Who does the money belong to?

18th June 2022

It has been hard to miss the massive budget surpluses the McGowan Government has been announcing in recent years.

Last year it was a $5.8 billion profit; this year’s estimate is about the same, but I am sure it will rise to another record.

They are the biggest profits of any state in the history of our nation.

They are the result of the latest boom in iron ore royalties, which in Mark McGowan’s first year in charge (2017-18) were $4.5 billion. Last financial year, they were $11 billion.

In other words, the entire massive budget surplus can be accounted for by iron ore royalty increases alone.

Which makes the Premier’s claim of good financial management farcical; winning the iron ore lottery is not the same as good budgeting.

That is unless Mr McGowan is claiming credit for the January 2019 Brazil dam collapse that stifled supply and drove up iron ore prices from February 2019. 

He can hardly claim credit for the COVID crisis that saw countries around the world spend trillions on infrastructure stimulus packages that needed steel, driving up the iron ore price again in 2020.

So, having the good fortune of massive revenue increases, the real question for the McGowan Government is how effectively have they spent the greatest windfall we are ever likely to see, and who has benefited?

After all, as most businesspeople know, especially farmers, it is when you get these windfalls that you reinvest for the future.

It is when the wheat or beef of lamb price is high, and the profit is up, that you can pay down debt, replace the fences or the tractor, and add that extra bit of fertiliser next year.

Regional people understand that if your income is variable, you have to carefully invest in the good times better than our city cousins whose incomes are more consistent.

But the Government can hardly argue that they have used their windfall to improve services to the community when we face a health crisis.

They have also not used their sudden wealth to improve the lack of housing which inflicts the entire state.

Try finding affordable rental accommodation anywhere from Kununurra to Albany; from Esperance to Bunbury, you will be competing with dozens of other desperate people for each available house or apartment.

I do note that the Government has taken the first, small step in the housing direction by acknowledging the problem and putting some money aside, but remember the boom started three and a half years ago.

And there are plenty of other areas where nothing has progressed.

The Transport Minister Rita Saffioti announced the business cases into three Tier three rail lines in 2020. Two years later she is still doing them apparently, but we have seen zero progress.

The Minister for Agriculture Alannah MacTiernan has dithered on the rebuilding of the Boyanup saleyards, and so the current lease has had to be extended for decades.

The Minister for Forestry Dave Kelly has destroyed the hardwood timber industry, and in his role as Water Minister seems to be in the process of going down the same path for irrigated agriculture.

There’s plenty of money however for the Attorney General John Quigley to fly back to Sydney to correct his evidence in court.

So, the question is whether the Western Australian community or the Labor Government is getting the benefit of the biggest economic boom the state has ever seen?

It is not investing to diversify the economy by reforming taxes that restrict businesses and limit jobs, like payroll tax, despite have the greatest capacity to do so any Government has ever seen.

It is investing in infrastructure, but most of its infrastructure spend is focused on Perth projects like MetroNet which has gone from a $3 billion project to a $10 billion one.

Even the Auditor General raised concerns last week, in a report that identified a half a billion dollar blowout in project costs, with seven of seventeen projects also blowing out their timelines by at least a year.

But even those blowouts can’t dent Mark McGowan’s money bin, which still overflows, nor his embodiment of Scrooge McDuck. He seems to be addicted to rolling in cash, and revels in the coverage he gets for it.

As every regional business knows though, especially farmers, the good times are when you reinvest.

And Mr McGowan should be investing for the people, not for his own political gain.

After all, it’s their money in the end.