Boom time budget numbers as revenue surges

Higher iron ore prices and a hot property market will boost the state government’s operating surplus to $3.1 billion, but that money doesn’t stay in the bank.

The operating position improved by $962 million since the mid-year review in December, according to the Treasury's pre-election financial projections statement released today.

Borrowing is still rising.

That’s because the budget will remain in cash deficit, which includes spending on infrastructure and capital items, until the 2024 financial year.

States report their budgets in operating terms, including only recurrent items, unlike the federal government which reports on a cash basis and includes capital spending.

The state’s cash deficit will be $814 million in the 2021 financial year, down from a previously projected $2.3 billion.

Net debt will peak at $40.4 billion in 2023, a lower level than the December projections.

Effectively, the higher operating surplus goes towards funding planned infrastructure projects, which the government would otherwise have borrowed to pay for.

Opposition leader Zak Kirkup said the operating surplus was staggering, and said small businesses were pushed to the edge during the lockdown.

“We want to make sure the books are properly balanced but at the moment the Labor Party is sitting on mountains of cash while the rest of the state is in distress,” Mr Kirkup said.

Rivers of iron

Revenue will increase a whopping 13.9 per cent this financial year compared to last year, at $36.6 billion.

The high iron ore price was the biggest contributor.

Since the December review, iron ore revenue projections lifted by $2.1 billion.

Treasurer Ben Wyatt said there were only four months left in the financial year and so the government was confident in its iron ore price projection of more than $US 130 per tonne.

The projection quickly reverts back to $US 65.60 for the year to June 2022.

Iron ore was trading at $US153.74 overnight.

However, the government has also delayed dividends from its trading enterprises, moving one source of incoming cash from this financial year into the next.

About $1.5 billion was shifted through the deferrals.

Mr Wyatt said that was a practice used occassionally.

“Rather than have one year with very large revenue versus the borrowing program, it has effectively been pushed into the following financial year," Mr Wyatt said.

“It smooths the revenue profile and smooths the borrowing program."

Going out 

Spending will rise 9.9 per cent this financial year compared to 2020, the documents show.

That means it's about $3 billion higher this year than last.

Decisions since December have increased spending, too.

“General government expenses have been revised up by a total of $850 million over the forward estimates period,” the report said.

“(It includes) higher forecast costs of home building stimulus measures, including the state government’s building bonus (up $178 million in 2021-22) and on-passing of the Commonwealth government’s HomeBuilder grants (up a total $309 million over 2020-21 and 2021-22).”

“(They) have also contributed to higher demand for the State’s First Home Owner Grant (up $41 million over the forward estimates period).”