Budget rethink to shred deficit: CCI

A public sector wage freeze, amalgamations of major departments and a reform of health would be key moves to fix the state government’s worsening debt position, according to Chamber of Commerce and Industry of WA’s pre-budget draft submission.

Key targets for departmental consolidation would include the Department of Treasury and the Department of Finance, according to the chamber, and the Department of Planning with the Department of Transport and the Department of Regional Development.

The chamber also highlighted spending growth in the Department of Health, which it said had run at nine per cent per year, by increasing use of general practices in place of emergency departments and embracing public private partnerships.

Chamber chief executive Deidre Willmott said the government needed to set out a strategic direction moving forward.

“When times get tough, businesses have to cut their spending and tell staff there is no money for pay rises - the state government should do the same,” Ms Willmott said.

“In the current circumstances, the government cannot avoid making difficult decisions, as businesses often do.

“Public sector wages have doubled to more than $11 billion in ten years and those wages continue to be well above increases paid to private sector workers.

“This needs to change.

“While the government should be applauded for its commitment to asset sales, using alternative methods of funding and deregulation more can be done to reduce the debt and deficit.”

On the taxation side of the ledger, the chamber recommends abolishing stamp duty and payroll tax in the long term, while broadening the land tax base and considering congestion charging.

An increased reliance on land tax would bring the additional benefit of a more stable revenue stream, while being substantially more efficient than other tax options.

It comes just more than a week after ratings agency Moody’s downgraded state government debt to an Aa2 rating.

The level of net debt is projected to peak at around $39 billion later this decade, according to the government’s most recent budget documentation.

Business News reported last week that one option for reducing debt levels would be selling the electricity network Western Power, which would likely result in lower prices for consumers.

The state’s asset sales program did get a boost last week, with the government earning $135.5 million selling the Perth Market Authority’s Market City to an industry consortium.