State finances in bad shape says ex-treasurer

13 September, 2017

Former Labor Treasurer Eric Ripper dealt some hard truths to the State Government in the wake of its first budget released last week.

Ripper, now Chairman of GRA Everingham, unpacked the budget with CCI Chief Economist Rick Newnham at the Post State Budget Breakfast on Wednesday morning.

Despite the revenue measures announced in the budget including payroll tax and gold royalty increases, Ripper says state’s financial position is still in bad shape.

He says debt is probably still being underestimated and some of the figures used in the budget estimates are rosy.

“They’ve got expense growth forecast of an average of 1.9 per cent across the forward estimates, that compares to an average of 7.3 per cent over the last decade, it also includes a fall in expenses of 1.3 per cent next financial year,” he says.

“They’re practically forecasting zero expense growth next year, my experience as treasurer would tell me that is unachievable.

“They’re also looking at no growth in non-salary expenses over the next four years and after this budget year growth and salaries expenditure of only 0.1 per cent per annum.

“Beyond that you’ve got large election commitments like the Ellenbrook rail line and the Joondalup hospital expansion not included in the budget papers.”

He says the voluntary redundancy program to shed 3000 public sector jobs would have unintended consequences and he would rather a compulsory redundancy program.

“Voluntary redundancy schemes are very problematic, the wrong people go. People that are about to retire get a real benefit,” he says.

“You can degrade the quality of your public service.

“Senior public servants tell me, and they’ve told me over many, years that they could save 10 or 20 per cent of their costs if they were permitted to manage their workforces in accordance with compulsory redundancy powers.”

With the health budget sitting at $8.9 billion – or 29 per cent of the State Budget – it still needs reining in but Ripper acknowledged the difficulty of doing so.

“It’s a long running sore, our costs are a lot higher than other states,” he says.

“Every time you try to tackle the budget, there will be pictures on the front page of the newspapers, grandmothers lying on chairs in emergency departments waiting 24 hours for treatments.”

Ripper also regaled the crowd with some of his own insights into the budget process and said while debt was politically bad, surpluses were too.

“I ran budget surpluses of $2 billion in the Carpenter Government and it became a significant public problem. People thought that I was wilfully withholding money, which  should be spent on their school or their hospital or their police station,” he says.

Get your assets into gear

Newnham told business leaders that only reining in spending and revisiting asset sales could help WA pay down its ballooning debt.

“There is no clear plan to pay down debt over the forward estimates,” he says.

“The Chamber continues to talk about asset sales and encourages the Government to revisit asset sales.

“This isn’t about the one-time sale of an asset that goes into private hands, it’s about recycling assets so you free up the cash the Government has sitting in that asset.

“You provide new infrastructure that the public owns, then you’re left with what you used to own and a shiny new asset that is productive in the economy and supporting growth.” 

Visit CCI’s website to view our expert analysis of the 2017-18 State Budget.