CHART: Why wages are so high and business costs so expensive in Western Australia

Sculpture By The Sea at Cottesloe Beach n Perth. Paul Kane/Getty Images

The mining boom did a few things for Western Australia, including increase its population and create a lot of jobs.

It also contributed to the state being a relatively more expensive place to live and do business.

The Bankwest Curtin Economics Centre, in a study on the cost of doing business in WA, says part of the problem is that the state has the highest payroll tax in Australia

That plus other labour costs including wages are significant pressures experienced by local businesses.

This chart compares WA wages to the rest of Australia:

WA business revenues have been increasing at a faster rate than other states and territories. But this has also meant that common business costs including wages, labour, electricity and transport have also gone up.

Wages in mining areas have grown the fastest. In the Pilbara, wages increased by 60% over the last decade from an average annual $58,000 to $93,000.

The Goldfields-Esperance region has also seen substantial wage growth, with employees averaging the second highest in the state of $69,000.

Annual wages for Perth have tracked closely over the last ten years with the average also increasing by 60% in the last decade from around $40,000 to $64,000.

Professor Alan Duncan, director of the Curtin Economics Centre, says payroll tax thresholds have not been increased in line with wage inflation.

This has meant payroll tax bracket creep, bringing more small businesses into the state tax system.

For the WA payroll tax system to have remained neutral over the last decade would have required the threshold to be nearly $1 million, or about 37.5% higher than the current $800,000.

Western Australia now ranks first overall across all states and territories in payroll tax costs for businesses with payroll costs of between $1.75 million and $7.5 million.

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