The state’s financial outlook has improved since the May budget by about $3 billion across the next four years, with iron ore royalties and federal grants doing the heavy lifting, but the domestic economy will again shrink this year.
The state’s financial outlook has improved since the May budget by about $3 billion across the next four years, with iron ore royalties and federal grants doing the heavy lifting, but the domestic economy will again shrink this year.
State Treasurer Ben Wyatt confirmed today that WA will be in operating surplus as early as next financial year, with revenue to exceed operating spending by $1 billion.
The cash deficit, which also accounts for capital investments, will be $511 million in 2019-20.
The big win for the government was through an improved revenue outlook.
Across the forecast period, revenue will rise $3.3 billion.
That is largely thanks to the federal government, with GST reform providing an extra $2.4 billion across the four years.
Iron ore royalties will provide another $1.1 billion.
Payroll tax and stamp duty will both bring lower revenue, however.
Spending will grow at 2.5 per cent in the current year, up from 0.9 per cent forecast at budget time, although the government says that was because of items delayed from the previous year.
“Importantly, expense growth is forecast to remain at historically low rates across the forward estimates period, averaging just 1.3 per cent per annum (similar to the 1.2 per cent per annum forecast at Budget-time),” the budget papers said.
“In total, expenses have been revised up by $289 million (or just 0.2 per cent) across the four-year forward estimates period compared to the 2018-19 Budget.”
But there was negative news in the numbers, too.
State final demand, which measures the economy without including imports and exports, will contract by 0.5 per cent.
Dwelling investment will fall 4 per cent this financial year, well down on an estimated 4.75 per cent rise predicted at budget time, while business investment is predicted to drop 11 per cent, improved on a 14 per cent decrease previously forecast.
Household consumption will grow only 1.5 per cent, much lower than the 2.25 per cent predicted in the budget.
Treasurer Ben Wyatt said the outlook was improving for WA.
"To turn things around from the record debt and deficits we inherited to now have such a healthy surplus predicted is testament to the financial discipline which has been shown by every member of the McGowan government,” Mr Wyatt said.
"Getting the budget back into surplus from 2019-20 will greatly assist in managing the debt levels we inherited from the former Liberal National government - with a substantial $532 million saving in interest payments.
"We have had some great successes this year and there has been plenty of cause for optimism for the future with a lot of the data that has come out in 2018, and to now see that Treasury has forecast such a surplus is truly the cherry on top of a stellar year of financial management.
"Of course, the government will go through a budget process which will reflect our priorities and also react to circumstances between now and budget time, but we are at last starting from a more sustainable position.
“However, our fiscal restraint will remain as important as ever as we look to pay down the record debt left to us by the Liberals and Nationals."
Opposition leader Mike Nahan said the economic news was broadly negative.
“The only good news in this midyear review released today by the government is a large windfall revenue to the state, first from the GST improvements thanks to the Liberal National (federal) government, and a very large increases in royalties thanks to the world economy,” Mr Nahan said.
“There is no good news in this budget for the WA public
“The economic update that comes with the budget indicates a substantial downgrading in all aspects of the domestic economy.”
