Budget deficit to hit record

The Barnett government expects to deliver Western Australia’s largest budget deficit of $3.9 billion next financial year as it continues to grapple with shrinking revenue and higher spending.

Government revenue will fall by 3.1 per cent in 2016-17 while expenditure will lift by 3.7 per cent.

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Asset investment slows

Iron ore relief

Western Power

Treasurer Mike Nahan said today the government was doing everything it could to contain growth in government spending.

The expected 2016-17 budget deficit is about $1 billion more than the government had estimated in the mid-year review, released last December.

On a relatively positive note, the outcome for the current financial year is forecast to be substantially better than had previously been expected.

The budget deficit in 2015-16 is forecast to be $2 billion, reflecting GST top-up funding from Canberra, a higher than expected iron ore price, and lower recurrent spending.

The state budget is expected to improve slowly over the three 'out' years before returning to a $1.1 billion surplus in 2019-20.

The return to surplus is driven mainly by faster growth in revenue, which will increase by about 8 per cent a year over the three out years.

Dr Nahan confirmed today there were no tax increases and no new taxes in this year’s budget.

He also confirmed the government would stick to its election pledge to lift the payroll tax threshold to $850,000.

However household charges will increase by an average of 4.8 per cent, in part due to the previously announced introduction of a no-fault disability insurance scheme.

Power tariffs will increase by 3.0 per cent, public transport fares are up by 1.5 per cent, and water charges will be up 4.5 per cent, with Dr Nahan saying Perth would need to invest in additional water sources.

Government spending will be boosted by two policy decisions – the roll-out of the National Disability Insurance Scheme will be expanded, and Horizon Power (rather than the private sector) will build a new power station at Onslow.

Dr Nahan said the government had brought growth in public sector salaries under control.

It had also capped growth in the number of public servants, however a hiring freeze will be ended from today.