Budget Op Ed
August 2021
The 2021 State Budget is coming up next week, so it is time to review what the budget is likely to say and compare that to what it should be focussed on.
First off let’s address the elephant in the room; the budget surplus last financial year is likely to be a record of at least $4 billion and as possibly as high as $5 billion.
It will be the biggest budget surplus in Western Australia’s history by far, thanks entirely to the latest boom in iron ore prices.
Iron ore royalties in the 2020-21 year will be in the order of $11 billion, around twice the normal level. The highest royalty income in the last boom was $6 billion in 2013-14, so it is obvious where the $5 billion surplus is coming from.
So the revenue side of the budget equation is well and truly taken care of.
The question we need to ask is what is happening on the spending side, and is the community getting the benefit of the mountains of cash being raked in from the mining sector?
The Government dropped its first pre-election announcement a month out from budget day with a cash splash of $1.9 billion for the health budget, which was both welcome and well overdue.
Mark McGowan and Roger Cook have spent the last year denying there is any problems in health, despite the plague of ambulance ramping blowouts and emergency department overcrowding.
The obvious crisis in health has been ignored until the cries of outrage were so loud that the Labor Party was forced to give up some of the piles of money it has been sitting on.
But is heath the only pressure point in service delivery the Government has to deal with?
Those in the housing and homeless sectors would say absolutely not, and that that there is more than one crisis facing the Government.
The bank of public housing is down more than a thousand homes since Mark McGowan came to power, and rentals are almost impossible to find across the entire state. From Kununurra to Perth to Esperance people are struggling to find somewhere to live.
The tourism sector in WA would also disagree. While a potential AFL grand final would bring some relief to struggling city hotels, there are plenty of tourism operators looking down the barrel of closure or bankruptcy who don’t think that they can survive the next business lock down.
The training sector also needs a boost. It was only a few short weeks ago that despite being in power for the last four years the Government had to have a “skills summit” to address the critical shortage of workers in a multitude of industries including construction, health and agriculture.
For a Premier who came to power in 2017 with a pledge to “rebuild our training system” it must be something of an embarrassment to have to hold a crisis meeting four years down the track.
The business community is also looking for support, not by way of handouts but by asking Government to assist their growth instead of getting in the way.
When the Premier is rolling in cash like Scrooge McDuck with his money bin it should be hard to tell business and industry that there is nothing of substance in the budget for them.
The current payroll tax system for example is an anathema; it is a tax on jobs and employment that damages businesses’ capacity to grow.
To leave payroll tax unchanged when you are so embarrassed by your income riches will no doubt be remembered as a poor legacy to leave the engine room of the WA economy.
These are all areas that should be addressed in some way by the September 9th budget.
It will not be acceptable for the McGowan Government to cry poor because of the costs of the COVID pandemic, and use this as an excuse not to support the community that needs it.
It needs to be remembered that the current boom is two and half years old already, and it has already poured $4 billion extra into Mark McGowan’s money bin prior to the 2020-21 $5 billion bonanza.
And iron ore royalties are the gift that keeps on giving, even though the price has moderated it is still well over the budget estimate.
Western Australia is one of the few places in the world making a profit out of COVID as other countries buy our iron ore for their massive stimulus packages.
The budget next week is the time for the WA community to share in that profit, and we need to see a budget plan that delivers the services we need and diversifies our economy for the future when the current mining boom passes.
Let’s hope that is what is delivered.