Premier Mark McGowan has urged Lisa Scaffidi 'to do the right thing'. Credit:Philip Gostelow "More than 80 years ago the Great Depression occurred, the world's economies were thrown into turmoil. "Our set of finances are now the worst since that point in time. "In Opposition as we were until a couple weeks ago, you never quite understand the magnitude of what will confront you in government. "Now that we're there, you see the full horror on display before you."

The Premier warned if the government didn't make "tough" and "uncompromising" decisions to arrest the slide, the state could 'slide into an economic basket case'. In February, the budget update had net debt for 2019/20 expected to hit $41.1 billion. Now that is expected to reach $43.2 billion by 2020. In late December, the Barnett government forecast a surplus of $521 million in 2019/20 but that had turned into a $535 million deficit in updated figures released in February. That has doubled to more than $1 billion by 2020.

The state government is already facing a $735 million budget black hole after the Commonwealth Grants Commission delivered just 34 cents in the dollar for WA's share of the GST. That will blow out to almost a billion dollars with WA expected to lose close to $200 million in GST revenue because of the state's dwindling population. The WA population grew just one per cent in the 12 months to September 30 last year, the slowest rate of growth on record. And to add salt into the wounds of WA's economic doldrums, failing land tax means the budget will be $239 million worse off. One of the first pieces of legislation the McGowan government is expected to introduce is a Loan Bill so it can borrow money to keep the WA economy afloat.

Labor's first budget will be handed down on September 7, to give the government time to "consider" Budget repair measures. Treasurer Ben Wyatt said he was being "transparent" about WA's economic plight to allow all Western Australians to understand the challenges the state faces. "Western Australia's finances are not in good shape due to years of budget mismanagement from the previous government," he said. "Years of poor financial management has left the State Government vulnerable to this sort of deterioration. "The diabolical state of the books, coupled with further deterioration in revenue, have further exacerbated the significant fiscal challenges we now face.

"Returning the budget to surplus is going to be difficult, however we are taking immediate action to limit unnecessary expenditure. "The McGowan Labor Government is committed to progressing the Service Priority Review, a budget management initiative, which has been designed to deliver significant savings to the budget and assist in getting it back on a sustainable footing in the long term. "The scale of the challenge confronting the Government means the 2017-18 State Budget will be later than usual this year, with Cabinet approving a September 7 Budget." Mr Wyatt said he had written to Federal Treasurer Scott Morrison requesting a $226 million GST top-up.