/WA Budget back in black as Treasurer Ben Wyatt forecasts five years of surplus

WA Budget back in black as Treasurer Ben Wyatt forecasts five years of surplus

Updated

May 09, 2019 16:58:00

Premier Mark McGowan has declared Western Australia is “back on track” after his Government delivered the state’s first budget surplus in five years, on the back of a surge in Commonwealth grants, iron ore royalties and GST top up payments.

The surplus will reach $553 million this financial year and a total of $9.3 billion over the next four years, although much of that is already allocated to spending on Commonwealth infrastructure projects.

“Western Australia is back on track. We are now officially back in surplus. A real surplus, right here, right now,” Mr McGowan said.

After big hits to household fees and charges in the Government’s first two budgets, the pressure would be eased this year, with electricity prices tied to inflation and increasing 1.75 per cent in 2019-20, or an extra $30 a year.

Mr McGowan trumpeted the lowest overall rise in fees and charges in 13 years, and said WA was the only state where net debt was forecast to decrease over the next four years.

But state debt remained high and was due to peak at just under $37 billion in 2019-20, a figure that was $4.1 billion lower than forecast under the previous Barnett government, with $508 million in saved repayments.

Money for hospitals, security, serial killer trial

In a new announcement, the expected $300m sale of the TAB would help build a new women’s and children’s hospital to replace the ageing King Edward Memorial Hospital.

Once the TAB was sold, 35 per cent of the proceeds would go towards a racing infrastructure fund and the other 65 per cent would go towards the new hospital.

Treasurer Ben Wyatt denied the two were being tied to force a sale.

“There is no politics being played at all,” Mr Wyatt said, adding funding for the hospital would also come from other sources.

Fulfilling an election promise, the Government has committed $52 million in initial money to establish a Health Research and Innovation Fund, which it hoped would attract the best and brightest medical researchers.

Interest from the Government’s general Future Fund would provide ongoing money for the health fund.

In other new funding, $5.4 million would be spent to improve security, such as new bollards, at Optus Stadium and Perth Oval.

There would also be an extra $2.6 million allocated towards the trial of alleged Claremont serial killer Bradley Edwards, expected to run for nine months.

Increases to fees and charges reined in

Mr Wyatt rejected any suggestion the decision to keep increases to household fees and charges low was aimed at not annoying voters ahead of the May 18 federal election.

He said it had become apparent substantial increases to power bills over the last two years were hurting people.

“The decisions were made with our own priorities in mind,” Mr Wyatt said.

There would be a 2.5 per cent increase to water charges in 2019-20, a 2 per cent increase to standard public transport fares, no increase to student fares and a 3 per cent increase to vehicle licence charges.

The overall basket of household charges is rising by 2 per cent, or $127 for the average household.

Mr Wyatt said keeping those fees and charges low would cost the state $301 million in revenue.

The Opposition had called for a freeze on any increase to electricity and other charges, saying households were already struggling and any increase would drive many more over the edge.

But Mr Wyatt said that was not going to happen.

“The problem with a freeze is it creates a time bomb, a freeze holds down what will come down inevitably,” he said.

More money for Metronet

The Government would be spending $4.1b on developing its Metronet rail network over the next four years.

The Yanchep rail extension, the Thornlie-Cockburn link, the Ellenbrook line and the Bayswater station upgrade were all due to start construction this year.

The state would receive Commonwealth grants worth $654 million over the next four years, including for major projects such as the Fremantle bridge replacement and Tonkin Highway improvements.

But Mr Wyatt acknowledged that if Labor won the Federal Election, there would be more funding for the Government’s signature Metronet rail network.

In his budget speech to Parliament, Mr Wyatt said the budget would have returned to surplus even without the GST top-up payments, which would total $5 billion by 2021-23.

He added the unexpected boost from iron ore royalties this year was a result of a global supply shock from the Vale tailings dam disaster in Brazil, which saw iron ore prices spike to more than $US90 per tonne.

But he did not believe prices would remain at that level, with the budget forecasting an iron ore price of about $US70-80 a tonne in 2019-20, and lower after that.

Mr Wyatt said the continued fiscal restraint meant average government expenses growth would be limited to 1.3 per cent over the next four years, compared to an average growth of 6.4 per cent under the Barnett government.

The state’s economy was forecast to grow by 3.5 per cent next financial year and by 3 per cent in each of the following three years, while the unemployment rate was forecast to drop below 6 per cent by 2020-21, from its current rate of 6.1 per cent.

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First posted

May 09, 2019 16:02:17