The WA Budget is out – and set to leave other states envious again thanks to a very healthy operating surplus of $3.5 billion in 2025-26, with surpluses each year across the forward estimates.
The billion dollars of cost-of-living relief will capture many headlines, but here are three quick takeaways for business.
- Infrastructure dollars are flowing again
Last year the WA infrastructure pipeline was shrinking, with the 2025-26 budget for the Asset Investment Program tipped to fall to $9.8B by FY26-27 and $8.2B by FY27-28, with a post-METRONET wind-down.
That trajectory has reversed entirely.
AIP for 2026-27 is now $13.2B, and the four-year total of $44.3B is the largest infrastructure pipeline in Western Australian history. Three new funding pools – a $1.4B Clean Energy Fund, $500M Major Projects Fund, and $500M Building Hospitals Fund – mean plenty of construction and infrastructure work and a new squeeze on trades.
- Diversification is working (at least for resources)
WA still accounts for more than 45 per cent of the nation’s exports ($238.4 billion to February 2026) but mining remains the source of its riches.
After once again taking a very conservative view of iron ore prices, WA has been pleasantly surprised by finding an extra billion behind the couch cushions. Treasury assumes a return on iron ore prices will revert to $US72/t, and notes that every one-dollar movement in price is a $93M windfall or loss to the State.
The good news is iron ore’s share of total royalties has fallen from 86 per cent to 76 per cent. Gold royalties have risen 80 per cent in two years to $1.309M, and lithium is up 160 per cent to $540M. Together, they contribute nearly $2B to the State’s coffers.
This Budget sees the State leaning into critical minerals and green metals, with the NeoSmelt pilot ($75M), Critical Minerals Advanced Processing common-user facility, and Lithium Industry Support Program extension.
- The Middle East conflict Is a double-edged sword
The Middle East conflict has been the single most disruptive external event in this Budget cycle, driving demand for gold, LNG and lithium, but hitting WA’s second biggest industry in agriculture.
Treasury notes that only around 2 per cent of Western Australia’s fuel imports were sourced directly from the Gulf in 2024, but the State is indirectly exposed through refining hubs in Asia that heavily use Middle Eastern crude oil.
“In effect,” it warns, “around 37 per cent of the State’s fuel is linked to the region.”
Transport (45 per cent of WA diesel consumption), mining (39 per cent), and agriculture (6 per cent) are most exposed.
CPI was 5.5 per cent against a Budget assumption of 2.75 per cent, a disastrous forecast miss. Diesel prices surged 78 per cent, the RBA raised rates instead of cutting them, and agricultural input costs (urea/fertiliser) jumped 64 per cent.
The Government’s response – a $100 Fuel Support Payment, 12 million-litre diesel stockpile, expanded FuelWatch, and Commonwealth fuel excise relief – addresses the symptoms. The bigger question is whether WA’s commodity windfalls can outrun the cost pressures.
Purple will have a detailed analysis up tonight on purple.au but as always, reach out if we can help.
