Relying on the iron ore price as a budget saviour is a lazy approach to financial management, says Western Australia’s peak business advocate.
Chamber of Commerce and Industry of Western Australia (CCI) Chief Economist Rick Newnham says slashing government spending must be the primary means of budget repair and should be complemented by a strong asset sales agenda.
“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,” he says.
“Mr Wyatt’s plan is inherently flawed – WA’s GST share actually drops as the iron ore price rises, particularly when the rest of the state is doing well, and WA’s GST relativity isn’t forecast to reach above 65 cents in the dollar over the next term of government – would a Labor Government just sit on their hands for four years, with no other plan to reduce debt?
“This really brings into question WA Labor’s understanding of state finances, if their plan is forecast to not pay down a single dollar of debt if elected.
Newnham says the State needs strong financial leadership.
“The next Treasurer of Western Australia needs to refocus on the elements they can control – like how much is being spent from the public purse – rather than concentrating on forces beyond their control, like the iron ore price and the GST distribution formula,” he says.
“Western Australia does not have a revenue problem, we have a spending problem, and whichever party forms the next State Government must get spending under control.
“CCI has long called for restraint in budget expenditure growth to underpin any budget repair efforts – consolidation of departments should occur where there is clear existing overlap and curbing growth in spending in the Health Department must be prioritised.
“CCI has also long called for the sale of any asset that does not need to be owned by the state – the partial sale of Western Power will reduce state debt by around $8 billion, create greater efficiencies for consumers, boost investment, take us one step closer to regaining the critical AAA credit rating and most importantly, will create thousands of new jobs for WA workers through recycling sale proceeds into new infrastructure via the $3 billion Next Generation fund.
Newnham says taxing business will not strengthen the economy.
“Over the past five years, the public sector employed around 200,000 people, whereas the private sector put wages in the pockets of more than 1.1 million West Australians. Helping business work will help put Western Australians back to work, and with a state-wide jobless rate of 6.6 per cent, slugging the business community with a tax hike is not what will help solve WA’s unemployment problem.
“CCI and the business community calls on Mr Wyatt and the leaders of both major parties to pledge that they will not increase taxes on business should they form the next State Government.”
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