Rising taxes lift surplus to record $2.26bn

The impact of booming economic conditions and high commodity prices led to a stellar year for the state’s finances in 2005-06, with a record $2.26 billion operating surplus.

There was strong growth in general government revenue and the lowest level of net debt on record.

The release of state final demand figures showed WA’s domestic economy grew at 14 per cent in the June quarter compared to the same period a year earlier – higher than China’s growth rate of 11.3 per cent.

Registering an annual SFD growth in 2005-06 of 10.4 per cent, compared to the 2004-05 financial year, the WA economy surged ahead of the other states, with QLD at 6.7 per cent, Victoria at 2.9, South Australia at 2.6 and NSW at 2.2.

Taxation and mining revenue, including royalties from the North West Shelf, were the largest contributors to government revenue growth.

Conveyance and mortgage duty revenue was significantly higher, due mainly to the strong growth in property prices over the year and the high number of transactions.

Strong wages growth contributed to higher payroll tax revenues.

The increase in mining revenue was largely due to an increase in North West Shelf royalties, resulting from a higher than forecast average oil price over the year, higher commodity prices and a lower than forecast average exchange rate.

This was partially offset by lower than expected production volumes for some commodities as a result of cyclonic activity in the region.

According to the 2005-06 Annual Report of State Finances, WA’s taxation revenue as a share of GSP increased relative to the 2005-06 budget estimate, but remained below the average of the other states.

This reflected strong growth in the Western Australian property market over the year.