Budget misses the target

14/05/2008 - 22:00


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LAST week’s state budget was exactly what you’d expect from a pre-election government in a very strong electoral position, picking a few winners and hoping to make positive headlines.

Budget misses the target

LAST week's state budget was exactly what you'd expect from a pre-election government in a very strong electoral position, picking a few winners and hoping to make positive headlines.

But it's another missed opportunity to take advantage of the booming conditions by locking in some important elements, and applying some self-discipline to make sure the runaway revenue train doesn't derail Western Australia in the future.

It was chance to provide certainty for everyone, so the future would be clearer - which is good for investors, business and all those who live here.

While the moves in the property sector were welcomed by the vocal and electorally potent real estate lobby, they fail badly to do the obvious - index stamp duty and land tax.

By indexing and removing the bracket creep, government won't have to go 15 rounds with the property sector every election cycle because its take will be the same percentage of a bigger pie.

Then again, maybe they enjoy that.

More important than the numbers, however, is what isn't forecast.

It's not just revenue that blows out year after year well beyond the forecast numbers.

Look at recurrent spending as an example on the cost side.

Last budget it was forecast to rise by 4.6 per cent, but actually came in at 9.7 per cent to almost $16.74 billion.

That's double.

This coming year, recurrent expenditure has been estimated to rise by a further 7.7 per cent next financial year and 5.1 per cent in 2009-10.

Given next year's number is significantly above last year's forecast, you could be hopeful Treasury has realised that spending is running away, which it obviously is with that kind of growth.

But what if this is the conservative number and, like last year, it blows out considerably.

This is a big worry for us all.

I agree that government has to try to keep providing services and maintain standards in a boom.

I accept there are salary pressures and huge demands from many sectors created by this economic development.

But there must be places to make savings or which can have reduced emphasis during this bumper period.

With a job available for almost every person in WA who wants one, there should be some reduction in demand in the welfare sector, for instance.

Then again, years of neglect in that area seem to be catching up with us.

Let's hope, should he win the next election, that Alan Carpenter takes a leaf out of his federal counterpart's book and directs his treasurer to drive cuts across the board, sparing those areas, perhaps, that actually help in revenue generation.

Not all of this is about money either.

Labor has been in power for seven years, yet we are still only just starting to see real native title deals with explorers in the minerals sector.

This has delayed much-needed expenditure in that sector and meant work that could have been done years ago is now another demand for the government to deal with.

In hindsight, how much cheaper would it have been for government to sort out problems like this, regional education and indigenous affairs, before the bills got out of hand and the people disappeared into more profitable employment? --- On a very different note, this column has concentrated recently on board battles with shareholders.

If I mention extraordinary general meetings, a board led by a leading lawyer and former managing partner of a law firm, and dissident shareholders trying to take control with paying a premium then it will be familiar ground, won't it? Well, if you are thinking WA Newspapers Holdings Ltd, you are wrong.

This time it's the tiddler end of the market with the embattled board of Paramount Mining Corporation Ltd finding life even tougher than the WAN directors holding up the ramparts against Kerry Stokes.

A couple of weeks ago, the dissidents voted down moves to increase the remuneration of the board and CEO Maureen Muggeridge in what was obviously a bit of a nasty meeting.

The company released a bunch of what it termed 'observations' from chairman Steven Cole (who resigned last Tuesday as a result of this issue), the former managing partner of Arthur Allens Robson's Perth office, which was aimed at highlighting the interconnectivity of those who'd succeeded in blocking the resolutions.

"If is the future intention of dissident shareholders, or certain of them, to wrest effective control of the company, without paying to all shareholders a premium for that control, then all shareholders are on notice to ensure that they remain active and vigilant in assessing and exercising the votes attaching to their shares at any future shareholder meeting which may be convened," Mr Cole stated in an ASX announcement after the meeting.

Clearly this line, which is an entirely valid one, is currently the number option in the defensive play book down at the local chapter of the Australian Institute of Company Directors.


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