State records $318m surplus in FY09

The state government has managed to keep its annual budget in the black despite revenue growing by just 0.5 per cent and spending skyrocketing by 13.5 per cent.

Treasurer Troy Buswell revealed today that state's operating surplus for the 2009 financial year had shrunk from the latest forecast $647 million to $318 million.

However it was a sharp fall from the May 2008 estimate which had projected a surplus of $1.85 billion.

Revenue for the year had grown 0.5 per cent to $19.4 billion, a much slower rate when compared to the 5.5 per cent initial forecast.

Mr Buswell said the slow rate of revenue growth was a significant challenge for the government that year, and was not helped by a 42.2 per cent fall, or $962 million, slump in stamp duty, a $427 million fall in GST payments and a $298 million drop in royalties, mainly driven by lower nickel prices and nickel mine closures.

General government expenses climbed 13.5 per cent to $19.1 billion, a much higher result compared to an initial forecast of 7.7 per cent made in May 2008.

Mr Buswell today said he did not believe the surplus had hit the bottom yet and declined to back Premier Colin Barnett's pledge to keep the state's budget out of the red.

"Although there are positive signs that the state's economy is improving I think the state's finances and especially our revenue growth will only pick up with a significant lag ... it could be 12 months, it could be 24 months," he said.

"We face as many challenges heading into this budget now as we did heading into last year's.

"I don't think we have bottomed out..."

The government had to seize economic opportunities while audits on government agencies would generate savings in some areas or redirect money to other priority areas, he said.

A 3 per cent efficiency dividend had yielded $155 million in savings and a ceiling on wages for public servants had also been beneficial, he said.

The state's net debt forecast at $7.9 billion was revised to $6.6 billion despite a record infrastructure spend of $5.8 billion and increased spending in key public service areas.

The announcement is below:

The 'Annual Report on State Finances' for the 2008 09 financial year has been released today by Treasurer Troy Buswell.

The ARSF is a key accountability report required by the Government Financial Responsibility Act 2000.

"I am pleased the State's books were in the black in 2008 09, however, the results show the importance of the Government's efforts to control unsustainable expenditure growth," Mr Buswell said.

"Today's report follows recent news of a rise in business confidence and the unanimous endorsement for our Triple-A credit rating from both Moody's and Standard and Poor's.

"These acknowledgments reflect our work implementing the Capital Works Audit, the three per cent efficiency dividend, the Economic Audit, Wages Policy and FTE ceiling.

"We will continue to carefully manage the State's finances to ensure that Western Australia is well positioned for the next period of sustained economic growth."

The report compares the State's financial performance for the financial year ending June 30, 2009 with the projections in the 2008-09 Budget, released on May 8, 2008. Key highlights of the 2008-09 ARSF include:

- a general Government sector operating surplus of $318million, down $1.537billion on the original budget estimate

- growth in general Government revenue was 0.5 per cent in 2008-09, down from the 5.5 per cent growth forecast in May 2008 reflecting the impact of the economic and financial turbulence of the past 12 months

- revenue from State taxes, GST grants and royalties was down $1.6billion (or 12 per cent) compared to the Budget forecast, although these shortfalls were partly offset by a higher level of specific purpose grants from the Federal Government

- general Government expense growth of 13.5 per cent was up from the 7.7 per cent growth forecast at budget-time. This includes the impact of implementing the Government's election commitments and working with the Federal Government to implement its economic stimulus package

- infrastructure spending totalled a record $5.8billion, down $691million on the original Budget estimate, but up $821million on the previous record investment of $5billion in 2007 08

- total public sector net debt increased to $6.8billion at June 30, 2009, up $3.2billion from the outcome recorded a year earlier, but $1.2billion lower than the original budget estimate.

The 2008 09 ARSF is available from the Department of Treasury and Finance website at http://www.dtf.wa.gov.au/.