Western Australia Treasurer Troy Buswell
State Budget 2013-14: Securing Our Economic Future
Victor P Taffa
- Surplus of $386 Million in 2013-14
- WA’s economic growth forecast at 3.25% in 2013-14, higher than the national 2.5%
- $6.8 Billion Fiscal Action Plan to ensure long-term sustainability of the State’s finances
- Housing Supply Package to increase the supply of housing, including an increase in the First Home Owners Grant to $10,000 for new homes
Treasurer Troy Buswell today announced a general government sector operating surplus of $386 Million for the 2013-14 State Budget.
Mr. Buswell said while the Western Australian economy remained strong, with growth forecast next year, it was undergoing a transition.
“The State’s economy is forecast to grow by 3.25 % this year the highest rate of growth forecast for any State and well above the national growth forecast of 2.5 %.” Mr. Buswell said.
“Our economy is supported by ongoing work on a number of large liquefied natural gas and iron ore projects, but the flow of new projects has eased and business investment in WA appears to have peaked although still expected to stay at historically high levels.”
The Treasurer said the State’s rapidly growing population and subdued revenue performance meant WA faced a financially challenging future, despite forecast growth.
The State’s population jumped 75,000 last year, leading to unprecedented demand for services and infrastructure.
“An imbalance has emerged between growth in the State’s expenditure and growth in revenue.” Mr. Buswell said.
“This brings significant financial challenges, as major resource projects transition from a construction phase to a production phase, the demand for labour has begun to ease, and so has growth in the State Government’s tax revenue.”
“The challenges are exacerbated by WA’s declining share of GST revenue. It has already fallen to a historic low of just 45 cents for every dollar of GST raised here that means WA loses $477 Million in revenue.
“It gets worse our share of GST is projected to fall to only seven cents for every dollar of GST raised in 2016-17, meaning WA is forecast to receive just $500 Million that year. The bottom line is that WA will receive $2.4Billion less than we received last year.”
The Treasurer said the State Budget reflected the Liberal National Government’s determination to meet the challenges of a changing economy, and secure a strong and secure future for generations of West Australians.
“The Government is attempting to achieve a difficult balance of investment in services and infrastructure to cope with spiralling demand from a growing population, while some traditionally strong revenue streams, like payroll tax and land tax, are not performing as strongly as previously expected.” Mr. Buswell said.
“So with upward pressure on expense growth and challenges to key revenue streams, WA is facing a serious structural budget challenge.”
“This State Budget reflects tough but necessary decisions undertaken by the Government to secure our economic future through fundamentally reforming the way in which the public sector operates, with the introduction of the $6.8 Billion Fiscal Action Plan.”
The Fiscal Action Plan will ensure the sustainability of the State’s finances and includes:
- A 12.5 % across-the-board increase in land tax rates from 2013-14; offsetting lower than expected land valuations and generating an additional 5% in land tax revenues from that forecast in the Pre-Election Financial Projections Statement
- Halving of the private vehicle concession for motor vehicle registration fees from January 2014
- The introduction of a $4,000 per year public school tuition fee for children of 457 visa holders to partly cover the costs of educating these children
- A new public sector wages policy to apply from November 2013 that caps wages and conditions increases to CPI growth
- A $1 Billion re-prioritisation of the public sector’s infrastructure spending
- Targeted program rationalisation measures, including a reduction in the feed-in tariff customer payment rate from the current 40 cents per kilowatt hour to 30 cents from October 1, 2013, and a further reduction to 20 cents from July 1, 2014; together with a two-year extension to the scheme
- Introduction of ongoing program evaluation in the public sector, with targeted savings of $350 Million over the next four years
- Long overdue public sector workforce reforms to bring flexibility into the management of the public sector workforce.
The Government will also look to unlock new economic growth opportunities, including investing $300 Million to diversify and further grow WA’s agricultural sector.
This includes $40 Million in agriculture science, research and development programs to forge partnerships between innovative growers and researchers to conduct applied research and development projects.
The State Budget also includes a Housing Supply Package to accommodate rapid population growth. The measures include:
- Increasing the First Home Owner Grant to $10,000 for first-time buyers of new homes
- First-time buyers of established homes will receive $3,000
- Expanding the number of affordable rental properties by committing to an additional $47.8 Million for an extra 1,000 homes under the National Rental Affordability Scheme
- Streamlining residential planning and building approvals processes to ensure the supply of new housing is not held up in red tape.
- The $6.8 Billion Fiscal Action Plan will ensure sustainability of the State’s finances and includes new revenue measures, a cap on public sector wages, funding for 1,000 voluntary separations, re-prioritisation of infrastructure funding and targeted program rationalisation
- $300 Million (Royalties for Regions) over five years to allow WA farmers to capitalise on the growing world demand for fresh produce. This includes $40M in agriculture science, research and development programs
- From 2014-15 the payroll tax exemption threshold will be raised to $800,000 and from 2016-17 the threshold will be lifted further to $850,000, providing tax relief to more than 16,000 employers
- $8.7 Million over four years to support small business by boosting ‘Buy Local’ provisions
- $15.3 Million over four years to the Small Business Centre program to ensure these centres continue to provide advice and support to small businesses