03/03/2009 - 15:29

Barnett bullish on WA economy

03/03/2009 - 15:29

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Premier Colin Barnett continued talking up Western Australia's economy in the face of further bad global news, but also issued a warning that the state had to be treated fairly by the rest of the nation.

Barnett bullish on WA economy

Premier Colin Barnett continued talking up Western Australia's economy in the face of further bad global news, but also issued a warning that the state had to be treated fairly by the rest of the nation.

Far from the doom and gloom that has pervaded many political leaders, Mr Barnett believes that WA's economy may actually be a counter-cyclical balance to the rest of the nation, with significant cashed-up resources houses looking at new investment here as lower costs and the weak Australian dollar make the state affordable for long-term projects.

He added that WA's resilience would be underscored by the 3 per cent cut in government spending, including the axing of more than 500 government boards and committees which will amount to the loss of hundreds of paid positions.

But he said the Commonwealth funding was needed if specific infrastructure projects, such as the sinking of the railway at Northbridge, were to go ahead this year. Furthermore, he said WA's population would not wear an unfair distribution of GST grants which left the state hundreds of millions out of pocket.

"We can be a counter-cyclical force in this recession," Mr Barnett said in a speech today to the Committee for Economic Development Australia.

"Thousands and thousands of jobs can be created.

"The history of this state is major advances are achieved in difficult times."

Mr Barnett said he has been surprised by the number of cashed up companies that are revisiting projects put on hold during the boom due to the costs or other impediments.

He said WA had to develop better ties with regional city states where the major customers were based, singling out the development of a special relationship with Singapore to become a banking and trading partner.

On the question of tax reform, Mr Barnett said it was difficult in an environment where the government had already lost $1 billion in budgeted revenue to go beyond trying to achieve $200 million in tax cuts promised in the election.

The premier suggested the biggest area of reform needed was in the Commonwealth's system of redistributing the GST revenue among the states.

"Under the tax sharing arrangements with the GST WA is in danger of being done over," he said.

"With 11 per cent of the population we may only get back 60 cents in the dollar.

He said this unfairness would test the current system.

"I don't think the Federation can sustain that, I don't think people would accept it."

WA has moved from being in a position of net gain under the GST distribution to one of net loss.

Mr Barnett said that for equity to be maintained there needed to be a cap on redistribution, suggesting a limit of around 20 per cent of original share.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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