Western Australia is grappling with the highest inflation rates in the nation, posing significant challenges to the state government’s economic strategy. This development comes despite Treasurer Rita Saffioti’s assurances that the “inflation beast has been tamed” following the release of this year’s state budget. The budget marked a shift away from immediate cost-of-living relief towards a broader focus on diversifying the state’s economy.
The latest figures from the Australian Bureau of Statistics reveal that Western Australia recorded a 1.9% increase in the cost of living between March and June, and a 2.7% increase over the past year—both the highest in the country. A significant portion of this increase is attributed to a staggering 116.8% rise in power bills, driven by the expiration of Commonwealth and state government rebates. This change has added approximately $550 to the average household’s annual power expenses.
Government’s Economic Management Under Scrutiny
Treasurer Saffioti has defended the government’s approach, highlighting their “responsible management” of state finances. She emphasized that excluding the impact of electricity credits, the quarterly Consumer Price Index (CPI) for Perth rose by only 0.7%. This narrative suggests that outside the energy sector, inflationary pressures have significantly eased.
However, independent economist Conrad Liveris challenges this perspective, arguing that while the broader economy may appear less heated, the reality for residents is starkly different. “It would be nice to exclude certain increases, [but] that’s not the lived experience of people living in Western Australia at the moment,” Liveris stated. He suggests that the government’s power credits may have inadvertently prolonged financial strain for households.
Wage Growth Lags Behind Inflation
The disparity between wage growth and inflation further complicates the economic landscape in Western Australia. From March 2020 to March 2025, inflation in Perth is projected to rise by 22%, while wages are expected to increase by only 17%. This gap is one of the largest in the country, despite Western Australia boasting the third strongest wage growth nationwide.
Shadow Treasurer Sandra Brewer criticized the state government for a lack of productive reforms to boost wages and address the cost-of-living crisis. “Unfortunately, Western Australian families have to pay escalating rents and mortgages whilst wages aren’t budging,” Brewer remarked at a recent business breakfast.
The Impact of Policy Decisions
The end of government rebates has revealed the underlying pressures faced by Western Australians, who have endured the second-worst increase in the cost of living over the past five years. Economist Conrad Liveris noted that the withdrawal of electricity credits has effectively delayed, rather than mitigated, financial pain for households.
“Effectively, in one way, [the electricity credits] delayed the pain that households are experiencing and they’ll have to contend with that now,” Liveris explained.
The timing and management of these credits remain subjects of debate. The question persists whether the support was strategically timed to suppress a potentially worse cost-of-living crisis or if it could have been better managed to prevent such a harsh impact.
Looking Ahead: Bridging the Economic Divide
As inflation continues to ease nationally, Western Australia’s government faces the challenge of aligning wage growth with inflation to ensure equitable prosperity. This task is critical in a state known for its wealth, yet struggling to share it effectively with all residents.
The government’s next steps will be crucial in addressing these economic disparities and fostering a more balanced growth trajectory. The focus will likely shift towards implementing reforms that encourage productivity and real wage increases, aligning with broader national efforts spearheaded by federal initiatives.
As Western Australia navigates these economic hurdles, the effectiveness of its policies will be closely monitored, with implications for both the state’s residents and its broader economic landscape.
