Chamber sees red over govt spending

THE WA Government’s much vaunted $3.3 billion capital works program will put WA further into the red during 1999-2000. This represents an increase of more than $600 million from forward estimates.

However, net debt is expected to fall from 8.5 per cent of state output in 1999-2000 to around 6.5 per cent in 2002-2003. This is considerably less than the 20.6 per cent the Court government inherited from the previous Labor Government.

The capital works program is designed to counter an expected downturn in the economy due to lower commodity prices and a decline in consumer confidence.

At the same time, business investment is estimated to decline 15 per cent after record increases in 1997-1998.

The budget hinges on continued economic growth. Inflation is forecast at 2.25 per cent, employment growth is forecast to be sustained at 2 per cent as against 2.5 per cent in 1998-99 and the government expects real economic growth of 4.5 per cent in 1999-2000.

This is at odds with the WA Chamber of Commerce and Industry’s more conservative forecast of 2.75 per cent growth.

Chamber chief executive Lyndon Rowe said the Budget was disappointing and made the challenge for government next year much harder.

“It contains no attempt to rein in general government spending which is set to increase this year by another $470 million, or 4.5 per cent,” Mr Rowe said.

“The $171 million surplus quoted in the budget for ‘whole of government’ (including statutory authorities and agencies) conceals that, in fact, the government has incurred an underlying general government deficit of more than $733 million – largely the result of undisciplined day to day spending.”

Mr Rowe said the different departments should consolidate and rationalise so that, for example, only one CEO reports to relevant ministers. The Small Business Development Corporation, Resource Development and Regional Development and Commerce and Trade should merge to avoid duplication of resources.

This has been something the chamber has pressed the government on for many years.

Mr Rowe also expressed disappointment that the budget did not include reductions in taxes and charges for industry which would make investment in WA more attractive.

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