$2.3bn budget surplus record

23/10/2007 - 22:00

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The state government posted another record budget surplus in 2006-07, of $2.3 billion, fuelled by strong growth in mining royalties and taxation revenues.

$2.3bn budget surplus record

The state government posted another record budget surplus in 2006-07, of $2.3 billion, fuelled by strong growth in mining royalties and taxation revenues.

The government recorded $17.4 billion of revenue for the past financial year, up 7.7 per cent but well below the 14 per cent growth in 2005-06.

Such figures prompted Treasurer Eric Ripper to declare that revenue growth had already peaked, with the state unlikely to experience the extremely high revenue growth levels of previous years.

Net debt reached its lowest level on record, with total public sector net debt falling to $2.9 billion million at June 30 2007, delivering a net debt-free general government sector for the fourth consecutive year.

Taxation revenues, up 10 per cent on last year, boosted the government coffers, led by a strong increase in payroll tax on the back of wages and general employment growth.

Higher commodity prices pushed mining revenue 23 per cent higher than last year to more than $1.4 billion, despite being $79 million, or 3.5 per cent, less than the original budget estimate.

The biggest contributors to revenue, by sector, were petroleum, iron ore and nickel, which staged the most significant increase, up 122 per cent on last year.

In a year of records, the government also delivered a record $5.1 billion capital works program, up $666 million on the previous record achieved in 2005-06.

The capital works program equates to roughly $2,000 per person, up from $1,000 per person spent in the 1999-00 financial year.

General government expenses grew 8.6 per cent on the previous year, slightly higher than budgeted growth of 7.7 per cent.

The consolidated account, the central account of government managed by the Department of Treasury and Finance, recorded a significant cash surplus in 2006-07 of $1.3 billion.

In total, $1.09 billion of the surplus has been committed to the debt-free construction of the Fiona Stanley Hospital, with $50 million contributed to the costs associated with the New MetroRail project, ensuring the project is debt-free on completion.

Remaining surplus funds will go towards repaying Building Management Authority’s $116 million debt, and the $32.9 million debt held by the Fire and Emergency Services Authority, saving the government $12 million in annual interest costs.

WA’s share of commonwealth GST grants, the second largest contributor to state revenue, are forecast to fall substantially between now and 2010-11, which is likely to have a flow-on effect on the state’s budget surpluses.

Based on government projections, the current strength of WA’s revenue raising capacity may lead to a drop in GST grant share from 10.1 per cent in 2006-07 to 7.5 per cent by 2010-11, equivalent to a loss of $1.4 billion in grant share in 2010-11.

In 2005-06, the commonwealth made a $5 billion surplus from WA, with the state contributing more per capita than the other two net contributors, New South Wales and Victoria,

This was up by $1 billion on the previous year, primarily due to increased company taxes and offshore petroleum tax revenue.

The government followed the announcement of its record surplus by unveiling a new $238 million housing affordability package targeting low income households, public housing and land supply in regional areas.

These measures were in addition to housing affordability measures announced in the last budget, which included cuts to stamp duty, the abolition of letting fees, a $300 million shared equity program and additional funding to increase public housing numbers.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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