West Australians have been delivered an early Christmas present this year, with the State Government confirming that WA’s finances will be back in the black for the first time in six years in 2019-20.
The Chamber of Commerce and Industry WA (CCI) congratulates the State Government on today’s Mid-year Review, which confirms that it has continued to constrain expenses growth while reducing net debt by $3.7 billion since the May budget.
The Federal Government’s GST fix has delivered a major windfall to the WA budget. Even without the GST fix the budget would have returned a $206 million surplus a year earlier due to disciplined financial management by the State Government. For this, Premier Mark McGowan, Treasurer Ben Wyatt and the entire Cabinet should be congratulated. The WA Government is still the highest spending State Government in the country on a per person basis – however very good progress is being made to close the gap.
We particularly welcome the State Government’s confirmation that the $2.4 billion in GST top-ups the State will receive over the next three years will go toward debt reduction, but we urge the Government to commit to the full $4.7 billion GST reform package over the next eight years being used to pay down debt. To date, the Government has only committed the top-up funding from the GST floor, not the increase from the formula change.
Paying down debt is essential to fixing the State’s finances. Interest payments on debt will exceed $1 billion next year and will continue to increase every single year, even while net debt decreases.
This is a billion dollars a year that West Australians will pay in tax that isn’t going towards building new schools, hospitals or roads. Paying down debt with the entire GST windfall will go a long way toward reducing these interest payments which are leaking from the State’s finances.
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 cracks in the dam wall don’t start to appear and spending once again goes unconstrained. Now is not the time to become complacent and undo the hard-won repairs.
Today, WA’s unemployment rate rose sharply to the highest in the country at 6.5 per cent and the mid-year update confirms that WA has the highest payroll tax burden of any state, meaning creating jobs here is more expensive. Addressing the large payroll tax burden on business, and in particular on small business, is essential to creating more jobs which are desperately needed in WA.
CCI looks forward to continuing to work with the State Government to lift confidence in business and households by creating a stable investment climate to boost WA jobs and continue the State’s economic recovery.
Media contact: Shannen Wilkinson – 0448 928 227