The state government has announced an unexpectedly large operating surplus of $831 million for 2009-10 defying concerns that the state might fall into deficit.
The state government has announced an unexpectedly large operating surplus of $831 million for 2009-10 defying concerns that the state might fall into deficit.
The result was $541 million higher than was estimated in the May budget and $780 million higher than the revised surplus of $51 million announced in December last year.
Premier Colin Barnett said the surplus reflected higher royalties from iron ore, which was up $107 million and $164 million in grants from the Commonwealth and North West Shelf.
The result also reflected lower dividends and tax equivalent income from public corporations, which was down $141 million and lower than expected salary expenditure, which was down $140 million.
Total public sector debt was $9.9 billion at June 30, $1.6 billion lower than expected in the 2010 budget.
However, it was an increase of $3.2 billion on the previous year.
Mr Barnett said the improved surplus was the result of the lowest underlying growth in salaries expenditure since 2000-01 and the recovery of the property market.
As a result of the surplus, Mr Barnett said $100 million would be allocated into a special trust fund for the New Children's Hospital.
"I am very pleased that we will be able to set aside this money to pre-fund construction of the New Children's Hospital as a result of our financial discipline over the past year," said Mr Barnett.
The $100 million will be in addition to the $350 million one-off payment from the royalties deal struck with BHP Billion and Rio Tinto.
Shadow Treasurer Ben Wyatt said the larger than expected windfall came on the back of savage hikes in household bills.
"Household bills have delivered Colin Barnett a massive $190 million windfall," he said.
"Western Australian familites are not the only source of windfall revenue to the Barnett Government."
Mr Wyatt said GST revenue was up $258 million, property transfer duty had increases $416 million and Payroll Tax was up $87 million.
He said he was concerned the surplus did not amount to improved funding investment in the state.
"Spending on capital works for 2009-10 was $1.45 billion less than budgeted," Mr Wyatt said.
See full statement from the Premier below:
The State Government has recorded a general Government sector operating surplus of $831million for 2009-10, $541million higher than estimated at the 2010-11 State Budget in May.
The surplus mainly reflects the net impact of:
- higher royalties, mostly from iron ore (up $107million)
- higher North West Shelf grants and other Commonwealth grants, such as for non government schools (up $164million)
- lower dividends and tax equivalent income from the State's public corporations (down $141million)
- lower than expected salaries expenditure, as the Government's spending control measures began to have a more noticeable impact on employee costs (down $140million).
Premier Colin Barnett said the improved surplus was the result of the lowest underlying growth in salaries expenditure since 2000 01 and the recovery in the property market.
"The State Government's sound financial management, combined with a faster than expected economic recovery, have ensured that the State's finances remained firmly in the black in 2009 10," Mr Barnett said.
Other highlights in the 2009-10 Annual Report on State Finances include:
- record infrastructure investment (in hospitals, schools, roads, electricity infrastructure, etc) of $6.8billion. While this is $334million lower than the estimated outturn at the time of the 2010 11 State Budget, it is up $1.0billion on the previous record outcome in 2008 09
- total public sector net debt of $9.9billion at June 30, 2010, which is $1.5billion lower than expected in May 2010 but represents an increase of $3.2billion on the previous year.
Excluding extraordinary spending factors such as the on passing of Commonwealth stimulus funding, general Government expenses grew by 7.7 per cent in underlying terms in 2009 10, which is the lowest rate of expense growth since 2005 06.
Of note, underlying growth in salaries expenditure was just 5.7 per cent, the lowest rate of growth since 2000 01. This can be attributed to a number of Government initiatives, including a ceiling on staffing numbers, voluntary severance schemes and the implementation of a new public sector wages policy.
- The ceiling on staff numbers has resulted in an improved focus on the measurement and management of employees across the public sector. In this regard, the Public Sector Commission's June quarter report shows that the average level of full-time equivalent (FTE) employees in the year to June (102,863) is below the approved 2009 10 FTE ceiling (102,911)
- The Government also assisted 802 staff exit the public sector during 2009 10 under its voluntary severance programs, at a total cost of $80.5million.
"These are very positive outcomes achieved against a challenging year for the Western Australian public sector," the Premier said.
After achieving a better than expected surplus for the 2009-10 financial year, Mr Barnett confirmed the Government would allocate $100million into a special trust fund to the New Children's Hospital.
"I am very pleased that we will be able to set aside this money to pre-fund construction of the New Children's Hospital as a result of our financial discipline over the past year," he said.
"This will be in addition to the $350million one-off payment from BHP Billiton and Rio Tinto to the New Children's Hospital after the conclusion of the historic royalties agreement in June this year."
Construction on the New Children's Hospital, which will have about 250 beds and the State's only tertiary paediatric trauma centre, is scheduled to start in 2012 and be completed in 2015.
The 2009 10 Annual Report on State Finances is available from the Department of Treasury and Finance website at http://www.dtf.wa.gov.au/.