Disciplined spending restraint by the State Government is paying dividends, with Western Australia’s long-term credit rating today revised up by Moody’s from Aa2 to Aa1.
The Chamber of Commerce and Industry WA (CCI) congratulates the State Government, particularly the Premier and Treasurer, for their commitment to rein in expenditure growth.
Today’s credit rating announcement builds on last month’s release of the State Budget, which confirmed that spending restraint, a CCI championed GST deal and an iron ore royalties windfall, have resulted in the first operating surplus in five years of $553 million and a $6.8 billion reduction in peak net debt since the Government’s first Budget.
Interest payments on debt will peak at $1.1 billion next year, which means it is crucial that responsible fiscal management continues. This is a billion dollars a year that West Australians will pay in tax that isn’t going towards funding essential services such as schools, hospitals or roads.
As debt is reined in and the interest bill is reduced, the Government’s credit rating and outlook should continue to improve. The higher our credit rating, the lower the Government’s interest payments are on debt, so continuing to fix the State’s finances is essential.
CCI has consistently recommended to the Government that the objective of budget repair should be to return the size of Government to pre-boom levels and continue focusing on reduced spending growth. This will reduce net debt and help the State regain its triple-A credit rating.
To achieve both job creation and budget repair, CCI has urged the Government to reduce its tax on jobs – payroll tax. WA has the highest payroll tax burden of any state in the nation, making it more expensive to create jobs here than anywhere else in Australia.
Payroll tax is a critical lever to boost job creation because it supports every industry, from manufacturers, retailers, construction to farmers, as opposed to cherry-picking winners in a fiscally constrained environment.
Asset sales present an excellent opportunity for the Government to pay down net debt, as recognised in today’s statement by Moody’s. CCI urges the Government to continue to review all public assets for privatisation or long-term lease.
CCI looks forward to continuing to work with the State Government to lift confidence in businesses and households by creating a stable investment climate that boosts WA jobs and drives the State’s economic recovery.