Treasurer Troy Buswell has pledged to keep the state’s budget in the black, despite projections of a $147 million deficit in 2014-15.
Yesterday’s state budget projected a modest surplus of $386 million for 2013-14 and a slim deficit the following year, as well as a significant increase in net debt.
Mr Buswell told guests at a Business News Success & Leadership breakfast this morning that the government considered keeping the budget in surplus to be a “fundamental measure of your capacity to live within your means”.
“We won’t deliver a deficit next year, we’ll deliver a surplus,” Mr Buswell said.
“We’ve got time, about nine months, to work on some solutions so we’re not sitting still. The process of managing the state’s finances I’ve described as very dynamic, and we’re constantly looking at our bottom line for two reasons: to make sure that we protect our surplus and to make sure that our expense growth isn’t getting out of control.”
Expenditure growth for 2013-14 is forecast to reach 8.4 per cent, with the government set to embark on a record capital works spend despite warnings from credit agencies that the state’s AAA credit rating could be lost if the government failed to rein in its spending.
The government will claw back $6.8 billion in savings over four years through a series of tax and revenue measures, including increases in land tax rates and the introduction of a $4,000 school fees charge on the children of 457 visa holders.
Mr Buswell warned however that the state economy was more vulnerable to fluctuations in commodities and the exchange rate than ever before.
Treasury’s budget modelling indicates a US 1 cent movement in the $US/$A exchange rate would represent a $76 million impact on revenue estimates, while a $US1 per tonne movement in the iron ore price translates to a $45 million impact on the state's bottom line.
“Our revenues as a state are more exposed to the international sector than any other state and more exposed to the international sector than at any other point in our history,” Mr Buswell said.
“We are very exposed to those types of movements and it’s something that we watch incredibly closely in terms of the overall management of the state’s finances.”
Premier Colin Barnett meanwhile defended the government against allegations of broken promises, saying he felt the government had satisfied its commitments to voters.
“When you have an election campaign, you do go out and make promises but I don’t imagine anyone would seriously expect that every single one of them is going to be delivered 100 per cent in the first budget of four budgets in a term of government,” Mr Barnett told guests.
“The vast majority of what we committed to do during the election campaign has been delivered or is set to be completed in the forward estimates in this budget.”
Major transport commitments, including the $1.8 billion MAX light rail and $1.9 billion Perth airport rail link, are set to be delivered a year later than promised in 2019, with a significant component of the projects' cost left unaccounted for in the budget.
Opposition treasury spokesman Ben Wyatt yesterday said the government had been exposed for its "shameless election dishonesty".
"This is the budget of Barnett's broken promises that will hurt Western Australian families for years to come," Mr Wyatt said.
While the government hopes to secure private sector funding towards its transport plans, the state’s contribution is expected to be heavily funded by borrowings, placing further strain on the state’s growing net debt.
The state’s net debt is forecast to reach more than $28.3 billion by 2016-17; well up from the $23.6 billion flagged in Treasury's pre-election financial projections statement.
The reaction to the budget from industry groups has been generally negative, with calls for greater action to preserve the state's AAA credit rating.