State Budget 2018 – what it means for business

The CCI has congratulated the State Government on its confirmation that it remains on track to achieve a surplus by 2020-21, and is forecast to spend $2.8 billion less over the forward estimates.

Maintaining a surplus for 2020-21 and reducing net debt was the highest priority recommendation from the CCI.

CCI Chief Executive Officer Chris Rodwell said some external factors have contributed to the State’s finances, namely rallying commodity prices, an expected boost to household consumption, an upgrade to the national pool of GST – giving WA an extra $124 million – and a cash injection for infrastructure from the Federal Government.

“This has given the Budget a much-needed boost, but unless the Government’s spending continues to be reined in it will be a small drop in WA’s debt ocean,” Rodwell said.

“CCI welcomes the Government’s strong focus on reining in spending which will reduce the size of the government from the unsustainable peak this year of 12.6 per cent of the economy to 11.7 per cent in 2021-22. This reduction in government spending is taking the Budget toward pre-boom size which is strongly welcomed by CCI.

“The WA Government is still the highest spending State Government in the country on a per person basis – however good progress is being made to close the gap.

“CCI has consistently advised the Government they have a spending problem, not a revenue problem, and this advice has clearly been heard. It will take continued discipline from the Government to ensure it can meet its ambitious expenses growth reduction forecasts.

“We urge the Government to continue to consider new models to deliver services in partnership with the private sector in order to accelerate its savings effort and improve the lives of West Australians.

“Revenue measures such as an increase to the Foreign Buyers Surcharge would however not be necessary if the Government focussed its entire efforts on reducing spending, given WA continues to be the highest spending state per person.”

CCI welcomes the Government’s confirmation that it will continue to review the sale of Landgate and the TAB.

“Recycling assets will allow the Government to pay down debt and invest in new infrastructure that will create jobs and ensure WA’s skilled workforce remains in the state,” Mr Rodwell said.

“We encourage the Government to continue to review all State-owned assets for sale, including Western Power, which if partially sold would wipe almost $11 billion off net debt.

“CCI welcomes the provision of $750 million over the forward estimates for METRONET to boost WA jobs and $15.3 million for the establishment of Infrastructure WA to drive a long-term strategic approach to planning and the prioritisation of infrastructure across WA.

“CCI has long called for an independent infrastructure body to provide transparency and certainty to industry around the State’s pipeline of works and their timing to ensure businesses can plan their investments, manage their workforce, and retain critical specialised skills within the state.”

CCI supports the Government’s changes to water pricing and closing the gap between the true cost of electricity and what households are charged in their bills to drive greater efficiency.

“Although increasing charges on some households is not ideal, the proposed changes to water pricing will drive behavioural change that ensure that the heaviest users of WA’s precious water will pay a premium for that use,” Mr Rodwell said.

“Customers should be paying bills that accurately capture how much it truly costs to generate, transmit, distribute and sell power – ensuring cost reflectivity will create the appropriate environment for other electricity retailers to enter the WA market, creating greater competition in power prices and driving costs down for the long-term benefit of consumers.

“This Budget reflects the additional revenue the Government will receive from business by restricting the Payroll Tax Exemption for trainees – a second payroll tax hit by this Government. This change puts WA jobs and skills at risk and damages the State’s long-term economic recover.

“No funding has been committed in this year’s Budget for their proposed Grants Scheme which confirms that the Government has no plan for training in WA to replace the removal of the Payroll Tax Exemption, despite traineeship numbers already being in freefall.

“CCI looks forward to continuing to work with the Government to sort through this issue to support business investment and job creation.”

Read the full State Budget analysis here.

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