A global ratings agency has reinstated Western Australia's AAA credit rating, noting the state continues to outperform domestic and global peers.
It is the first time WA has been awarded the highest rating in nine years.
In a report released today, S&P Global said the upgrade was a result of WA's "track record of robust financial management, a very high-income economy, and exceptional liquidity".
Today's upgrade follows the state reporting a $5.7 billion surplus in this year's budget.
S&P's report said the upgraded rating also reflected WA's budget outperforming domestic and global peers, and the state's GST deal.
"A strong economic restart in Western Australia since mid-2020 has propelled broad-based revenue growth, including in transfer duties and payroll taxes," the report said.
Tight caps on public sector wages were also a contributing factor, although it was noted there was pressure to raise wages higher.
Infrastructure pipeline helped boost rating
The report also commented favourably on the government's plans to spend $33.9 billion on infrastructure over the next four years, including its Metronet project.
That was despite the agency expecting the government would not be able to spend all of that money, given pressures on the construction industry.
The potential sale of state-owned betting agency TAB was also a positive in analysts' eyes.
According to the report, WA's rating was only likely to be downgraded if the state were to "materially underperform" forecasts.
"This could occur if economic conditions deteriorate, due to a deep downturn among trading partners or accentuated geopolitical tensions, for instance, causing the government to significantly veer from its currently prudent fiscal strategy," it said.
"A substantial loosening of operating expense restraint might also lead us to reassess our view of the state's financial management."
S&P also gave Western Australia a "stable" outlook rating looking forward.
"[This] reflects our view that the state's fiscal metrics will remain very strong even as commodity prices normalise, aided by a more favourable system of distributing federal grants than in the past," the report said.
WA was stripped of its AAA credit rating in 2013 amid declining revenues and a blow-out in state debt.
At the time, it led to then-premier Colin Barnett flagging drastic measures to bring the budget under control, including privatising state utilities.
State's financial reputation 'restored': Premier
In a statement, Premier and Treasurer Mark McGowan took aim at the record of the previous Liberal- National government.
"WA's financial reputation has been restored after five years of hard work to repair the state's finances," he said.
"The restoration of our AAA credit rating enables my government to provide stability to Western Australians and fund important projects for the state's future.
"It will also ensure that the state will pay less interest on its future borrowings and highlights that Western Australia is a safe investment destination."
Speaking on Mr McGowan's behalf, acting Premier Sue Ellery said the upgrade gave the government more options when it came to finances.
"It will reduce the amount we have to pay in interest payments on debt into the future," she said.
"That means we can make decisions into the future as well that we might not have otherwise been able to make."
Ms Ellery said the higher credit rating would be a factor the government considered when thinking about whether it could offer more cost of living support, or a greater wage rise to the public sector.
It leaves WA the only state with a AAA rating from S&P, with Queensland, New South Wales, South Australia and Tasmania all one step lower at AA+. Victoria is slightly lower again at AA.
Government has enjoyed easy run, says opposition
Shadow treasurer Steve Thomas said the upgrade was a good outcome for WA, but emphasised the role mining had in the decision.
"It's a good thing to see that the interest rates will be kept lower with a triple-A credit rating, because unfortunately for Western Australia, the debt levels are not going down," he said.
"They're expected to rise, and so that interest cost will be cheaper with a lower interest rate."
But Dr Thomas said it only added to pressure for the government to reconsider its wages policy and cost of living supports.
"It's hard to imagine a government that's had an easier run than the current one," he said.
"There is an imperative for the government to start to reassess what it does with the money that it's got, this massive revenue and these massive booms."
Dr Thomas said the government also needed to plan for what happens when the current boom finishes.
