09/03/2017 - 15:52

Labor claims bigger surplus, flat debt

09/03/2017 - 15:52

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The Labor Party is budgeting on $750 million of spending cuts and $400 million of metropolitan land sales to help pay for its election promises, and claims it will achieve a budget surplus of $205 million in 2019-20.

Shadow treasurer Ben Wyatt. Photo: Attila Csaszar

The Labor Party is budgeting on $750 million of spending cuts and $400 million of metropolitan land sales to help pay for its election promises, and claims it will achieve a budget surplus of $205 million in 2019-20.

Labor has also acknowledged its financial plan will produce only a minimal reduction in state debt over the next three years.

Shadow treasurer Ben Wyatt released details of Labor’s budget strategy today, saying its capital spending commitments amounted to $2.78 billion over the three years to 2019-20 (corresponding to the budget’s forward estimates).

By comparison, the Liberal Party has estimated Labor has made $5 billion of election promises.

Part of the difference comes from timing – Labor’s Metronet public transport plan, for instance, has a total estimated cost of $2.9 billion but only $1 billion of spending is built into the three-year projections released today.

Labor claims all its election promises are covered by spending cuts, revenue increases or changed priorities, such as cancelling Perth Freight Link.

It has listed $2.98 billion of capital savings, including $1.1 billion of money not spent on Pertth Freight Link, $529 million from land sales and developer contributions, and $631 million from Royalties for Regions. 

In addition, it has listed $1.3 billion in cuts to recurrent spending and increases in revenue over the coming three years.

This includes plans to save $750 million by conducting a detailed review of general government spending, though Mr Wyatt was evasive on what that would mean for public sector job numbers.

It also plans a $400 million special dividend from land development agency LandCorp, after deciding it should not be involved in metropolitan land developments.

Mr Wyatt said LandCorp would sell its interest in land joint ventures and focus on areas of market failure.

It also aims to raise $21 million from a surcharge on foreign property buyers and, as announced this morning, $10.5 million from selling the naming rights to Perth Stadium and Perth Arena.

Other savings are to come from reduced government advertising ($55 million) and less use of external consultants and contractors ($84 million).

Under Labor’s plan, the government’s operating balance would return to surplus (of $205 million) in 2019-20 compared with the projected deficit of $535 million in the pre-election financial projections.

By comparison, the Liberal Party said yesterday its plan would achieve a surplus of $29.3 million in 2019-20.

The difference is much bigger in regard to state debt.

The pre-election financial projections show the state’s net debt rising to $41.1 billion at June 2020.

Under Labor’s plan, that would come down only slightly to $39.9 billion.

The Liberals would achieve a much bigger reduction to $29 billion, largely by using the proceeds from selling 51 per cent of Western Power to cut debt.

Mr Wyatt argued today that selling Western Power would do nothing to cut the debt in the general government sector (as opposed to debt in government trading enterprises).

Labor's plan was reviewed by former WA assistant auditor-general David Gilchrist, and former WA public service commissioner Michael Wood.

It has been criticised for not submitting its plan to the Treasury department for review, as the Liberal Party did.

 

 

 

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