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."   

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

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!