20/05/2010 - 14:45

Budget: Barnett delivers surplus

20/05/2010 - 14:45

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In his first outing as Treasurer, Premier Colin Barnett delivered a promised surplus - $286 million - on the back of sharp royalty rises, increased services charges to households and restraint in spending growth which was limited to 3.9 per cent.

Budget: Barnett delivers surplus

In his first outing as Treasurer, Premier Colin Barnett delivered a promised surplus - $286 million - on the back of sharp royalty rises, increased services charges to households and restraint in spending growth which was limited to 3.9 per cent.

Mr Barnett sold his budget as one that reins in costs and shares the pain across the community, as increased charges and rising royalties have helped to keep the state's finances in the black.

The Premier was apologetic for increasing electricity (up 10 per cent from July) and water (17.7 per cent) to ensure prices reflect cost, believing the community will understand the government's need to share the burden. He pointed out that, with reducing GST and Commonwealth Grant income, the state had to increase its independence, generating 65 per cent of its own income.

The state will also increase the dividend paid by most government trading enterprises to 65 per cent from 50 per cent, a change it suggested was in line with other jurisdictions.

Business will be aggrieved that the payroll tax rebate for small business will not be extended or the general payroll tax rate altered.

He pointed to restraint on the government side of the ledger, budgeting to rein in spending growth from 12 per cent this financial year to 3.9 per cent in 2010-11.

Despite the government's improved bottom line - a surplus of $286 million in 2010-11 peaking at a forecast $807 million in 2012-13 - Mr Barnett painted a picture of a fragile economy that had not yet overcome the global financial crisis and faced further uncertainty.

Suggesting the state had tentatively turned the corner from the GFC, he pointed to the federal government's resources super profits tax and the jitters in the Euro zone as areas that created ongoing uncertainty.

The premier also admitted he was concerned about the state's debt levels which were forecast to rise to more than $20 billion in four years from $11.36 billion this financial year. While he said that the debt was well within the capacity of the state to pay it was the shift in the use of debt to fund non-income producing assets that was something to watch.

Despite the global uncertainty, the state's budget is partly built on buoyant forecasts for revenue from the mining sector.

Royalties income is expected to boom again, jumping 47 per cent on the back of rising iron ore prices to $US115/tonne to raise a total of $3.27 billion in 2010-11, a level from which it rises moderately and then plateaus at around $3.5 billion to $3.6 billion, for the out years of the budget.

There were no changes to the state's royalties regime priced into the budget, however the government still expects by the start of 2010-11 financial year to see fruits from its discussions with Rio Tinto and BHP Billiton over their proposed iron ore joint venture.

The impact of the RSPT was not factored into the budget forecasts.

As a result of the rising royalties forecast, the Royalties for Regions expenditure under Brendon Grylls is set to more than double to $896.8 million in 2010-11, up from $357.1 estimated for the current financial year.

The biggest single allocation for the R4R spending is $253 million in the first year for state government's Pilbara Cities program of revitalisation of North West towns, part of a $846 million outlay over the next four years.

A significant proportion of that four-year spend is $150 million development of the Nickol Bay hospital in Karratha to gain regional status.

Part of the Pilbara Cities budget, $310 million over four years, has been earmarked for joint infrastructure projects in partnership with the Commonwealth or private sector.

A significant proportion of the overall R4R budget spending was on schools, hospitals and other infrastructure normally funded by other government departments.

 

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