West Australians knew they were getting a surplus for Christmas, but $2.6 billion is a welcome bonus when growth and confidence in the economy are lagging. It’s another clear sign that the strong financial discipline of the State Government is working.
The Chamber of Commerce and Industry WA (CCIWA) has welcomed the State Government’s release of the Mid-Year Review, which shows a higher surplus of $2.6 billion in 2019-20. We particularly welcome the constraint of government expenditure growth to 1.6 per cent per year on average over the next four years. Ensuring sustained operating surpluses provides some mitigation against WA’s exposure to global uncertainty.
The Premier Mark McGowan and Treasurer Ben Wyatt deserve credit for disciplined financial management. The 2018-19 financial year marked the first time WA’s finances have been back in the black since 2013-14. The improved position in 2019-20 locks in a second Mid-Year Review in which Government expenditure is constrained, with net debt reduced by $3.2 billion since the May budget.
The restraint in expenditure needs to continue. A revenue windfall of $1.1 billion was based on one-off increases in iron ore prices that cannot be relied on in future.
Paying down debt is essential to fixing the State’s finances. Total public sector net debt has peaked, but there is still a $36 billion debt to pay off, amounting to $17,000 for each and every West Australian. Interest payments on the State Government’s debt will exceed $900 million this year. This is dead money that could otherwise be spent on productivity-boosting infrastructure or essential services like schools and hospitals. It is critical that progress not be squandered or unwound. Claims upon government funds become louder in times of surplus and the WA economy is not in a strong enough position to sustain unnecessary and unconstrained new spending. The Government should make a new years’ resolution to keep taxes below CPI and to maintain spending discipline, particularly given our exposure to volatile commodity prices and an uncertain global economic environment.
The Government has listened to CCIWA and the business community by reducing net debt, reducing the payroll tax burden and reintroducing Perth’s status as a region for migration purposes. The Government could further boost jobs and the economy by accelerating the work of Streamline WA to remove regulatory barriers, reforming retail shopping restrictions and enabling the Roe 8 project to be independently assessed by Infrastructure WA.
CCIWA looks forward to continuing to work with the State Government to support the conditions for businesses to grow, create jobs and continue WA’s recovery.
For more on the economy visit: waeconomy.cciwa.com
