Expect costs to rise as falling revenue streams put pressure on the Barnett government’s ability to balance the budget bottom line.
Expect costs to rise as falling revenue streams put pressure on the Barnett government's ability to balance the budget bottom line.
IT has only been five months since Colin Barnett’s slashing election win, but already the premier has used up much of the political capital he accrued in that March victory.
The tough state budget is just the latest example.
His problems won’t end with the budget, however; things will get tougher before they get better. The budget challenges leave the government with no alternative. The test will be whether Mr Barnett and Treasurer Troy Buswell have the nerve required to do the job.
The first cause for disquiet was the proposed new boundaries linked with shrinking the number of metropolitan councils from 30 to just 14.
It’s clear that there are plenty of government MPs being bombarded by constituents with grizzles about the new boundaries. Some councils still oppose amalgamation, although the case for rationalisation is strong.
The main beef now seems to be the actual boundaries, especially in inner suburbs where the critics believe ‘community of interest’ has been overlooked. The government members, including new Perth MP Eleni Evangel, are working overtime to find compromises to placate their agitated constituents. Mr Barnett is optimistic that, with a certain amount of ‘tweaking’, general agreement can be reached. He has expressed confidence that there will be no forced amalgamations, an assurance he made in the heat of the election campaign. Time will tell.
It was Mr Buswell’s turn to play bad cop with his state budget. On the surface the document doesn’t appear unusual. Spending and revenue are both tipped to rise by about 8.5 per cent, producing a forecast surplus of $386 million.
The government has targeted some surprising areas to help achieve the surplus, however, and managed to slug a number of groups, including traditional supporters.
Halving the concession of $72 to register privately owned vehicles is another hit for families. So too would have been the proposed 50 per cent reduction in the fee paid for electricity generated by solar panels. The humiliating back down after the angry reaction from the 75,000 households affected was politically wise given the proximity of the federal poll, but Mr Buswell will now have to look elsewhere to protect his budget surplus.
There was a mixed reaction from the property and housing sectors over the decision to increase the first homeowner grant for new houses by $3,000, to $10,000. Mr Buswell explained this was to encourage house building.
The builders were happy, but the Real Estate Institute of WA is alarmed at the reduction of the grant for first buyers of existing homes to $3,000 (down $4,000), pointing out that government revenue based on the changes could actually take a hit.
Not publicised in the treasurer’s speech was the decision to introduce a $2 fee for commuters who park their cars at railway stations. At the 2010 election, the contest seemed to be which major party could promise the most additional free parking bays. They won’t be free much longer.
An additional cost for commuters was foreshadowed when Mr Buswell noted that the government only gets about 31 per cent of the cost of each trip though fares. The new target will be 40 per cent. That means steeper fare increases over the next few years – another hit on families.
While much prominence was given to the Liberal commitment to the airport rail link, the MAX light rail service, and the grandly named ‘Perth-Darwin Highway’ (read Swan Valley bypass), work on the rail lines will not be completed until 2019, one year later than promised. And doubts persist as to the merits of the airport link, let alone the Ellenbrook rail connection, which Labor continues to push.
Mr Buswell’s job gets harder in 2014-15. According to the budget papers, and using the new revenue settings, total revenue actually declines next year for the first time in living memory – down $61 million – while spending jumps by $473 million. The result is a projected deficit of $147 million.
Turning that into a surplus will be Mr Buswell’s project for the next nine months. He has promised a rigorous reassessment of government programs, and hasn’t ruled out asset sales, which were extremely helpful to Richard Court’s efforts to help balance budgets in the 1990s – think BankWest, the Dampier-to-Bunbury gas pipeline, AlintaGas, and the country rail network.
National Party leader Brendon Grylls has also agreed to do his bit to keep the budget in the black, noting: “Royalties for Regions is a $4.8 billion program across four years. I have offered $536 million across those four years as savings to protect the state’s AAA credit rating, with decisions such as funding the agencies of regional development and other capital works expenditure.”
If other sources fail to pick up, Mr Grylls might be called on again to avoid further painful attacks on the hip pocket.
By then the government will be hoping that voters forgive … and forget.