State moves to cap govt employees

Treasurer Troy Buswell has revealed that state revenue has dipped a further $1 billion since the interim budget was released last month as the government moves to cap employees in the public sector at 99,155.

At a press conference this afternoon, Mr Buswell said the state is likely to enter into deficit starting 2010/11.

"Since the mid year review published in December, the state's revenues over the next four years have fallen by $1 billion," Mr Buswell said.

"That has put additional pressure on the government surplus and/or deficit and on state government borrowings.

"I expect Western Australia will be in deficit in 2010/11 as well as financial year 2011/12."

"This puts the state government in a difficult position."

He said the declining revenue income had been affected by a decrease in mining royalties and property taxes.

Last week, Moody's warned that the state's AAA credit rating was at risk should the budget go into deficit and government spending was not reined in.

Mr Buswell today said that he had spoken to various rating agencies last month and had already notified them that a series of announcements regarding state spending and capital works program will be released shortly.

Today the state government decided to put the development of the Perth sport stadium on the backburner for two year, scrap the $500 million East Perth museum in favour of a redevelopment in Northbridge and committed to a new children's hospital, likely to be built at QE2.

Additionally, Mr Buswell said a head count ceiling on the general government sector will be the equivalent of around 99,155 full time employees.

Mr Buswell said the government needs to rein in spending in the public sector after an eight year increase in the salary bill from $4 billion to $7 billion under the previous government.

Additionally he outlined details of where several government departments will make cuts in order to meet the government's 3 per cent efficiency dividend.

The Department of Education and Training have indicated it would be reducing central office staff by 5 per cent or 100 FTE's, which will result in savings of $27 million over four years.

"A reduction in FTE's will not be delivered by involuntary redundancies rather by not filling related positions as they arise," Mr Buswell added.

The Department of Attorney General said it will reduce administrative support functions, among other things to generate savings of $54 million over four years while the Department of Health is expected to generate savings of $90 million over five years.