An independent think-tank says Western Australia should follow the lead of the Newman government in Queensland and implement major spending cuts after recording the largest increase in operating expenditure of all states over the last three years.
The Centre for Independent Studies found combined state government debt had blown out to about $43 billion over the past six years from what was originally a negative net debt position.
WA recorded the largest increase in real per capita operating expenditure in the three years to 2012-13, while its strong revenue growth came to a halt.
This contributed to a substantial increase in its debt ratios, which are among the largest of all Australian states.
CIS senior fellow Robert Carling said WA's finances had deteriorated in a similar fashion to Queensland, with "rampant" growth in spending on capital infrastructure in the context of strong population growth.
"The state government has increased a range of taxes from relatively low levels but the key to halting the deterioration in its finances is tighter control of operating expenditure," he said.
Ratings agency Standard & Poor's downgraded the state's prized AAA credit rating to AA+ in September last year, criticising the government for demonstrating "limited political will" by failing to follow through with planned spending cuts.
While the Campbell Newman-led Liberal National government in Queensland has come under fire for bringing in massive spending cuts, Mr Carling said other states should follow its lead.
"Unless action is taken now, state governments will face rising deficits and debt in the long-term, just like the federal government, and will be unable to deliver the services the public wants," he said.
"Financial strength is not just desirable for its own sake; if the states were to return to running operating surpluses, it would mean more funds available for improved infrastructure."
