12/01/2018 - 12:08

Action needed on budget repair

12/01/2018 - 12:08

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To a large degree, Labor’s big budget repair plans have stalled, while newcomers on both sides of the aisle find their way around their house on the hill.

Action needed on budget repair
Ben Wyatt hopes to achieve a $926 million budget surplus by 2020-21, despite the current inertia. Photo: Attila Csaszar

After almost 12 months in office, Premier Mark McGowan and his Labor team can be thankful for one thing – the opposition parties have had just as much trouble adjusting to their new role as has the government.

Only six Labor MPs with ministerial experience in the Alan Carpenter government (before the 2008 election loss) are in the current cabinet, including Alannah MacTiernan who managed to win a term in the House of Representatives in the interim.

So, much of the past year for the newcomers has been devoted to bedding down their generously staffed ministerial offices and coming to grips with their portfolios, many of which have been subjected to considerable restructuring.

‘Budget repair’ has been the catchcry of Mr McGowan and his Treasurer Ben Wyatt, thanks to the record budget deficit and state debt they inherited from Colin Barnett’s Liberal-Nationals alliance.

But precious little in the way of repair has actually been achieved. Householders have been slugged with hefty increases in power and water charges. (Labor claimed during the election campaign the increases under the alliance would be tougher, but we’ll never know.) However, Labor’s big budget hit, an increase in the gold royalty to raise $392 million over four years, was defeated in the Legislative Council.

So budget repair has never really got off the ground. Nevertheless, Mr Wyatt is generating confidence that a budget surplus – a healthy $926 million in fact – can be achieved by 2020-21, an election year. The expected source of this windfall is a big comeback in repayments from the GST, according to Mr Wyatt.

For example, the GST is expected to return $2.22 billion to Western Australian coffers this financial year, about 34 cents in the dollar of the state’s share that would apply under a per capita basis. 

But thanks to the three-year lag in the Commonwealth Grants Commission’s formula for the GST’s carve up, and WA’s economic hangover after the frenzy of the resources boom, that will more than double to an estimated $4.63 billion by 2020-21.

So just as the GST payments evaporated (as predicted by the Treasury) under former Liberal premier Colin Barnett’s leadership, so they will assist a return to Mr Wyatt’s hoped-for surplus budget within four years. Nevertheless, it’s still a long shot, and Mr Wyatt’s performance will be measured against the desired improvement in the state’s finances during this term.

One minister whose contribution has caused grief for most of the first year has been Sue Ellery in the education portfolio. As government leader in the upper house, she ranks third in the cabinet. But she has been accident-prone.

Her first gaffe was the handling of the proposed change of status for public education’s flagship Perth Modern School, and the introduction of a new high school in a city tower building. Efforts to sell the proposal failed dismally, and the government (sensibly) beat a hasty retreat.

However, despite the parlous state of the finances, she did deliver on the election promise to employ an extra 350 support workers in government schools, even though WA has one of the best support worker-pupil ratios in the country.

Hopefully that will help achieve better results in schools – including where classroom harmony is under challenge – as well as deliver extra members for the influential United Voice, which supports Ms Ellery and several other senior ministers.

Ms Ellery’s second gaffe was education spending cuts announced just before Christmas; that led to another backflip this month, when the government reversed planned cuts to School of the Air and the gifted and talented program.

The Liberals and Nationals also struggled, partly because few on their front bench, including both leaders – Mike Nahan (Liberal) and Mia Davies (Nationals) – had experienced the harsh reality of opposition. The two leaders, plus former ministers such as Dean Nalder, Liza Harvey and Sean L’Estrange (Liberal) and Terry Redman (Nationals) will be expected to strongly challenge the government when parliament resumes on February 13.

Meanwhile, Mr McGowan has generously invited Mr Barnett to join him for the official opening of the $1.4 billion showpiece Perth Stadium at Burswood, later this month. Remember five years ago – Mr McGowan’s preferred site was Subiaco.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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