Search the news, stories & people Personalise the news and stay in the know Emergency Backstory Newsletters 中文新闻 BERITA BAHASA INDONESIA TOK PISIN analysis Topic:Economy At a time of historic global uncertainty, Rita Saffioti has lots of reasons to love her job as WA treasurer. "I'd be a lot more nervous if I was a treasurer of another state," the veteran economic boffin told Stateline. There's good reason for her upbeat mood, given she presides over the healthiest set of budget books in the nation. As other states rely on debt to fund their major projects, Saffioti is preparing to finish the last of Labor's flagship 'Metronet' projects which, despite its $12 billion-plus price tag, have been delivered at the same time as record surpluses. Rita Saffioti enjoyed a bumper surplus in her first state budget, but how long can the good times roll? (ABC News: Jake Sturmer) Those good times are drifting into the rear-view mirror though as the iron ore price returns to more normal levels — a decline which could be accelerated by Donald Trump's 'Liberation Day' tariffs.  While WA's direct exposure to Trump's tariffs is small — the US is WA's 10th-largest export market — it's the flow-on effects which matter most. That's because nearly two-thirds of Western Australia's exports go to China, Japan or South Korea — three countries hit with the biggest tariffs.  Because WA is so reliant on the trio, any hit to their economies could quickly flow through to ours. "Yeah, [I'm] definitely concerned about the indirect impact," Saffioti said. "We wanted to see a very strong economic growth across our trading nations, across the world, and these tariffs, … [have had] probably one of the most significant or seismic impacts across the world. Rita Saffioti says the government is keeping a close eye on the impact of Donald Trump's tariffs around the region and the globe.  (ABC News: Jake Sturmer) "We've already seen the fallout on the share market and on other commodity prices, so we are very much monitoring the impact." But that concern isn't enough to diminish Saffioti's confidence in her budget. "We've budgeted conservatively and that means that you can withstand shocks, and shocks like these new tariffs that Donald Trump is introducing," she said. "We've got a whole range of different commodities that feed into our budget, of course iron ore being the key, but we've always budgeted conservatively for iron ore. Rita Saffioti says WA is well-placed to absorb the seismic economic shock created by Donald Trump's tariffs.  (ABC News: Jake Sturmer) "There will always be challenges, there will always be more demand, in particular in key areas like health, but we'll continue to make sure we can deliver the services without those cuts." It's a bold statement given the uncertainty ahead. Committee for Economic Development of Australia chief economist Cassandra Winzar said while probably true, there were steps the government should be taking to firm up its fortunes. "We've got pretty strong private sector spending, particularly in the resources sector, and we do also have a lot of government spending, so there's a lot of money going around the economy," she said. "So what we really need to think about is around timing. Cassandra Winzar says the WA government should plan some infrastructure projects for lean times ahead.  (ABC News: James Carmody) "Maybe in the future, if we're seeing softer private market spending, softer business investment, that might be the time that we want government to have something, some projects, ready to go to stimulate the economy. "It's not huge cuts that we should be making, but we should be thinking really carefully about every dollar that's spent and whether it needs to be spent now, or whether there are some things that we can hold off for future times." Western Australia's vulnerability to needing that kind of stimulus stems from its growing reliance on one industry. No prizes for guessing which one. Pressing play on this chart shows how the state's leaders have struggled to diversify the economy away from its most lucrative honeypot, which would reduce the risk of global shocks flowing through. But Saffioti defended the government's efforts.  Rita Saffioti became WA treasurer in June 2023, and her job could be about to get more difficult.  (ABC News: Jake Sturmer) "We have embarked on a strong diversification through supporting new value-adding and new industries, such as in the north-west and of course new markets," she said. "We've had a series of expansion of our international trade commitments in particular through South-East Asia as well as other parts of Asia." Is it too little too late, given the lopsidedness of that pie?  Rita Saffioti defended the government's record on diversifying the economy. (ABC News: Jake Sturmer) "Absolutely not," Saffioti said. "We've made some major efforts already in diversifying … and of course, it's going to be the main focus of our government going into the future." WA Treasurer Rita Saffioti walks with Premier Roger Cook as he prepares to attend the first meeting of his new cabinet.  (ABC News: Andrew O'Connor) Major focus or not, turning around WA's reliance on what's beneath its surface won't come quickly or easily. And while some are optimistic it can be done, independent economist Conrad Liveris is less convinced. "It's hard to see that there's been any serious attempt at that," he said. "So I think we do need to take a step back and get some proper independent analysis to really outline what are the opportunities for Western Australia in the next five years, in the next 10 years, in the next 20 years and beyond." Conrad Liveris says the WA government has not done enough to reduce reliance on the resources sector. (ABC News: Keane Bourke) Liveris said those efforts needed to embrace mining and use its strengths to build other industries, not try and compete with the "elephant that is in every room". "We've got this massive industry that dwarfs all others, and actually we've got to use that to our advantage, to diversify the economy, not to pretend that it's not there," he said. That's something the government has spoken about with the 'Made in WA' pledge it took to the election. WA Premier Roger Cook is making changes that will impact a third of government departments. But a glossy brochure is much easier to produce than real economic change, especially when so much money is flowing in one direction. After years of high iron ore prices and a boosted share of the GST making the job of managing WA's budget easy, in the eyes of critics, factors outside of the state government's control could force its senior members to earn their keep. Have they, and their predecessors, really built the budget into a stable set of books capable of weathering even a Trump-sized storm? Or will difficult decisions have to be made when push comes to shove? Western Australians have become accustomed to big surpluses, huge spending on infrastructure and a healthy helping of cost-of-living handouts in recent years. A larger-than-expected economic shock could bring all of that to a sharp end, and take some of the shine off Saffioti's enthusiasm for one of the state's most important jobs. Topic:Rental Housing LIVE Topic:Government and Politics Topic:Explainer Topic:Universities Topic:Government and Politics Topic:Explainer Economy Elections Government and Politics Perth State and Territory Elections State and Territory Government State and Territory Parliament Topic:Rental Housing Topic:Elections Topic:Government and Politics Topic:Explainer Topic:Universities Topic:Elections Topic:Golf Topic:Floods Topic:Public Schools We acknowledge Aboriginal and Torres Strait Islander peoples as the First Australians and Traditional Custodians of the lands where we live, learn, and work. 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