WA Budget deficit $431 million, more ugly figures to come

Date
    September 24, 2015



WA treasurer Mike Nahan has announced the state's first deficit in more than a decade.



Western Australia's spending growth has been reined in, but not enough to hold off the state's first deficit in more than a decade - and uglier figures are yet to come.

Treasurer Mike Nahan gave the frank assessment of the state's financial outlook on Thursday in the 2014-15 annual report, which showed an operating deficit of $431 million.   :(

That's $856 million better than the estimate of almost $1.3 billion in this year's budget, thanks to public sector wages growth being capped at the inflation rate.


The state is seeing very slow growth in revenue, with iron ore prices leaving a large dent.

But there has been no revenue recovery, with iron ore prices staying stubbornly low and ongoing softness in own-source revenue such as payroll tax.


"I'm not crowing here - this is still the first deficit in 18 years, I think," Dr Nahan told reporters.

While net debt at the end of June was $2.1 billion better than expected at $23.4 billion, Dr Nahan said it wasn't wise to borrow for recurrent spending purposes.

"But when you get hit with a revenue stream like that and have weakness in the economy ... it's time for the state to provide some stability," he said.

Dr Nahan said the budget would return to surplus in three years, when the state's GST take was expected to improve.

In May, the federal government granted a one-off $499 million payment to WA for road projects that was designed to offset the state's drop in GST revenue from 37 cents in the dollar to 29.9 cents.

Dr Nahan said he hoped a similar payment would be made this financial year.

"My understanding is that will happen again this year," he said.

Asked whether Prime Minister Malcolm Turnbull would be open to that, the Treasurer said Christian Porter - one of Dr Nahan's predecessors and the newly appointed federal Social Services Minister - certainly was.

Dr Nahan was equally blunt when asked if the ugliest figures were behind the state. 

"No," he said.

"Iron ore prices will stop hopefully where they are now, which is a little bit higher than production, but we're seeing very slow growth in our own revenue.

"We understand where we're going - it's not an easy time.

"We're trying to hold this ship together ... keep employment going and we're going through major structural change this state has never experienced because of the decline of the mining boom.

"I'm just telling people like it is. That's what you have to do."   :(

Read more: http://www.watoday.com.au/wa-news/wa-budget-deficit-431-million-more-ugly-figures-to-come-20150924-gjtz8l.html#ixzz3mgsvUw6w
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comments so far 

        So much for the LNP being better economic managers.   :(

    Commenter
        Johnny
    Location
        Perf
    Date and time
        September 24, 2015, 12:44PM

    Why am I not surprise at this. A gov't sending the state broke in the middle of a mining boom, then claiming its someone else's fault. CAN all developments (non essential) until finances are available. AFTER hospitals and EDUCATION have been FULLY financed. People first, not self aggrandizing erections.   :(

Commenter
    earn it
Date and time
    September 24, 2015, 2:48PM

Quote:

..............Dr Nahan was equally blunt when asked if the ugliest figures were behind the state.  "No" he said. "Iron ore prices will stop hopefully where they are now , , which is a little bit higher than production, but we're seeing very slow growth in our own revenue. "We understand where we're going - it's not an easy time. "We're trying to hold this ship together ... keep employment going and we're going through major structural change this state has never experienced because of the decline of the mining boom. "I'm just telling people like it is. That's what you have to do."   ...............

yes, this is a liberals attitude.
One I am happy to stand beside.

Sprintcyclist wrote on Sep 25^th, 2015 at 7:40am:

Quote: ..............Dr Nahan was equally blunt when asked if the ugliest figures were behind the state.  "No" he said. "Iron ore prices will stop hopefully where they are now , , which is a little bit higher than production, but we're seeing very slow growth in our own revenue. "We understand where we're going - it's not an easy time. "We're trying to hold this ship together ... keep employment going and we're going through major structural change this state has never experienced because of the decline of the mining boom. "I'm just telling people like it is. That's what you have to do."   ............... yes, this is a liberals attitude. One I am happy to stand beside.

Attitude is irrelevant if the Liberals are still failing:

Quote:

the 2014-15 annual report ... showed an operating deficit of $431 million.

If the Federal Liberals were competent, they would have taken a closer look at reforming the GST funding formula to be more responsive to changes in the economy of the states. The WA budget is suffering because WA's meagre allocation of GST funding is based on economic conditions from two or three years ago when the iron ore price was double what it was now and far more money was flowing into the WA budget from mining royalties.

If the WA Liberals were competent, they would have banked more of the past surpluses, or charged more for mining royalties. If they've spent all of the past surpluses and run up a debt of $23 billion, they are not very good at managing money.

After McMahon gave payroll tax to the states, interstate rivalry saw starting points rise very quickly and rates reduce at the same speed.

Why can’t the states get back together and set sensible starting points and rates. Then at least some of the big companies would have paid SOME tax here! No, all too easy to have the GST increased. The GST is a bloody disaster states  became addicted to spending, mostly on useless bureaucracies in universities and hospitals!