The state government has announced a better-than-expected result in its annual report on state finances for 2014-15, but Treasurer Mike Nahan says Western Australia has a long way to go before it returns to surplus.
The state government has announced a better-than-expected result in its annual report on state finances for 2014-15, but Treasurer Mike Nahan says Western Australia has a long way to go before it returns to surplus.
Dr Nahan said the $499 million grant from the Commonwealth to bring the state’s share of GST up to 37 per cent, coupled with ‘substantial’ reductions in spending and wages growth, brought the deficit down from a forecast $1.28 billion to $431 million.
”As we said at the time of the 2015-16 state budget, an operating deficit in 2014-15 was unavoidable given the change in the revenue outlook,” he said.
Expenses growth was up 2.2 per cent (lowest increase in 20 years), while wages growth more than halved from an average of 8.4 per cent to 3.8 per cent (lowest in 16 years).
The treasurer said the result was driven by the fiscal discipline imposed on the public sector in the face of the first revenue contraction to the state’s finances in 18 years, down $556 million, or 2 per cent, brought about by sharp reductions in iron ore and oil prices.
“The slowdown in expenses growth was driven by a whole range of factors, including the outcome of voluntary redundancy programs, ongoing efficiency expenditure, a wages policy that targeted CPI, the workplace renewal program, and a number of other efficiency measures which have been very comprehensive across the board,” Dr Nahan said.
“Almost all of the departments achieved reductions in expenditure growth, except for health.”
Net debt for the total public sector was $23.4 billion, reflecting an increase in borrowings required to support the state’s asset investment program.
The program totalled $5.8 billion in 2014-15 and included a $1.1 billion investment in electricity infrastructure, $985 million for roads, $670 million for water infrastructure, $588 million for hospitals and other health facilities, and $432 million for schools.
“This is a very substantial spend on infrastructure that is building our productive capacity and supporting our growing population while at the same time providing jobs,” Dr Nahan said.
The treasurer said the financial result didn’t mean the worst was behind for the state.
“I’m telling people like it is. We’re seeing very slow growth in our revenue and we’re seeing population diminishing so I think where we forecast in the budget last time is right about where we’re going,” Dr Nahan said.
“If anything, it’s getting more difficult, because of the slowdown in our economy and the structure of our economy.”
However, he said WA was going through a cycle where it will come back and recover.
“We understand where we’re going,” Dr Nahan said.
“We’re trying to hold this ship together and keep employment going, and we’re going through major structural change this state has never experienced from the decline in the mining boom and we have policies that are keeping us on track.
“In three years time we will have a substantial budget surplus, we will maintain capital expenditure, and we will come to a period that our public sector workforce has retained job security and maintain the highest wages in the country.”
