Today’s State Budget is the WA Government’s sixth consecutive surplus, supported by strong export growth and business investment.
The Government is expected to bank a $4.2 billion surplus this financial year ($3.3b in 2023-24), however net debt is not expected to peak over the forward estimates.
The Budget confirms the current strength of the WA economy, but highlights risks to the outlook as growth is forecast to plummet in coming years, says CCIWA Chief Economist Aaron Morey.
“In addition to relieving the burden of payroll tax on small and family businesses, it’s critical the State Government also accelerates its efforts to make it easier to get approvals for major projects, including by pushing the Federal Government to rein in the Federal Department of Environment, which is increasingly frustrating the efforts of WA investors,” he says.
Here’s what the State Budget means for business:
- To assist households and small businesses with cost pressures, the Government (in conjunction with the Federal Government) will deliver a $400 electricity credit for households, plus an additional $326 for high needs households, and a $650 credit for small businesses who use less than 50MWh of electricity per annum. This will benefit about 90,000 small businesses.
- Unfortunately, the Government missed the opportunity to reform payroll tax to make it easier to do business in WA.
“This means WA small and family businesses will still bear the heaviest payroll tax burden in the country, with total payroll tax collections forecast to reach $5.5b in coming years,” Morey says.
“It’s critical action is taken to reduce the burden to help alleviate the higher costs of doing business and to make WA a more attractive place to invest.”
- The Budget offers $26.9 million to support employers of apprentices and trainees in the Building and Construction sectors; base employer grant under the Construction Industry Fund up from $10,000 to $12,000 per eligible apprentice.
- $11.5m for visa subsidies of up to $10,000 to attract skilled migrants to the construction sector.
- $4.2m towards encouraging completion of apprenticeships and traineeships in the building and construction industry through a $2,000 completion payment and $500 tool allowance.
- Synergy will receive $2.7b to build battery storage capacity (including the Collie Battery Energy Storage System, 500MW, and the Kwinana Battery Energy Storage System 2, 200MW).
- $368m for Synergy to develop 210MW of wind generation capacity including the King Rocks Wind Farm and a proposed expansion of Bright Energy Investments’ existing Warradarge Wind Farm.
- $196m to build WA’s third desalination plant at Alkimos and deliver a range of other climate initiatives.
- $750m directed at housing and homelessness needs of the State, including a $450m top-up to Social Housing Fund. This is expected to bring the total number of social housing up to 4,000, taking pressure off WA’s rental market.
- Extended off the plan apartment rebate to mid-2025.
- $2.7b spending on health, including $544m for the new Women’s and Babies Hospital.
- Several initiatives aimed at boosting workforce shortages, particularly in regional WA.
Transport, roads & ports
- $136m for essential projects that will increase port capacity and diversify exports.
- $294m of additional investment in road, port and electricity infrastructure to support economic development and diversification.
- $40m Sustainable Geoscience Investments package to accelerate critical minerals discoveries to help meet demand for minerals used in new battery technologies.
- $35m top-up of the Industrial Land Development Fund to support private sector investment aimed at planning and de-constraining initiatives to attract investment.
- $28m to support the State’s invest and trade initiatives, including establishing a new Invest and Trade WA office in Texas to enhance our relationship with the Americas.
- $22.5m to accelerate the environmental approval process for green energy proposals.
- $253m being allocated to the Digital Capability Fund, which will deliver 30 ICT initiatives to improve digital service delivery.
“The State Government has taken some steps to diversify the economy, including a $40m Sustainable Geoscience Investments package to accelerate critical minerals discoveries, an expansion of the New Industry Fund, and funding for the previously announced Trade and Investment Office in Austin, Texas,” Morey says.
“It should remain open to do more given the transformative efforts from other economies, notably the US and Canada, to redirect capital flows to drive decarbonisation.”
WA’s economy is expected to grow by 4.25% in 2022-23, the strongest growth in nine years.
Net debt is expected to fall to $27.9 billion as at 30 June 2023, the fourth consecutive annual decline.
The Government expects inflation to shrink next year, falling to 3.5%. However, growth will reach just 1.5% at the end of the Budget forecast period.
“Conditions in the WA economy are strong and are forecasted to remain resilient even as we face the challenges of rising interest rates and global economic volatility,” says Premier and Treasurer the Hon Mark McGowan MLA.
“[This Budget] has put us in a position to support Western Australian families and communities, enhance public services and continue our record investment in the State’s future.”
This article was in partnership with Australian Retirement Trust.
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