Industry weighs in on new state budget

Broader praise for Western Australia's ‘ironclad budget’ has been accompanied by industry calls to build the state's investment appeal and diversify the economy. 

S&P Global Ratings said WA’s robust economic growth, a historically tight job market, and lofty iron ore prices were buttressing the state’s fiscal performance.

Despite describing the budget as ‘ironclad’, the ratings agency observed the state government’s commodity price assumptions were conservative by anticipating a big drop in the iron ore price to a long-run average of $US66 per tonne.

It was also bearish on WA’s infrastructure plans due to a shortage of skilled labour.

Moody's said the state’s sustained financial discipline and budget repair meant it was well-positioned for the carbon transition, to which about $3 billion has been allocated over several years.

Chamber of Commerce and Industry Western Australia said the state budget confirmed the strength of the state but highlighted a risk to the outlook with growth forecast to plummet over the coming years.

“The state’s finances are still very strong, especially compared to other states,” chief economist Aaron Morey said. 

“The government is expected to bank a $4.2 billion surplus this financial year. However net debt is not expected to peak over the forward estimates.”

Mr Morey also took a swipe at the state government’s apparent lack of action to alleviate the "burden of payroll tax on WA small and family business".

“This means WA small and family businesses will still bear the heaviest payroll tax burden in the country, with total payroll tax collections forecast to reach $5.5 billion in coming years,” he said.

“It’s critical action is taken to reduce the burden to help alleviate the higher costs of doing business and to make WA a more attractive place to invest.”

CCIWA also said more needed to be done to make it easier to get approvals for major projects including by pushing the federal government to rein in the Federal Department of Environment, which it said was ‘increasingly frustrating the efforts of WA investors’.

Association of Mining and Exploration Companies chief executive Warren Pearce said the surplus reflected the strength of WA’s mining industry but that the budget had missed an opportunity to fight for international investment in the sector, particularly in downstream processing.  

“WA needs to reinvest in growing our resources sector, and supporting emerging industries that will diversify our economy and drive future growth,” Mr Pearce said.

“And while the state continues to make investments to support economic diversification, most of these funds are focused on infrastructure delivery.

“WA needs a more focused approach to diversifying our economy, and one that leverages off the strength of the mining industry, with investment in downstream processing to realise greater value from our resources here at home.”

Pitcher Partners Perth managing director Leon Mok said the renegotiation of how GST revenues were split between the states was a dark cloud looming on the horizon. 

The budget drew a largely positive response from the property sector, with Master Builders Association of Western Australia lauding the $750 million allocated to building more social housing.

Housing Industry Association executive director WA Michael McGowan was also supportive of the measures.

An $11.5 million allocation to provide visa subsidies to bring in skilled migrants to the state’s overburdened construction sector was also welcomed.

Urban Development Institute of Australia said the future supply of rental accommodation in the state was looking brighter, but WA chief executive Tanya Steinbeck warned that relying on the 27,500 of homes under construction to fix Perth’s housing supply was flawed.

“Given increasing migration to Perth and WA, combined with underlying local demand that is currently suppressed due to lack of consumer confidence in the housing construction sector, the assumption that the pipeline of housing currently under construction will free up enough rental stock is dangerous,” Ms Steinbeck said.

“A dedicated focus on the provision of affordable and key worker accommodation and subsidised private rental initiatives are a missing piece of the puzzle at present and need urgent attention.”

Property Council of WA executive director Sandra Brewer said the $33 million existing off-the-plan apartment transfer duty rebate to June 2025 was good news for prospective apartment buyers. 

“The stamp duty reforms go some way to supporting housing diversity, to encourage more medium density style apartments in suburbs close to the city," she said.