In August, the WA government put the Kwinana Bulk Terminal, the Utah Point bulk facility in Port Hedland and the Perth Market Authority up for sale. Mining stocks could rally as the anticipated US Federal Reserve rate hike hits. Credit:Rob Homer In this year's state budget the WA government dropped plans to sell the Kwinana Bulk Terminal. Instead it now plans to sell off Fremantle ports. Then last month, the Barnett government said it was planning to sell off the Old Cottesloe Cable Station, the Claremont Police Station, three disused school site, plus more than 20 vacant lots. The WA government says selling off of state-owned assets will help balance the books, after the state's debt ballooned, following plunging iron ore prices and WA losing its share of GST.

But the state has just come off the back of a "once-in-a-lifetime mining boom", which according to political experts should have secured the state's economic future for years to come. Yet in September 2013, WA was stripped of its AAA credit rating by global ratings agency Standard & Poor's, which lowered its rating to AA+. Then it April this year, WA's AA+ credit rating was placed on a negative watch by Standard & Poor's due to falling iron ore prices. So how did the Barnett government squander such a golden opportunity to secure WA's financial future? Professor Alan Duncan, Director of the Bankwest Curtin Economics Centre, said the Barnett government's public spending and investment decisions over the course of the mining boom should have been more cautionary in saving for a "rainy day".

"The combination of falling revenues, sticky public spending, growing net debt and significant projected future budget deficits mean the sale of public assets is the only short-term solution to improve the budget position," he said. "The drop in iron ore price has been exceptional, and I'm not sure could have been foreseen. The question is the degree to which WA has become so reliant on royalties revenues to balance the state budget, and in making its expenditure decisions." Professor Duncan said the seeds for WA's current economic malaise were sown in the mid-2000s. "With significant recurrent spending commitments - principally public sector pay awards - and capital spending that continued to rise to meet the resources-fuelled growth in state revenues,' he said. "This at a time when paying down government debt more aggressively and building a contingency to protect against future economic uncertainties was always an option.

"It could be claimed that this argument is supported with the benefit of hindsight, but the debate in WA parliament at that time was documented pretty clearly." Professor Duncan said the problem with the state of WA's economy now is it's going to be harder to "unwind".

"Recurrent government spending needs to adjust now that revenues are falling so sharply, but it can't reasonably happen at the same pace without significant public sector job cuts and a reduction in public services," he said. "Hence the pressure to concede to the sale of assets. Spending decisions over the course of the resources boom bear a large part of the responsibility for painting the government into its current corner." Ian Cook, Senior lecturer in politics at Murdoch University, said he couldn't recall a state government selling off assets so quickly. "So it is unprecedented in terms of the scale and speed of what's being done," he said. "It's coming across as a little desperate; so it is looking like it is this government that has created the problems. The problems have been around for a long time. The mining boom helped hide them."

Martin Drum, senior lecturer in politics and international relations at Fremantle's University of Notre said the asset sale would provide a "large sugar hit" for the economy, but it would come at the expense of long-term revenue. "The sale of Fremantle port is a pretty good example of this," he said. "The amount it might fetch is impressive, but the state will lose the future revenue it would otherwise charge users. "Arguably such a sale is fiscally wise if the revenue is used to pay off debt, thus saving on interest repayments over the years, or if it is invested in key economic infrastructure which generates revenue in other ways." Dr Drum said there was no doubt the state's coffer's should be in a better state but he didn't think the current Liberal government could be entirely to blame for the state's current economic woes. "Part of the problem is the high recurrent expenditure in recent years. Comparatively speaking we spend a lot on delivering our services and facilities," he said. "Whether this is because of the vast distances in WA or because we're not as efficient as other states is debatable."

Dr Cook said people shouldn't be "surprised" the state's kitty wasn't healthier following the mining boom. "The game of creating ongoing pseudo-surpluses for a particular budget, despite an actual increase in debt, has been a long-running joke for me," he said. "Once the mining boom stopped the reality was going to set in. I'm surprised that anyone is surprised." Dr Cook said the Barnett government was trying to appease rating agency Standard & Poor's and also get the books back in order before the next election. "It is mostly, for me, about a government struggling to please the ratings agencies," he said. "Standard and Poor's seems to be the more punishing and the government won't want them to go below AA+. They've just got to hold the AA+ coming into the next election."