Nats' plan threatens WA's credit rating

Western Australia's Treasury has thrown an obstacle in the path of negotiations on the formation of a state government.

The Department of Treasury and Finance says the National Party's royalties for regions policy would threaten the state's triple-A credit rating.

Nationals' leader Brendon Grylls has made the policy the non-negotiable starting point for his support of either major party in forming a minority government.

Treasury has released a statement claiming the Nationals' policy would cost $2.8 billion over the next four years, saying that that amount of money would increase state debt and exceed the current financial target adopted to maintain the triple-A credit rating.

Labor and the Liberals have been seeking the Nationals' support after Saturday's election left neither with the 30 seats they need to govern in their own right.

Both Premier Alan Carpenter and Liberal leader Colin Barnett have indicated they essentially support the Nationals' plan.

But Under-Treasurer Tim Marney has said the Royalties for Regions policy would take the net debt to revenue ratio to around 53 per cent by 2011-12, above the current limit of 47 per cent, the target needed to maintain the state's triple-A credit rating.

Yesterday Mr Grylls acknowledged that he had not run his royalties policy past Treasury, saying that was up to the premier and Mr Barnett.