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A timely warning

THE WA Chamber of Commerce and Industry could not have better timed its gentle warning to the State’s major political parties.

The Government took great delight announcing a $303 million net operating surplus for the public sector for the 1999-2000 year – $218 million above its Budget estimate.

The result was achieved due to record revenue growth – an extra $761 million compared with the previous year, $574 million more than forecast.

Despite this, the general government sector recorded an operating deficit for the year of $10 million, $50 million better than the revised May 2000-01 Budget estimate.

So, generally, the books are balancing reasonably well.

It is a positive situation, but one the CCI is concerned the major political parties may exploit.

The chamber, WA’s biggest employer group, has rightly warned the parties of the dangers of using the Government’s sound financial position to justify pre-election promises that will be difficult to meet or come at unreasonable expense.

It points out the economy is stronger than leading up to the last poll in 1996.

It is an extremely tempting situation for politicians desperate to retain or win office.

They are salesmen selling themselves and their party’s policies and juicy promises to the electorate help close the deal.

Voters are so tired of broken election promises, apathy threatens to set in. They want transperancy.

The Government Financial Results Report (which compares the final 1999-2000 results with Budget predictions) is a means of improving that.

This was the first time the report has been released and is a result of the Government Financial Responsibility Act from July. It is a step in the right direction.

CCI senior economist Dan Engles suggested luck rather than good management was a major reason for the good fiscal result, which he described as possibly the best in five years.

He said strong economic conditions were the main reason for the growth.

The Government must take some credit for the result – which would have been a pipedream when the Liberals inherited the State’s broken economy.

Now that WA is moving, its momentum must not be impeded.

A sobering aspect of the Government’s performance was the revelation of the general government sector’s deficit, despite the revenue windfall.

Premier Richard Court said he expected the sector to trade in the black in the current financial year, pointing out the result compared favourably with the revised May 2000-01 Budget estimate of a $60 million deficit.

Not surprisingly, it wasn’t enough to impress Opposition Treasury spokesman Eric Ripper, who said the report showed the Government had delivered a State Budget in the red for the fourth consecutive year.

He was “alarmed” the latest deficit occurred despite record revenue growth.

He has a point. The proof of the Government’s fiscal policy will be its ability to deliver a budget in the black at the end of 2000-01.

Voters will soon decide if it gets the opportunity.

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