02/05/2012 - 11:19

Government needs to define vision

02/05/2012 - 11:19

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The state government needs to find a balance between honest financial management and policy savvy over the next 12 months.

The state government needs to find a balance between honest financial management and policy savvy over the next 12 months.

NEXT month’s state budget will test whether Colin Barnett’s minority government has the political maturity to create a sustainable financial and policy vision for Western Australia.

There will need to be a compelling and coherent narrative, especially over the budget’s four-year forward estimates, if voters are to have any real confidence in a future Liberal-National Party alliance.

It may seem surprising that, after more than three years, the Barnett government, which for the most part has been well ahead of the state opposition, should find this to be such a difficult task.

But the political stars that aligned to deliver power to Mr Barnett in 2008 have changed, and with that created a sense of vulnerability about the government’s future.

The government is now at a point in the political cycle where its own management, budgetary, policy and political chickens are coming home to roost; and will be judged accordingly by the electorate.

The easiest change to observe has been the resurgence in the Labor opposition under new leader Mark McGowan. The last Newspoll – the most reliable of its kind – showed the premier’s approval rating fall a startling 16 per cent, most of which appears to have gone to Mr McGowan.

Similarly, and despite the national trend, the Labor Party in WA seems to have lifted itself into a contestable position.

The other obvious change has been the determination of the National Party to vigorously pursue a strategy to increase its numbers in parliament by targeting not only Labor-held seats at the next election, but those of its Liberal alliance partners as well.

For the past three years there has been lingering resentment and suspicion among Liberals about the terms of the National Party alliance based on Royalties for Regions; that is only set to deepen, given the Nationals’ ambitions.

What has been less obvious to the general public – due in a large part to Mr Barnett’s clever exploitation of the self-inflicted problems of the Rudd-Gillard governments – is the ongoing struggle to manage the state’s finances and public sector.

These problems are a combination of poorly thought-out policy and political decisions stretching back to the 2008 election, combined with the enormous challenges of managing a growing economy when the rest of the world is in recession.

Within the first few weeks of coming to power, the premier and the then treasurer, Troy Buswell, stumbled in trying to explain their pre-election commitment to a 3 per cent efficiency dividend to fund election commitments.

They also struggled what to do with the forward estimates created by the outgoing Labor government and policy confusion over how Royalties for Regions projects would be funded separate to ordinary government expenditure.

Despite the initial pain of reorganising the budget process to address these unique arrangements there is evidence that they are still not fully resolved.

These problems were again highlighted by the recent announcement by Treasurer Christian Porter of a promised public service jobs freeze, a new round of efficiency measures – mostly targeted at government-trading enterprises – and a reduction in general government spending.

This ‘announcement’ was identical to the measures the treasurer unveiled during the release of Treasury’s mid-year review in December last year and is almost identical to the similar budget measures introduced during the government’s first year.

This time it is not the GFC or the need to fund pre-election commitments that is behind the rehash of these measures; it’s the fault of the federal government’s cuts to the state’s share of GST.

The pattern here is becoming all too obvious and so too is the perception that the government is not entirely on top of managing the state’s budget or public sector.

To be fair, the government’s first budget was framed against the unprecedented challenges of the GFC, followed immediately by the population and investment pressures created by the resources boom. 

With the worst behind it, and encouraged by the ongoing boom, the government then committed to doubling its ‘social infrastructure’ spend from an average of $3.5 billion under Labor to more than $6.7 billion.

One of the most concerning aspects of this expenditure – highlighted in WA Business News’ Infrastructure Report published last week – is the government’s constantly changing infrastructure priorities and faltering delivery of major projects such as Oakajee.

Mr McGowan and his Treasury spokesman Ben Wyatt have been quick to jump on these issues with Labor receiving strong support from industry for a proposed 20-year infrastructure plan.

The opposition has quite rightly highlighted the government’s lack of a coherent narrative and long-term vision for its spending plans, and the impact that it is already having on households and businesses, especially through higher utility charges that will only continue as debt needs to be repaid.

Mr McGowan is already making an issue of the record levels of state debt that has grown under the Liberal-National alliance from $3.8 billion in 2008 to a forecast $23.9 billion by the end of 2015.

And this is before the government has factored in the costs of the new multi-purpose stadium at Burswood and other deferred infrastructure projects.

Despite remaining within the limits of maintaining the state’s AAA credit rating, this spending is having a cumulative impact on the state’s balance sheet as it borrows money each year to cover its end-of-year cash deficits, forecast to be more than $2.5 billion this financial year.

Let’s just hope Mr Barnett and his alliance partners are mindful of the changing political landscape and can deliver a clear vision that includes a debt reduction strategy that simply doesn’t regard future generations of householders and business pay for this government’s potential largesse.

Failure to get the balance between honest financial management and policy savvy over the next 12 months may well further contribute to the premier’s and the government’s recent poor polling.

Paul Plowman was formerly Premier Colin Barnett’s director of communications and is now a corporate and government relations consultant.

• Peter Kennedy is on leave for two weeks.


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