It has been hard to miss the massive budget surpluses the McGowan Government has been announcing in recent years, thanks to the highest revenues any WA Government has ever seen.
Last year it was a $5.8 billion surplus; this year’s estimate is about the same, but I am sure it will rise to another record.
They are the largest surpluses of any State in the history of our nation, and arise from the latest boom in iron ore royalties.
In Mark McGowan’s first year (2017-18), total iron ore royalties were $4.5 billion. Last financial year, they were $11 billion.
In other words, the entire massive budget surplus and more can be accounted for by iron ore royalty increases alone.
Which makes the Premier’s claim of good financial management farcical; winning the iron ore lottery is not the same as good budgeting.
That is unless Mr McGowan is claiming credit for the January 2019 Brazil dam collapse that stifled supply and drove up iron ore prices from February 2019, and the COVID crisis that saw countries around the world spend trillions on infrastructure stimulus packages that needed steel, driving up the iron ore price again in 2020.
And it’s not just iron ore royalties. This Government’s taxes and charges are also booming, especially payroll tax and stamp duties. Payroll tax revenues alone under Labor have risen $700 million over the last two years.
So, having the good fortune of massive revenue increases, the real question for the McGowan Labor Government is:
How effectively have they spent the greatest windfall we are ever likely to see and who has benefited?
After all, as businesspeople know, it is when you get these windfalls that you reinvest for the future.
The McGowan Labor Government can hardly argue that they have used their windfall to improve services to the community when we face an obvious health crisis.
Nor has Labor used this sudden wealth to improve the lack of housing which afflicts our entire State.
Try finding rental accommodation anywhere from Perth to Broome to Albany, and you will be competing with dozens of other desperate people for each available house or apartment.
There are plenty of other areas where nothing has progressed.
Labor’s Transport, Minister Rita Saffioti, announced business cases into three Tier 3 rail lines in 2020. Two years later she is apparently still doing them, but we have seen zero progress.
Their Minister for Agriculture, Alannah MacTiernan, has dithered on the rebuilding of the Boyanup saleyards, and so the current lease has had to be extended for decades.
Minister for Forestry, Dave Kelly, has destroyed our hardwood timber industry, and as Water Minister seems to be in the process of going down the same path for irrigated agriculture in WA.
McGowan’s Government has also struggled to support WA business during the COVID crisis. Their business support packages are so restrictive and poorly designed that businesses have struggled to access them, which means the Government has struggled to get the money out to the businesses that need it.
Critically, this Labor Government is not investing to diversify our State’s economy by reforming taxes that restrict businesses and limit jobs, like payroll tax, despite have the greatest capacity to do so that any Government has ever seen.
The McGowan Government has ignored tax reform completely, while the Liberal Party took an excellent payroll tax reduction policy to the last State Election.
Nor is the McGowan Government paying down debt in any substantial way. In Budget Estimates last week, the Government confirmed that Total Public Sector net state debt was $32 billion when they got elected in 2017.
According to his own budget last month, that debt will be $31 billion by the 30th of June 2023, and a year later McGowan will have it back above $32 billion.
Labor is investing in infrastructure, but as recently as last week the Auditor General raised concerns in a report that identified a half a billion dollar blowout in project costs, with seven of seventeen projects also blowing out their timelines by at least a year.
But even those blowouts can’t dent Mark McGowan’s money bin, which still overflows, nor his embodiment of Scrooge McDuck. He seems to be addicted to rolling in cash, and revels in the coverage he gets for it.
So, as the iron ore price corrects back to normal and the current fiscal boom ends, the question is this: Is it the Western Australian community, including the business community, or the Labor Government that is getting the benefit of the biggest economic boom our State has ever seen?
As every business knows, the good times are when you restructure and reinvest.
And Mr McGowan should be investing for the people, not for his own political gain.
After all, it’s your money in the end, not for him to hoard for the next election.
Contact: +61 8 9792-5628 | Steve.Thomas@mp.wa.gov.au |
