No honeymoon for the premier

Colin Barnett should prioritise his ‘to-do’ list as he and his ministers wade through their election commitments.

PREMIER Colin Bamett may have scored a slashing state election win, but there is no room for complacency; there are too many issues piling up in his agenda in-tray for that to happen. And some will prove to be contentious.

After finalising arrangements in government with the resurgent Nationals Party, and selecting his new cabinet team, the premier must decide a priority list for the joint Liberal-Nationals campaign promises.

When, for example, will the approaches be made to the federal government to kick in for such projects as the light rail plan and the proposed rail link to Perth Airport? From a strategic point of view, the six months leading up to the federal poll would be an ideal time to extract some sort of commitment from Canberra.

After all, two senior federal ministers would have a direct interest in a positive response from Prime Minister Julia Gillard and Treasurer Wayne Swan. Defence Minister Stephen Smith has a 5.9 per cent margin in his Perth seat, and Special Minister of State Gary Gray has just a 3.3 per cent buffer in his southern metropolitan seat of Brand.

Both would be keen to see a positive response to a request from Western Australia, let alone Labor’s third federal member, Michelle Parke, who has 5.7 per cent up her sleeve in Fremantle.

If Canberra said no, the state government would be tempted to say that, while it really wants to do something about congestion issue on metropolitan roads, without federal input its hands are tied - it is just too expensive for the state to go it alone.

An alternative approach could be the immediate preparation of an integrated master plan for metropolitan Perth, incorporating road and rail - including light rail - to handle the city’s transport needs for the next 50 years, as proposed in Political Perspective last week. That should include a feasibility study into the proposed airport rail link. A feature of the Joondalup and Mandurah lines has been that patronage is way above initial projections. The risk for an expensive airport link is that it could become a white elephant requiring a massive subsidy to keep it in operation. That would be a setback for public transport across the board.

One thing is sure, Mr Barnett must come up with an early strategy to ease congestion, and then do something about it. If not, his political capital could be quickly eroded.

The level of federal involvement in these big-ticket items will also influence the state’s finances. Before last weekend’s poll, Treasury concluded that the election promises of both major parties would add more than $1 billion to state debt, which was already getting uncomfortably high. It is something the credit agencies are watching closely.

Mr Barnett has said he will not stand by and see WA lose its triple A credit rating; but the agencies are more impressed by actions than words.

The third issue the premier must grapple with early this term is council amalgamation. As a trained economist who lives in Claremont, it is an issue close to his heart.

And it is a hot topic, especially in the leafy western suburbs, which have six separate councils with a clear aversion to change. That is one reason why a drive west from the Broadway-Stirling Highway intersection in Nedlands is like travelling in a time warp. Very little seems to have changed there since I rode my NSU Prima 175cc motor scooter home from the University of WA in the 1960s.

Whether it is road widening, medium-density residential development, or taller buildings on the Cottesloe beachfront, the opposition is substantial. Rationalising councils might make decision-making easier. And the Perth City Council is set to expand again, having shrunk under Richard Court’s government in the 1990s.

A move towards fewer councils in the metropolitan area will attract shrieks of protest, but Mr Barnett will claim a mandate to pursue change. Just watch this space.

Treasury v premier

UNDER-TREASURERS have a history of warning their political masters against being profligate with government spending decisions. The temptation for ministers to throw money at an issue for short-term electoral popularity is never far away.

Take this note from the then under-treasurer John Langoulant in June 1998 to the premier and treasurer of the day, Richard Court.

“I have expressed my concern to you on a number of occasions about the disturbing trend of cabinet and individual ministers to embark upon expenditure proposals out of context with the budget,” Mr Langoulant wrote.

And he didn’t just point the finger at ministers. The “disturbing trend” included “Ministers, aided and abetted by their CEOs, (aiming) to defy government policy on financial management.”

But even the best-laid Treasury plans can go astray. In the special statement on WA’s financial position at the start of the election campaign, under-treasurer Tim Marney had this to say about electricity prices, remembering they had risen by more than 60 per cent over the past four years.

“The assumed residential tariff increases reflected in this (statement) are 5 per cent in 2013-14, 10 per cent in 2014-15, and 10 per cent in 201516. A one percentage point reduction in the assumed 5 per cent increase for 2013-14 is estimated to increase the operating subsidy requirements for the electricity agencies over the forward estimates period by a total of $53 million.”

So Mr Marney probably spilled his coffee while watching the leader’s TV election campaign debate when he heard Mr Barnett say, in response to a question, that he intended - if re-elected - to have electricity price increases only “at or around the rate of inflation”.

Good news for voters of course, but Treasury’s job is to balance the books.

So Mr Marney’s carefully worded response came in Treasury’s statement on the cost of the Liberal Party’s election commitments.

“If increases in electricity prices were to be held at levels consistent with the Perth CPI forecasts ... (2.75 per cent per annum from 2013-14 to 20125-16 - rather than the 5 per cent in 2013-14 and 10 per cent in each of 2014-15 and 2015-16 currently assumed in the budget aggregates - net debt would increase by $539 million over the forward estimates period.”

The negative impact on the budget surplus would be $36 million next year, $168 million in 2014-15, and $334 million in 2015-16.

Mr Barnett’s interpretation of “at or around the rate of inflation” will be watched with more than usual interest when the annual electricity price hike is announced in May, as Mr Marney aims to keep the budget in good shape.

After all the triple A credit rating could be at stake.