It’s a year this week that Mark McGowan’s Government was elected into power. He’s in a great frame of mind – Optus Stadium has opened, the State’s finances have improved slightly since Budget day in September, WA’s employment figures are improving and the economy is showing some green shoots.
The Government has been beavering away on improving efficiencies, creating jobs, diversifying the economy and getting the State’s finances back on track. It’s not been without controversy: a broken promise, a backflip and a wayward MP.
McGowan admits the hype surrounding the opening of Optus Stadium is a good symbol of an improved economy: “I think the economy has been showing very strong signs of a rebound now for six months or so. The stadium was a good symbol of that and the fact that it will allow us to attract good events and the like is important.
“We have seen rapid growth in employment, large numbers of people getting jobs and a decline in our unemployment rate. It’s been a great sign, actually. We no longer have the highest unemployment in the country. Whereas a year or so ago, we did.
“I think we are now down at the second lowest level of unemployment after NSW and I expect to see that trend continue. Some of the job-creating projects the Government’s got underway, some of the other reforms we have plus the fact that we have stable Government in WA again are good sign.”
It’s no surprise job creation comes up a lot in our interview given that the ‘WA Labor Plan for Jobs’ was a key election commitment. Projects range from new schools, a new museum to Metronet, port projects and road projects. This month, McGowan hopes to launch the Jobs Bill – which emphasises the use of local content.
“In terms of the Jobs Bill … considering the State spends about $5b a year on infrastructure and billions more on procurement, that at least gives some confidence to industry that we are doing our best to make sure local industry gets their fair share.
“I’m not sure most small business people know what we’re trying to do. But once we launch it later this year and show how it will work, we hope it will make a material difference.”
McGowan says the Government has also been focused on diversifying the economy and repairing the finances.
“As a Government, we have to do two things simultaneously. One is to create jobs, confidence and an environment for investment and activity and, at the same time, repair the shocking financial legacy we were left – the worst in the country and the worst in history.
“Those are the two things we have to balance at the same time. We’re doing our best to do that. Obviously at times when engaging in budget repair, you upset people. But broadly speaking I think the people of the state want to get the budget back on track. Getting the State’s budget back on a surplus path is very important.
“Also at the same time we are keeping a strong capital works program and securing as much federal money as we can for job creation and making sure we continue our efforts to keep mining strong but to also diversify the economy.”
While McGowan maintains it’s the previous government’s fault he inherited finances in the red, he says he won’t sell Western Power, Water Corporation, Fremantle Port or Synergy.
“The general government sector increased debt levels massively over the past eight years,” he says. “Basically, they were in surplus nine years ago but now we have a huge general government sector debt – and that’s the issue.
“Getting ourselves back to surplus so we have continuing paydown of that debt over time is the most important thing.”
While aiming to be back in surplus by 2020-21, McGowan says this is subject to ‘a lot of contingencies’.
“Who knows what’s going to happen in North Korea, China or what Donald Trump is going to do? They are outside our control but we are aiming to get back to surplus by 2020-21,” he says.
While the Government might have changed its mind on plans for savings in education, he stands firm that the Government is doing its best, with the mid-year financial projections showing the State’s finances have improved $568 million over the forward estimates since the September Budget.
“I’d say we listened to people but you’ve got to remember our heart is in the right place,” McGowan says. “We’re trying to get the State back on track.
“We had a view and we’ve admitted we made a mistake in trying to remove some of the duplication in education. We went a bit too far, so we pulled back on some of it. If we just continue down the pathway of the last Liberal National Government of just drowning in debt and deficits, future generations will have a rude awakening.”
Wins and mistakes
McGowan says he gets on well with business people who ‘know we are trying to do the right thing by the State’.
“They know that, at times, they won’t like the things we do. For instance, some people like the fact that we saved the Helena-Aurora range the other week, which is a mountain range that was recommend twice by the EPA not to be mined. So, we agreed with the EPA. Some other business people won’t like that.
“But they know that at least we had a considered process and a proper decision-making process – and that our hearts are in the right place about it.”
Reflecting on the furore over the gold royalty increase, he stands firm that the industry can afford it.
“In fact, lots of them said it to me that ‘gold could afford it’. It was a net $14 that they would have to pay to help the tax payers – and they are making about $600 an ounce. So, $14 out of $600 – it was insignificant to them.
“The fact that I’ve rejected tearing up the State agreement acts with Rio and BHP – I think most people respect the fact we’ve avoided a serious sovereign risk there. I get on pretty well with most business people.”
Fight for GST
McGowan feels WA is in a good position to lobby for a better share of GST and says he will continue to talk to Prime Minister Malcolm Turnbull and the Opposition about GST and funding for capital works, of which he says WA has not received its fair share.
“There’s a federal election coming so it will obviously be a significant election issue here. I will be putting pressure on both sides in relation to that,” he says.
He expresses incredulity at other states’ reaction to WA’s stance on the GST.
“What I find Orwellian is that they say ‘hands off our GST’.
“I went to Tasmania for COAG back in June and I was confronted by the front page of the Hobart Mercury with my photo on it saying ‘Hands off our GST’. It’s the most twisted logic I’ve ever heard. And I have the Tasmanian Premier on the front page saying ‘How dare he come over here and try and take our money’.
“In any event, there is some resistance from other states but it’s good for the nation if there is a readjustment of the GST arrangements. It’s also good for the nation if WA gets a fair share of infrastructure and defence and a few others.”
Fight for defence
With the appointment of Rear Admiral Raydon Gates and the establishment of Defence West, McGowan says WA now has a structured approach to obtaining a fair share of defence work from the Federal Government. Recognising the gap, CCI established the WA Defence Industry Council several years ago to bring together WA’s defence industry to work with federal and state governments to promote WA’s elite defence capabilities and competitive advantages.
“One of the tragedies of the past eight years is that there was no effort put into Western Australia –and South Australia garnered 90 per cent of it. I can’t unravel that failure, but what we can do now is make sure that we have an aggressive State Government approach to obtaining defence jobs,” McGowan says.
“There will be contracts spinning off from those particular shipbuilding projects in Adelaide that WA can compete for and the State is now engaged in doing that. It wasn’t engaged before.
“You think about those contracts – its $90b worth, the equivalent of Gorgon and Wheatstone. That’s a big thing and, knowing Defence, it will probably blow out from that. So, it’s a significant amount of work we have to try and get our share of.”
Stability in a ‘mad world’
When asked what his biggest achievement is in the first year of office, McGowan has a clear response. “Ha! To have a stable, sensible, reasonable government in Western Australia focused on creating jobs, opportunities, fixing the budget and listening to people makes us virtually unique in a world of mad governments,” he laughs.
► This article first appeared in Business Pulse, CCI’s monthly magazine profiling the state of business in WA. Click here to view the March edition.
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