23/09/2014 - 14:37

Budget surplus at risk: Nahan

23/09/2014 - 14:37

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Western Australian treasurer Mike Nahan says he can’t guarantee a budget surplus in the next financial year due to the recent volatility in iron ore prices.

Treasurer Mike Nahan.

Western Australian Treasurer Mike Nahan says he can’t guarantee a budget surplus in the next financial year due to the recent volatility in iron ore prices.

Mr Nahan told reporters today at the release of the annual report on state finances that the reduction in the iron ore price was a significant risk to the state’s revenue projections in the current budget.

“While the results highlight the success of recent government measures in improving the state’s financial position, the government is well aware that more needs to be done to ensure the ongoing sustainability of the state’s finances,” Mr Nahan said.

“We are going to need to consider our financial management response in the lead up to the forthcoming mid-year review.”

The report showcased an operating surplus of $719 million in 2013-14, $536 million higher than the budget estimate.

The net debt to revenue ratio placed WA as the second-lowest debt-burdened mainland state at 55.2 per cent, however, net debt sat at $20.8 billion as of June 30.

That being said, revenue increased by 8.7 per cent, which was above a 6.9 per cent increase in expenditure.

“This revenue outcome is consistent with the government’s financial targets and validates the new revenue-raising measures introduced by the government in the 2013-14 fiscal action plan and in previous budgets,” Mr Nahan said.

He said he was proud to announce that government sector salaries expenditure had increased by just 5.2 per cent, which would be the lowest rate of annual growth in 13 years.

“This salaries outcome reflects the successful implementation of the government’s new public sector wages policy, the associated consumer price index cap on agencies’ salaries budgets, the impact of a successful enhanced voluntary separations scheme, and the temporary recruitment freeze implemented in April,” Mr Nahan said.

The state’s asset investment plan totalled $6.8 billion, which included a $983 million investment in road infrastructure, $905 million in health facilities, and $546 million in schools, as well as $3.5 billion in “key economic infrastructure by the state’s public corporations”.

“Since coming into office in 2008, we have invested a record $40.1 billion in areas such as health, education, law and order, roads and public transport, ports, electricity and water,” Mr Nahan said.

“These investments are key to the state’s future.”

Chamber of Commerce and Industry chief economist John Nicolaou said the task was still ahead of the government to address looming budget challenges.

"It is a good result that expenses have come in lower than projected - this has been the result of improvements from the government's wages policy and agencies' not spending their full budget allocation," he said.

"However, reforms are now needed to address the structural challenges facing the state's finances.

While it is a positive result that state debt is $1.2 billion lower than forecast $20.8 billion, with cash defecits forecast in the coming years it will be difficult for the government to stabilise net debt growth," Mr Nicolaou said.

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