The Shadow Treasurer Dr Steve Thomas says the Annual Report on State Finances released today shows an even bigger budget surplus than predicted in the 2022 state budget, and this means that Premier Mark McGowan should provide more support to struggling Western Australian households.
“The last state budget suggested the 2021-22 surplus would be $5.7 billion, but I have repeatedly indicated that I thought it would be higher than that” Dr Thomas said. “In fact, in my pre-budget presentation given before the budget was released, I suggested the actual 2021-22 figure could be as high as $6 billion.”
“The actual surplus announced today was over $6 billion, the biggest in the history of any state in Australia.”
“This is based on the buoyant iron ore price, which jumped around between US$130 and US$145 a tonne in May and June 2022 despite expectations that it would decline more rapidly.”
“We have also seen a softening of the exchange rate, and that decline drives up revenue in an export- based state such as WA. May and June saw an average exchange rate well below the Government prediction of US73.5 cents.”
“At the same time the strong Perth economy was seeing high state income in taxes and charges, especially stamp duty and payroll tax.”
“The December Mid-Year Review showed the Government had underestimated its tax revenues by $1.9 billion in last year’s budget prediction. It also had to lift its GST revenue estimate by $1.1 billion.”
“On the expenditure side of the ledger, as predicted in my pre-budget presentation the Government has been unable to spend at the level it predicted in consecutive budgets. Spending is down by half a billion dollars.”
In the October 2020 budget the Government predicted a $1.2 billion surplus for 2020-21. The actual result from the September 2021 Annual Report on State Finances was $5.84 billion.
The September 2021 budget predicted a budget surplus of $2.8 billion for 2021-22. By the time we got to the May 2022 budget this predicted figure had jumped to $5.7 billion.
“There is no doubt that the McGowan Government is rolling in cash, with well over $20 billion in projected surpluses over five years” Dr Thomas said. “It has been the greatest fiscal boom of any state or territory in our nation’s history, and it is thanks to the world buying our iron ore as a part of their economic stimulus packages.”
“That means that the Premier has an even greater capacity to help Western Australian families that are struggling with cost of living pressures brought on by massive CPI increases that show no signs of easing yet.”
“The fact that such an enormous surplus been announced the same week that fuel prices are going back up – thanks to the ending of the six months fuel excise reduction – shows the Premier has his priorities all wrong” Dr Thomas said.
“The Premier is so fixated on delivering massive surpluses that he has forgotten that it is the people’s money, not his own. This arrogance must end!”
Dr Thomas said there was a range of options available to the Premier when he was looking at what to do with his latest cash windfall.
“In the first instance a reduction of Government fees and charges should be looked at, which could include yet another cash hand out as long as it is better targeted to those who really need it.”
“Another option is to freeze the increase in fees and charges, or to reduce charges on a means tested basis to ensure it gets to those who face the greatest economic distress.”
“Economic reform through the reduction of taxes on employment and housing would also be a welcome option. This could boost pay packets and give people a greater ability to maximise their income.”
“The Premier should also be paying down debt in a meaningful way rather than the lip service he has given to it to date” Dr Thomas said. “He inherited debt of $32 billion when he came to Government, and his own figures project it to rise to $34 billion in two years’ time, despite the rivers of cash flowing into his money bin.”
“There are plenty of options for the Premier to use another massive surplus to help people; the only one he can’t do is to hoard the money for himself and his political future” Dr Thomas said.
“People are tired of Mark McGowan rolling in cash like Scrooge McDuck while they struggle to make ends meet.”
“I have welcomed the additional support the Premier has given Public Service workers in his latest pay offer – albeit one he has been dragged to kicking and screaming after three failed attempts this year” Dr Thomas said. “At least in this process he has recognised the cost of living crisis many are facing.”
“But he has done very little for the 90% of workers who are not employed by the Government.”
The 2021 State Budget estimate of the 2021-22 surplus was $2.791 billion.
The 2022 State Budget estimate of the 2021-22 surplus was $5.676 billion.
The actual result in the Annual Report on State Finances released today was $
The 2022 State Budget estimate of the 2022-23 surplus was $1.592 billion, but this was based on a projected iron ore price of US$77.50 per tonne.
The price today is US$99 a tonne, which is around its lowest point this financial year to date.
This means the Government already has iron ore royalty revenue in the first quarter of 2022-23 at least half a billion dollars above its budget estimate.
The 2021-22 budget surplus announced today was $6.019 billion.