Premier Mark McGowan’s second budget as Treasurer has delivered another significant surplus and some relief for households, but few surprises.
- The $5.7 billion surplus is slightly less than last year
- The $400 power credit will cost the state $445 million
- A total of $2.5 billion will be spent on health and mental health
After a record-high $5.8 billion surplus in last year’s budget, this year’s budget delivers a slightly reduced surplus of $5.7 billion.
Like previous years, that’s largely because of increases in mining royalties, taxes and the state receiving more GST money than expected.
“This is another strong budget that helps set Western Australia up for a bright future beyond the pandemic,” Mr McGowan said.
The most significant measure announced today was a $400 electricity credit for every household, which will cost the state $455 million in total.
Other cost of living support will largely come through household fees and charges increasing by less than the state’s predicted inflation rate.
Health spending a big focus
Support for the state’s ailing health system remains below what many in the sector would have liked to see.
The budget contains a total of $2.5 billion for health, including an extra $629 million to fund services over the next year – a 12 percent increase to what had been estimated in last year’s budget.
Almost everything else for the sector had already been announced, including $223.4 million in new money for infrastructure and a similar amount to reduce pressure on emergency departments.
The Premier said his government was doing everything it could to help the system, but there was little hope of short-term relief.
“What we’re doing is using our strong financial position to invest heavily in the health system and make sure we can deal with the demand as it arises,” he said.
“There’s no overnight fixes here because of the COVID environment we’re in.
“But we’re certainly leaving no stone unturned in terms of new initiatives we’re putting in place and the new investment we’re putting in place.”
While inflation jumped 7.6 per cent in Perth at the last estimate, the Premier was confident it would settle at around 4 per cent across the current financial year, falling to 2.75 per cent next year.
A raft of household fees and charges will increase from July 1, including electricity (up 2.5 per cent), water (up 2.5 per cent), vehicle license (up 3.8 per cent), drivers license (up 6.4 per cent) and the emergency services levy (up 5 percent).
However, Mr McGowan said fees and charges would drop by 3.8 percent when the electricity credit is taken into account, delivering a saving of $244 for households.
Concession card holders will get $718 towards their electricity bills because they will be eligible for the one-off payment of $400 as well as the $318 energy assistance payments.
“We don’t have to borrow the money to do it either, as other governments have. It’s funded from our strong surplus,” he said.
“At a time of real pressure at the bowser and at the checkout, my WA Labor government is delivering real relief to Western Australians right across the state.”
Surplus to shrink in coming years
While another strong surplus has been forecast this year, next year’s is expected to be much smaller at $1.6 billion.
Aiding those figures will be climbing GST revenue over the years ahead, from $5.9 billion this year to $7.4 billion in 2025-26.
This year’s surplus had also been estimated at far below what has been delivered, which Mr McGowan put down to conservative iron ore price expectations.
“Iron ore prices have gone up, our revenue’s increased because of the booming property market and booming employment market in Western Australia,” he said.
And while net government debt is forecast to fall to $29.9 billion this year, it’s expected to rise to $31 billion next year and $34 billion in 2025-26.
The state’s economy is estimated to have grown by 5.25 per cent in the current financial year, before slowing to 4 per cent growth next year and continuing to fall until 2024-25.
Those figures are a result of West Australians being largely locked in the state for the last two years, delivering a boost, before spending returns to more normal levels over the years ahead.
Plan to boost housing sector
One of the few new announcements in today’s budget was significant changes to try to stimulate growth in parts of WA’s housing sector.
Starting mid next year, the government will offer a 50 percent land tax concession for some build-to-rent developments.
That is hoped to increase rental stocks in the state, and is similar to schemes used in other states.
It will also be cheaper to purchase off-the-plan apartments worth less than $500,000, with purchasers to receive a rebate equivalent to what they pay in stamp duty.
Mr McGowan continued to celebrate what he framed as his government’s successes in managing the state’s finances, while taking aim at other leaders around the country.
“All the other states have not run their finances as well as Western Australia.
“That’s the reality, and so they need to cut their cloth to meet their circumstances. That’s what we did when we came to office.”
WA has propped up entire country: Premier
He also spoke of WA’s contributions to the national economy, particularly over the last two years.
Other commitments in this year’s budget are $1.3 billion to try and diversify the state’s economy, including money to attract international industries and students, as well as tourism marketing.
A total of $650 million will be spent on climate action, which includes a rebate on electric cars announced earlier this week.
Almost $33.9 billion will be spent on infrastructure projects in the coming years, including $12 billion in regional areas.
Mr McGowan acknowledged many projects would be affected by cost increases, but could not point to any specific blowouts.
He said $350 million had been allocated to absorb those increases.
A number of Metronet projects are expected to be delayed, with budget papers revealing the State and Commonwealth governments would spend an extra $379.5 million over the coming years on the Thornlie-Cockburn and Yanchep lines.
Cost of living payments fall short: welfare groups
While the $400 electricity credit has been welcomed by welfare groups, the Western Australian Council of Social Service (WACOSS) said a more targeted approach was needed for vulnerable households.
“That $400 won’t go very far because we’re talking about 12 per cent increases in rental prices, we’ve got a 7.6 per cent increase in inflation, we’ve got real stagnation in wages,” WACOSS CEO Louise Giolitto said .
Treasury forecasts the soaring cost of living will cool off in the coming years, however, public-sector unions believe the budget should have included a wage increase.
Despite rising inflation, no improvements were made to the pay rise announced in December of a 2.5 per cent increase, plus the option of another 0.25 per cent or one-off $1000 payment.
“This is a budget that fails public sector workers,” said Unions WA secretary Owen Whittle.
“The state government needs to review the [wages] policy and they need to come to the table with at least 4 or 5 per cent pay rise for public sector workers, if not far more to keep up with the increasing cost of living.”
The comments were mirrored by the United Workers Union.
“This budget is a kick in the guts for workers, who next week are going to have to try and work out how they’re going to pay bills and how they’re going to put food on the table,” public sector coordinator Kevin Sneddon said.
WA’s Health Services Union and the WA Police Union have also demanded better pay conditions to attract more workers.
Giving with one hand and taking with the other: Opposition
Opposition leader Mia Davies questioned how WA could be the wealthiest state in the nation while also having a “crumbling health system, a housing crisis and more and more West Australian households struggling to make ends meet”.
Ms Davies said the benefit of the power credit was canceled out by rising water charges (up 2.5 per cent), vehicle license (up 3.8 per cent), drivers license (up 6.4 per cent) and public transport fees (up 2 per cent) .
The emergency services levy will also rise by five percent.
“This Premier doesn’t get gold stars for economic management as much as he likes to pat himself on the back,” she said.
“You can’t deliver multi-billion dollar surpluses two years in a row and not share the wealth of the nation with families and households that are struggling to make ends meet.”
Mixed feelings from peak business group
Meanwhile, the state’s business lobby congratulated the state government for holding firm on its wages policy and said it delivered a “good budget”.
“We’re now getting below $30 billion in net debt … that’s critical for the future of the state’s finances,” said Chamber of Commerce and Industry chief economist Aaron Morey.
However, while Mr Morey said the measures to lower the tax burden on WA businesses were welcomed, he felt more could be done.
“Now businesses can pay their payroll tax quarterly instead of monthly [and] that does reduce that admin burden,” he said. But in terms of that overall amount of tax paid, there is much more the government can do.”
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