Industry has given a lukewarm response to the state budget, with the property sector disappointed, tourism still looking for boosts for struggling regions, while miners were concerned over a lack of certainty regarding royalties.
Treasurer Christian Porter released his second budget today, which advocated the creation of a $1.1 billion Future Fund, highlighted major shifts in capital works spending and provided tax breaks for small business.
CCI chief economist John Nicolaou said that while the WA budget targeted the right areas, businesses were expecting more to help them grow and reduce their costs.
He said the government’s payroll tax relief measures do not provide the meaningful and long term relief that is long overdue.
“While small business will be pleased to get an end of year rebate, the problem is it’s temporary, while the rising costs of business are not,” he said.
CCI continued its strong criticism of the planned Future Fund.
“This money will be better used by investing the economy through necessary infrastructure and into the business community through genuine tax reform," Mr Nicolaou said.
“The government will receive a greater return on its investment through meaningful tax reform rather than stashing money away in a savings account.”
Mr Nicolaou said the government deserved credit for its fiscal discipline.
Real Estate Institute of Western Australia president David Airey said he was disappointed the budget did not include stamp duty concessions for those looking to downsize housing, calling it a “lost opportunity”.
Mr Airey said Perth’s rental market was under enormous pressure, and providing incentive to downsize would free up more stock to the market.
But Mr Airey said REIWA was pleased stamp duty concessions were retained for first homebuyers.
“This has been successful in maintaining first homebuyers at around 25 to 27 per cent of the market over the past 12 months,” he said.
“The importance of the stamp duty concession for first homebuyers in the modest market recovery currently being experienced cannot be underestimated.”
In the construction sector, Master Builders Association housing director Gavan Forster said builders had given the budget an A-minus rating, thanks to its focus on infrastructure, training and tax relief.
Mr Forster, however, said the MBA was disappointed that $1.8 billion worth of major construction projects had been deferred to deliver a surplus in 2012-13.
Tourism Council chief executive Evan Hall said he was relieved the government hadn’t gone ahead with a planned cut to tourism spending, but said the budget left no room to boost struggling regions.
“The 2012 tourism budget of $73 million is a $6 million improvement on the planned budget cut to $67 million, but is $2 million short of last year’s budget of $75 million,” Mr Hall said.
“We know GST revenue cuts made this a tough state budget, and we appreciate that tourism has been protected from massive planned cuts.
“However, there is no funding in this budget for a tourism marketing campaign to get ‘bums in beds’ in struggling regional towns.”
The mining industry was more welcoming of the budget, with the Association of Mining and Exploration companies calling it “responsible”.
AMEC chief executive Simon Bennison, however, said the industry did not support changes to the currently royalty system that could have a detrimental effect on industry.
The government announced it would assess its royalties payments over the next three years, with the budget flagging revenue of $180 million in the third year.
“We do strongly support and appreciate the government consulting with industry and industry bodies throughout the process,” Mr Bennison said.
“AMEC is keen to see this analysis resolved as soon as possible, so that any certainty in the minds of companies and investors concerning changes in royalties can be avoided.”
Chamber of Minerals and Energy of WA chief executive Reg Howard-Smith said the resources sector is proud to be the largest contributor to the state’s economy.
He said the strength of the resources sector was no more apparent than in the economic growth of 6 per cent in 2011-12 and a projected 4.75 per cent in 2012-13.
Commenting on the royalty review, he noted it will be undertaken over three years and is expected to deliver government a "modest increase" of $180 million in royalty take in 2015-16, compared to royalty payments of $4.9 billion in 2012-13.
"Government has promised significant consultation with industry, which is also expected to play a key role in setting the new parameters," Mr Howard-Smith said.