Mid-year Review uses conservative numbers and tricky accounting for small rise in surplus

The Shadow Treasurer Dr Steve Thomas says that the Mid-year Review released today shows a small increase in the expected surplus for 2022-23 using conservative revenue estimates for the year and hidden money grabs, describing the document as the most misleading economic plan he has seen.

“The Mid-year Review has confirmed that iron ore royalties and state taxes remain significantly higher than predicted in the May budget” Dr Thomas said.

“This means that State Government revenue remains high enough for the Government to assist those West Australians that are struggling with eight interest rate rises in a row this year, and to provide better services in areas such as health, despite the Premier’s commentary.”

“The Premier keeps warning us all of impending recession around the world in order to dampen down demands that he spend his amassed riches from multiple $6 billion surpluses on the needs of the community today and to provide better services, instead of saving it for his own pet projects and election sweeteners to ensure his political future.”

“The May budget predicted an iron ore price of US$77.50 this year, but it actually averaged US$103.50 in the first three months, and it is still US$109 dollars today.”

“Naturally Mr McGowan has predicted a significant weakening of the iron ore price next year, suggesting the average price for 2022-23 will be US$87.40. Even with that however the Mid-year Review has royalties $2 billion higher than projected in the state budget in May (up from $7 billion to $9 billion).”

“Total projected 2022-23 revenue has risen from $38.4 billion in May to $40.7 billion in the Review today.”

“State taxation revenue is also up nearly a billion dollars on the May budget estimate.”

Dr Thomas said that the Premier had tried to compensate for the increases in revenue by also increasing his expenditure but would struggle to deliver it.

“Mr McGowan already has a massive infrastructure budget and I doubt it can absorb another billion dollars. Finding the labour and materials to build any more will be problematic.

“He has also scrapped $1.4 billion in budgeted income from public sector corporations, mainly Water Corporation.”

“This is another accounting trick the Premier is using to keep the revenue numbers lower and hose down expectation of the community. That money will stay on the Corporations books and not the Government’s accounts, effectively hidden as state revenue.”

Dr Thomas said that Mr McGowan is quite deliberately overstating the downside economic risk to Western Australia so that he can keep his billions as free money in his money bin for his own political agenda. He said the community should be wary of the Premier’s agenda.

“While it is true that world economic growth is expected to decline, most commentators including the ratings agencies are predicting a soft landing here in WA. This is based on a surprisingly resilient iron ore price and the GST fix, plus a strong local economy.”

“And increased state taxes, especially payroll tax, have boosted Mark McGowan’s pile of cash even more. If the Premier doesn’t want to give any of his cash back, he could instead take his hand out of people’s pockets by reforming our clumsy tax system, especially payroll tax and stamp duties.”

“He could also pay down debt, which is predicted in today’s report to be the same $32 billion level in three years, the same as it was when Mr McGowan came to power. This despite the State experiencing the biggest boom in our history.”

“The pressure is on the Premier to share the wealth with the people and the community, but in true Scrooge McDuck style he is intent on keeping it for his own benefit and is trying to scare us all with threats of recession interstate and overseas into supporting him in doing so.”