Debt reduction must be priority

22 February, 2017

While early voters took to the polls this week to have their say on the 11 March state election, CCI Chief Economist Rick Newnham urged the major parties to carefully consider methods of debt reduction.  

With the State debt set to hit $41 billion by 2020, Newnham says the incoming Government must now look for ways to pay down debt without increasing taxes on business.

Both the Liberals and Labor have now committed to not introducing any new taxes, fees or charges, or increasing taxes on business if elected, which Newnham says is great for business confidence and job creation.

“In the opinion of CCI, it is the Government’s own responsibility – whether they are the party that oversaw the debt or not – to pay down that debt from within its own means,” he says.

“We are specifically calling on both sides to take a hard look at Government spending, find new ways to reduce Government spending and also to look for structural ways to pay down debt, specifically we are calling for the partial sale of Western Power.”

The Liberal Party is committed to the partial sale of Western Power to pay down debt and fund infrastructure projects, while the Labor Party is vehemently opposed and proposes to pay down debt with iron ore royalties.

“WA Labor’s plan to wait for the iron ore price to rise is a cop out – we cannot continue to rely on iron ore to bail the State out or we will just end up in the same position in a few years’ time,” Newnham says.

CCI has campaigned hard for commitments to raising the threshold for when payroll tax kicks in and had a win last week when the Liberals pledged to raise the threshold from $850,000 to $900,000 if they retain power.

Labor Leader Mark McGowan told CCI’s Business Pulse magazine he had no intention of lifting the payroll tax threshold as he could not justify increasing the State’s debt to fund a tax cut.

Newnham says lifting the threshold is good for business and one of the cheapest ways to ‘create jobs’ and urges McGowan to reconsider.

“The Liberals will support 11,000 to 12,000 small to medium-sized businesses by reducing the payroll tax burden on those businesses, so we commend the Liberals for doing that and we urge the Labor Party to reconsider their position on payroll tax,” Newnham says.

“It’s incredibly important to these businesses, the payroll tax relief will allow those businesses to either employ more people or put people on for more hours; they’ll invest back in their business, which increases jobs through contractors or save it themselves to spend in the economy somewhere else, therefore creating more jobs.

“Money back in the pockets of small to medium business owners is money back in the economy creating jobs.”

Throughout the campaign, CCI has called on both major parties to commit to a long-term infrastructure plan.

“WA Labor adopted CCI’s recommendation to implement an independent body calling it Infrastructure WA, which will assess long-term infrastructure projects, so we commend Labor for adopting CCI’s recommendation on infrastructure and call on the Liberal party to adopt the same principal.”

However, McGowan says he’ll rip up contracts for the $450 million extension of Roe 8, an essential part of the $1.9 billion Perth Freight Link, if elected – a move CCI has described as a bad precedent and evidence of why a long-term infrastructure is a must.