Western Australia can't continue to prop up the flagging Australian economy in the face of falling commodities prices, Premier Colin Barnett warns.
Mr Barnett has shrugged off suggestions his state would be hit hard by falling iron ore prices - down 30 per cent in the past three months.
But he said Australia could no longer rely on WA to get it through the continuing global economic slump.
"The mining and petroleum industries can sustain Western Australia," the premier told reporters in Perth on Sunday, after unveiling the city's proposed $1 billion light rail network.
"They cannot and will not sustain Australia as a whole.
"That's something I've been saying for some time, and I think that is now starting to become very apparent to the finances of the federal government."
Mr Barnett conceded former Labor prime minister Kevin Rudd's financial stimulus package had helped Australia avoid the worst of the 2008 global financial crisis.
But the Liberal premier said it also exposed the nation's economic reliance on the mining states.
"What the GFC of 2008 showed is that the financial incentive package of the Rudd government did play a significant role in getting Australia through that," Mr Barnett said.
"But it also clouded some of the underlying problems of the Australian economy.
"In particular, Australia as a whole is too reliant on Western Australia and too reliant, therefore, on the mining industry."
Despite falling iron ore prices expected to wipe $1.5 billion off his state budget this year, Mr Barnett said Asia would continue to grow in the long term and WA's fortunes would be tied to the region's economic development.
"We are the specialist mining state. We are hitched to China, Japan and other Asian economies," he said.
"We will grow as they grow and it won't always be a smooth path.
"But it's a ride that will keep this state in prosperity."
WA Treasurer Troy Buswell admitted an unprecedented high Australian dollar and falling commodities prices were putting "pressure" on WA's finances.
Analyst UBS has estimated the falling iron ore spot price, which has dipped below $US90 a tonne, had cost WA $A150 million in lower royalties since July 1.