STATE Government expenditure was a hot topic at last week’s WA Business News round table, with Chamber of Commerce and Industry chief executive Lyndon Rowe suggesting because the State tax base was so narrow, government failure to control expenditure meant the tab, inevitably, was picked up by the business sector.
Consensus among panel members was that the State Government’s expenditure on the Mandurah railway was a premature and loss-making investment that would place further economic burden on the WA business community.
John Poynton of Poyton and Partners suggested delaying the railway project for a further five to 10 years and instead introducing a number of policies that were consumer and business friendly.
In defence of increased government expenditure, Treasurer Eric Ripper outlined the dire situation within the health budget and suggested that business get behind efforts to reform the health system.
Lyndon Rowe, CCI chief executive: “The focus for me comes back to expenditure. If we kept real per capita expenditure constant in government since 1990 we wouldn’t need payroll tax. The growth rate in government outlay drives the tax burden on this State.”
Bill Sullivan, Commissioner of State Revenue: “I think it can be quite difficult to have a meaningful discussion regarding taxation without looking at the other side of the equation, which is expenditure. I think anyone who is proposing changes, in relation to taxation, needs to be more mindful of the consequences of doing so.”
Eric Ripper, Treasurer: “The expense growth issue is an interesting one. We’ve cut the rate of expense growth compared to the rate of expense growth that was been experienced in the previous government, but we have got some areas that are growing very strongly indeed. Take health for example. It’s growing at between 6 per cent and 8 per cent a year and that’s a quarter of our budget. It’s a quarter of our budget now.
“If it keeps growing at its current rate it will make up 35 per cent of our budget by 2010. That equates in today’s budgetary terms to shifting a billion dollars from other services into health or raising, unbelievably, an extra billion dollars in taxation.
“I think this State has by 2010 a real problem in sustaining the level of health services and the level of financial arrangements the community expects and suspect that the same is the case in other States.”
Peter Fitzpatrick, Motor Trade Association executive director: “We need to look at expenditure, and I for one believe the Mandurah railway is going to kill us in time as a major item of expenditure.
“People are either going to want to have decent schools and decent hospitals or a railway line that 5000 people a day will travel to Perth.”
John Poynton, Poynton and Partners chairman: “It’s a piece of infrastructure [the rail line] that, sure, we might need in 20 years’ time, but we don’t need it now.
“And we look at that and say that for the next however many years we are all going to be taxed because that thing is going to be making losses.
“You’ve got the actual capital cost and what might have been done with that capital and what has to be found to subsidise the losses. Put a net present value on that and how many schools, hospitals and increases in wages can you afford.”
Eric Ripper, Treasurer: “The average growth under the Coalition was 5.6 per cent growth per annum in expenses. In our first year it was 3.9 per cent, second year 4.7 per cent and this year 3 per cent. But we got some real issues within those figures.
“I’ve already mentioned health; you’ve mentioned the railway, that debt has to be serviced, and the operating losses of the railway have to be met that’s the pressures we have to take into account.
“It’s a democratic accountability issue here, both sides of politics went to the last election saying they were going to build the railway.
“It would be a major breach of faith by the political class of Western Australia as a whole if the railway weren’t built.”
John Poyton, Poynton and Partners chairman: “I think you would be surprised because if you were to say you aren’t going to do it now, you could say you were going to do it in five to 10 years’ time, and then you could announce a whole lot of initiatives that were both consumer and business friendly.”
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