The contest for most stupid political proposal is a toughly fought one, but on the weekend the bar was well and truly raised when the WA state Liberal party voted to “examine the option of Western Australia becoming a financially independent state within the commonwealth.”

While stopping short of complete secession, the proposal remains one of the kookiest you could get from a party that was once in charge of the state’s finances and, presumably, would like to one day again be considered worthy of being in power.

The proposal is dumb, firstly because “financially independent” and “within the commonwealth” make no sense whatsoever. It’s all very well to say states should raise their own taxes and pay the federal government for services rendered, but even a half-second thought reveals the idiocy of a state paying another government to defend it.

It makes for a fairly precarious economy – one burdensomely dependent upon iron ore prices. Falling iron ore prices have wrecked havoc with the WA state budget and they would be just as liable to do the same with a WA federal budget. Only this time there would be no Commonwealth of Australia to come lend a hand

If WA received all of the GST it paid it would have about $4bn extra revenue. That would be enough to wipe out the state’s budget deficit, but the problem with wanting to become financially independent is you don’t get to choose only the good things.

The Australian government currently has a debt of $500bn. That debt was raised to pay for Western Australian services as much it was for other Australians. The Australian government as it granted WA its independence would also gladly grant WA its share of the debt – let’s be generous and give them 10% based on their share of the population.

As the West Australian’s Shane Wright has noted, this means WA’s new financially independent government would be taking on an extra $50bn in debt to go with its own current $50bn of state debt.

And this is for a government that has a lower credit rating than does the federal government, meaning it would need to pay a much higher rate of interest on that debt. Given its level of debt would be double that of the similar sized economy of New Zealand, most likely credit agencies around the world would quickly downgrade the new Western Australia, meaning it would again have to pay higher interest rates.