The McGowan Government’s first budget will destroy job prospects and stall economic recovery.

Chamber of Commerce and Industry WA (CCI) Chief Economist Rick Newnham said the Government’s decision to increase the payroll tax burden on WA’s largest corporations for the next five years goes against all sound economic advice.

“WA already has the highest payroll tax burden, and this budget puts us further out of line with the rest of the country, making WA a less attractive place for business to create jobs,” Mr Newnham said.

“Penalising businesses that employ the most people in WA will destroy job creation and could affect the viability of existing and future projects, particularly in the mining sector, effectively locking in another five years of pain.

“For the Government to claim that this payroll tax increase will limit the impact on households is completely misleading. A tax on jobs is a tax on every West Australian.

“These costs will be passed on through the supply chain to small businesses, including mum and dad businesses.

“At a time when more than 3,000 people are leaving WA to head east per quarter, this budget needed to restore confidence to boost business investment and employment - instead it does the opposite.”

Mining companies will feel the brunt of this cash grab and will be further hit by an increase to gold mining royalties leading to less jobs down the track.

Mr Newnham said this will provide a sugar hit to the budget but will damage long term investment and job prospects.

“WA relies on business investment to create jobs – changing royalties makes new projects more expensive and deters investors. Any benefit to state finances is also largely lost to other states through the GST distribution,” Mr Newnham said.

“Debt will blow out to more than $43.7 billion in 2019-20 because the Government has no plans to reduce debt. The Government is also clearly struggling to afford future infrastructure spending.

“This highlights the need for the McGowan Government to revisit asset sales immediately, including Western Power, to recycle WA assets, pay down debt, and fund infrastructure that will boost the economy.

“In CCI’s pre-budget submission, we outlined key policies that, if implemented, would have helped the Government to achieve a surplus by the end of the forward estimates.”

Mr Newnham said importantly, this should not have been achieved through shortsighted cash grabs that will result in less jobs and a decline in business investment, but through fiscally responsible spending restraint.

“CCI and the business community have welcomed the McGowan Government’s strong policies to achieve savings by committing to a strict wages policy, transitioning the Royalties for Regions program to cover recurrent spending, as was recommended in CCI’s pre-budget submission, and taking steps toward reducing electricity subsidies, which cost WA taxpayers more than $300 million per year,” Mr Newnham said.

“Tough decisions have also been made around redundancies in the public sector. This combined with the Government’s wages policy and agency review are positive steps to reduce the size of government in WA.

“However, despite all of the discussion about budget repair, big government is here to stay. Over the last decade, the size of government has ballooned from 7 per cent to 11 per cent of the economy. This budget locks in big government at 11 per cent for as far as the eye can see.”