Budget marries prudence with big-picture planning

Missed opportunity

The 2016-17 WA State Budget shows fiscal discipline while maintaining a long-term vision for WA, CCI CEO Deidre Willmott says.

“Business has been calling for the State Government to implement a plan to regain the AAA credit rating and build the economy of the future, so today’s budget is welcome news to the community,” she says.

“In our pre-budget submission, CCI called for a government-driven focus on emerging and traditional growth industries, so business is pleased to hear the State Government will invest more than $45 million in tourism and support further growth in agriculture, innovation, aquaculture and defence and ship building.”

The budget also confirmed the deficit has continued to grow as expected and a surplus of just $1 billion is now likely in 2019-20.

According to the budget papers, the deficit will hit $3.9 billion in 2016-17, followed by a $1.9 billion deficit in 2017-18, before decreasing to a deficit of $197 million in 2018-19.

“The forecast deficit for 2016-17 is now $3.9 billion, but we are confident with continued due diligence around spending, we will come in under that as well,” Nahan told Parliament.

“It must be noted that the GST loss of $4.7 billion relative to our population share is driving us into deficit – otherwise we would be in surplus.”

Willmott says the business community would be pleased with the State’s commitment to reduce expenditure to 3.7 per cent in 2016-17, following unsustainable annual average growth over the past ten years of 7.9 per cent.

“Unfortunately net debt has still not reached a peak in the forward estimates, which CCI highlighted as an issue in their pre-budget submission – debt will reach $33.8 billion in 2016-17 and is forecasted to reach over $40 billion in 2019-20,” she says.

Agency review plan on track

Willmott also welcomed the commitment to expand the expenditure agency review program to 54 agencies.

“We previously recommended that the agency expenditure review program be expanded to all agencies that are not part of the streamlined budget process so we’re very pleased the Government has adopted this move in an attempt to find further savings,” she says.

The budget shows expenses have continued to grow in 2016-17, at 3.7 per cent but are expected to decline by 0.1 per cent in 2017-18.

The Budget confirmed that Government revenues had also been impacted, declining by 3.1 per cent in 2016-17, however they are projected to rise to more than seven per cent in the forward estimates.

Willmott says the Government should commit to ensuring that there will be cash surpluses across all public sector activities for all the future years by 2020.

“These measures will be a core component of a wider strategy to regain the State’s AAA credit rating,” she says.

“Business is also pleased the Government has announced no new taxes and is committed to lifting the payroll tax threshold and examining land tax aggregation.

“Creating a business-friendly tax environment while broadening the economy will allow business to grow, create jobs, discover new opportunities and help build a diverse and agile economy for our future.”

Willmott says savings measures and the budget’s formal announcement to progress with the sale of Western Power will boost business confidence and stimulate investment.