Barnett inherits strong state finances

22/10/2008 - 22:00

THE state government posted a record surplus in 2007-08 of $2.56 billion, fuelled by significant growth in mining royalties and taxation revenue.

Barnett inherits strong state finances

THE state government posted a record surplus in 2007-08 of $2.56 billion, fuelled by significant growth in mining royalties and taxation revenue.

It was a dramatic year for the government, with the shock election victory of the Liberal Party, led by now premier Colin Barnett, breaking the wall-to-wall Labor governments across the country.

The former Labor government has handed over a strong set of finances, generating $19.28 billion in revenue in 2007-08, up 10.5 per cent on the previous year.

One of the biggest contributors to revenue was taxation, with revenues from taxes rising 10.8 per cent to $6.33 billion.

Within taxation, stamp duty ($3.1 billion, up 6 per cent) and payroll tax ($1.88 billion, up 20.6 per cent) brought in the most revenue.

Mining revenue also boosted the government coffers, contributing $2.5 billion, up 15 per cent on the previous financial year.

Iron ore alone generated $1.1 billion in revenues for the government, up 30 per cent on the previous year, with petroleum the second largest generator of mining revenues, up 19 per cent to $850 million.

Despite the overall increase, the result was 1.1 per cent lower than budget estimates due to higher than assumed $US/$A exchange rate of US89.7 cents, compared with the 2007-08 budget assumption of US79cents.

Lower nickel royalties, with the average spot price decreasing by almost 25 per cent in 2007-08, and production falling below expectations due to unplanned maintenance at key plants, also contributed to the result.

Government expenses for the financial year totalled $16.71 billion, up 10.3 per cent on the previous year.

Education and training and health made up almost half of the government's total expenses, at $4.4 billion and $4.2 billion respectively.

The government delivered a record capital works program of $6 billion, up on the $5.1 billion posted in the previous year.

The state's capital works program has grown at an average rate of 18.9 per cent a year during the past five years.

In per capita terms, fixed asset spending in 2007-08 equated to around $2,327 per person, more than double that of five years ago.

With the change in government comes uncertainty over future capital works spending, with the new government committed to delivering the Nationals WA's Royalties for Regions policy.

The policy entails the equivalent of 25 per cent of all royalty payments to the state being set aside each year for reinvestment into regional WA, over and above current and budgeted expenditure.

But there is now disagreement between Premier Colin Barnett and Nationals WA leader Brendon Grylls over whether the funding will be in addition to the amount allocated in existing four-year forward estimates.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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