Western Australia has fallen to last spot in the latest CommSec State of the States ranking, as the end of the mining boom continues to hit the state's economy hard.

Two years ago WA was at the top of the state economy ranking, but has steadily dropped since then, to finally fall to last spot behind Tasmania and Queensland.

The report takes into account eight key indicators: economic growth, retail spending, equipment investment, unemployment, construction work done, population growth, housing finance and dwelling commencements.

Commsec economist Savanth Sebastian said WA's economic performance reflected the end of the mining construction boom, but indicated some improvement was likely before too long.

"There's still some positives ... the income lift that will come in line with the record mining export and the recent lift in resource prices," Mr Sebastian said.

"The public-private infrastructure partnerships that are supporting the broader growth story is holding up retail sales relatively well in a relatively tough environment for Western Australia.

"It just highlights you go through these cycles and at the moment Western Australia is feeling a little bit of a tough time."

Retail sales holding up, employment weak

WA posted the second-weakest nominal annual growth rate, down 5.9 per cent on last year but spending was up by 10.7 per cent.

"You've got to take some heart from the fact that retail sales are holding up relatively well and it's just going to take some time for the transition phase to run through the WA economy," Mr Sebastian said.

One of the weakest indicators for WA was the rising unemployment figure.

"Unemployment in Western Australia is essentially about 40 per cent above its decade average," Mr Sebastian said.

"If you start to see much more, drive from the public sector, the Government, to support infrastructure and it can drum up further business confidence and should support the broader growth story over the medium term."

Mr Sebastian said the lift in commodity prices in the past six months was an encouraging trend.

"There was a lot of talk about the China bubble bursting last year and in fact it looks like if anything the Chinese economy is on a much more solid footing and that's certainly a very big positive for resource economies like WA," he said.

"While the big miners may not come back and invest in the sector immediately, the medium term suggests that investment will be required."

New South Wales has held onto its position of strongest-performing economy, followed by Victoria and the ACT.

Debt must be reduced, CCI says

WA Chamber of Commerce and Industry chief executive Deidre Willmott said the Government needed to focus on reducing spending and debt.

Deidre Willmott says the Government must cut spending. ( ABC News: Andrew O'Connor )

"We need this state election to cement our place as a strong place to invest which means that we need good policies, we need a focus on reducing spending … paying down debt," Ms Willmott said.

Ms Willmott criticised National Party Leader Brendon Grylls' proposed $5 a tonne mining tax on BHP Billiton and Rio Tinto.

"This sends a very bad signal to Western Australia as a place to invest," Ms Willmott said.

"We can't be looking for new revenue sources we need to look to reduce government spending and government debt … and not shocking the economy with new taxes on major investors."

Asset sales the key: Treasurer

WA Treasurer Mike Nahan said the leading states, New South Wales and Victoria, had successfully sold off government assets to fund major infrastructure developments that had helped drive employment growth.

"That infrastructure development is to a large extent funded by asset recycle, and that is the sale of the Port of Melbourne by the Labor Government in Victoria and by electricity assets in New South Wales that are pumping $20 billion worth of infrastructure investment in that state," Dr Nahan said.

"Underlying its [NSW] growth, underlying its employment and that is why we are pursuing the same policies."

Earlier this month, Dr Nahan said the Government would reveal within weeks its plan to privatise electricity supplier Western Power after initially announcing the proposal in the May budget.