14/05/2013 - 13:54

Govt tightens belt amid budget strain

14/05/2013 - 13:54

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Treasurer Troy Buswell has trimmed $92 million in government expenditure as rising spending and a “significant erosion” of revenue threaten to bring the state’s budget into deficit.

The savings include a freeze on government advertising and promotions and on all expenditure on non-essential goods and services, including stationery, for the remainder of the financial year.

“These measures are designed to ensure we live within our means – if we don’t take action now there is a risk the state government’s expenditure will exceed our revenue,” Mr Buswell said in a statement.

“These new savings measures show the government is prepared to make the tough decisions necessary to manage the state’s finances responsibly, while ensuring front line services to the public are not affected.

“Reining in public sector spending is a considerable challenge in the face of extraordinarily strong demand for government services.”

The government will also reallocate $5.5 million in payments to local governments, which will now be paid next financial year.

Chamber of Commerce and Industry WA chief economist John Nicolaou said the spending cuts were a "show of faith" that the government was taking its budget problems seriously.

“With the budget bottom line and the state’s AAA credit rating coming under increasing pressure, the timing is right to move into a period of restraint with respect to government spending," he said.

"The government needs to balance their investment needs with fiscal responsibility to ensure the WA economy remains strong into the future.

“We look forward to seeing how these early components fit in to a broader structural review of government expenditure."

Mr Buswell said the government would announce a “fiscal action plan” containing longer-term reforms in the coming months as it aims to address a “structural imbalance between what we spend and what we earn”.

The treasurer has attributed the current budget strain to a lower than expected revenue stream from mining royalties and payroll and land taxes, as well as a falling GST share.

He also pinned the blame on spending pressures in the health and education sectors driven by the state’s rapid population growth.

However Mr Buswell refused to concede to reporters last week that the government should shoulder the blame for the shortfall, despite expenditure outstripping total revenue growth by more than 15 per cent during the Barnett government’s first term.

Mr Buswell said he remained confident the government would still deliver a surplus for 2012-13 but said it would not be of the magnitude of the $241 million forecast in Treasury’s pre-election fiscal projections statement.\

Premier Colin Barnett has refused to rule out public sector job cuts in the months ahead as the government prepares to hand down the budget on August 8 .

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