Today’s release of the updated State Finances may not pack a stadium but they’re definitely worthy of a cheer.
The Chamber of Commerce and Industry WA (CCI) congratulates the State Government on today’s 2017-18 Annual Report on State Finances, which confirms that it remains on track to achieve a surplus by 2020-21, while reducing net debt by $3.2 billion since the 2017-18 Budget forecast – welcome news for WA business and households alike.
The State Government, like WA businesses and households, has had to cut back its spending to keep its head above water. Delivering the lowest expenditure growth in more than two decades is a significant achievement and essential to budget repair – the Government must now continue to maintain this discipline, or these achievements will be lost.
The updated State Finances reflect a strong focus on reducing government expenditure and a slowly but surely recovering WA economy working together to improve the books. Employment growth is delivering for both job seekers and WA’s finances, with a $50 million increase in payroll tax revenue, mostly due to an increase in mining activity.
It is welcome news that almost all of the 3,000 voluntary targeted separations will be achieved, albeit over a longer period of time, which will be the most significant scheme ever run by the WA public sector. This has been a major piece of the public-sector reform puzzle for WA.
External factors have contributed to general government revenue growing by 9 per cent, relative to 2016-17, namely rallying commodity prices, an upgrade to the national pool of GST and growth in business investment and household consumption.
Much of this revenue may be one-off cash injections, so spending constraint must remain a priority with WA continuing to be the highest spending State Government in the country on a per person basis.
Health has been the portfolio eating the rest of the Budget, but growth has been reined in under this Government. The health budget grew by just 2 per cent in 2017-18, compared to the decade average of 8.9 per cent, signalling a change for the State.
Several items of capital expenditure have also been deferred, which have improved the State Finances for 2017-18 but will need to be paid for later, including capital expenditure on schools, hospitals and roads.
We urge the Government to continue to relentlessly review government expenditure to identify efficiencies through the adoption of new technologies and private sector partnerships and to renew its focus on paying down net debt, which has cost taxpayers $860 million in interest last year alone.
We also encourage the Government to keep pace with its asset investment program which is building the essential infrastructure for the State, while reviewing all State-owned assets for sale, including Western Power, which if partially sold could wipe $11 billion off WA’s $34.6 billion net debt.
CCI looks forward to continuing to work with the State Government to lift confidence in business and households by creating a stable investment climate to boost WA jobs and continue the State’s economic recovery.