Ripper wants $2bn resources infrastructure fund

The state government has called on the commonwealth to create a $2 billion infrastructure fund to expand and consolidate key export industries.

WA treasurer Eric Ripper said the Commonwealth should follow Western Australia's lead and use their surplus to build more infrastructure.

"Using the surplus to build infrastructure is an investment in the nation's future," the Treasurer said.

"In WA we use every cent of our surplus to build social and economic infrastructure and cut debt."

Mr Ripper said Peter Costello should address the issue in the May Budget.

"Peter Costello is already signalling that tax cuts are unlikely because of the inflationary pressure they will place on interest rates.

"An investment in the nation's future by supporting projects which will generate long-term prosperity is where I think the money should be spent."

Mr Ripper said that keeping up with the infrastructure demands generated by a booming economy was placing an unfair burden on WA taxpayers.

"Public sector investment by State and local government in WA was almost $2,100 per person in 2005 06, compared to an average of just over $1,300 per person by other State and Territory governments," he said.

"In contrast, the Commonwealth's public sector investment in Western Australia in 2005 06 was around a meagre $340 per person, less than the average of $480 per person it spent in other States and Territories.

"The Commonwealth receives the majority of fiscal returns from WA's major resource projects through its broad revenue bases - especially petroleum resource rent tax, income tax and company tax.

"Yet the Commonwealth makes very little contribution to the infrastructure and other costs of supporting such developments."

Apart from the North West Shelf project, the Commonwealth had been unwilling to share royalties from offshore petroleum and gas fields.

The State's revenue benefits largely consisted of mining royalties, however, under the Grants Commission process for allocating GST revenues, up to 90 per cent of our royalties from resource development were redistributed to other States.

Moreover, the Grants Commission did not adequately recognise many of the costs WA faced in supporting resource developments.

Examples included:
- The Gorgon gas project was forecast to improve the Commonwealth's budget balance by between $11billion and $14billion. However, after taking account of State expenditures to service the increased population resulting from the Gorgon development, and the redistribution of net revenue benefits by the Grants Commission, WA's forecast net fiscal benefit was only $300million ($10million per annum). Other States received a net fiscal benefit of about $3billion. The Commonwealth would provide no special assistance for the social infrastructure required to service the population increase in WA due to the Gorgon project.

- The Commonwealth Government's net revenues from the Ravensthorpe nickel project would be almost seven times larger than the WA Government's. Yet the State Government was already contributing over $30million to this project (including in the form of power and water infrastructure, road works and school upgrades), compared to the Commonwealth's contribution of around $11million.

- The Boddington Gold Mine expansion was expected to deliver significant benefits to both the State and the Commonwealth Governments. The cost of the social infrastructure package was estimated to be $67million, with proposed State Government funding of $51million and Commonwealth funding of just $16million. The State had already committed to providing funding to address issues requiring immediate attention. It was hoped that the Commonwealth Government would also make contribution through the Regional Solutions program, but there had been no commitment from the Commonwealth to date.

"Over the past four years, the State Government has invested approximately $480million on port infrastructure, while the Federal Government has contributed just $3million, Mr Ripper said.

"The State Government is investing a further $406million in ports over the next four years, but there is no commitment from the Federal Government to provide any funds."

"Taking into account all Commonwealth revenues and expenditures, the Commonwealth collects around $4billion more revenue from WA each year than it spends on WA. This is a net contribution of $2,000 per person and far exceeds that of NSW and Victoria, the other two donor states."