Record $1.24b surplus on higher tax revenue

The State Government budget surplus of $1.24 billion in 2004-05 was the strongest result ever, underpinned to a large extent by higher royalties collected from the booming resources sector.

Despite significant spending on the Government’s capital works program, the surplus was also 55 per cent higher than last year’s result of $799 million.

Tax revenue grew by 11.3 per cent to $14.2 billion.

Most key tax revenue drivers were higher than estimated, indicating “stellar” growth in the local economy, Treasury said in its financial results report.

The higher-than-expected tax revenue was largely the result of strong growth in the property market, increased Federal Government GST grants, and higher prices and volumes for key commodities such as oil and iron ore.

Royalty income was 28.6 per cent higher at $841 million.

Even though the State Government delivered tax cuts worth $233 million in the areas of payroll tax and conveyance duty, the final results showed an increase in revenue collected from these items on the previous year.

Western Australia was also one of the highest-taxing states in the nation, second only to New South Wales. Tax revenue per capita in WA was nearly $2,250.

A significant portion of the surplus was used to retire government debt.

Total spending increased to about $12.9 billion, up 8.6 per cent.

The Government’s capital works program recorded a preliminary spending outcome of $4.14 billion in the past financial year, representing a blow-out in costs of $219 million.

Revenue from public corporations was up $104 million, due mainly to higher-than-anticipated electricity demand, and the continued strength of the property market, which resulted in increased contributions to the Water Corporation by developers.

‘Other’ revenue was $73 million higher compared with the budget estimate, reflecting the transfer of Crown land previously vested with Edith Cowan University to the state and an increase in mining-related lease rentals due to greater-than-anticipated exploration activity.

Total government operating expenses were $12.98 billion, $506 million higher than the original budget estimate.

Interest expense was $50 million lower during the year, reflecting the retirement of debt and lower than expected borrowing.

The state sector net worth was $50.9 billion as at June 30 2005, according to the state balance sheet, a $9.9 billion increase on expectations at budget time.

The Government is expected to shortly make known the outcome of the state tax review, which recently closed its call for submissions.