Western Australia’s big budget surplus should position us for the future

09 September 2021

The Shadow Treasurer Dr Steve Thomas said the WA State Budget released today represents  not only the biggest surplus ever recorded in this state but the biggest lost opportunity the state  has ever seen. 

“The announcement of a $5.6 billion surplus for the 2020-21 financial year is the largest this state  has ever had,” Dr Thomas said.  

“When you add it to the $4 billion the Government received over and above its earlier budgets  and the very conservative $2.8 billion surplus predicted for the current year, it is a $10 billion  mountain of cash that Mark McGowan is already sitting on.” 

Dr Thomas said the massive increase in state revenue is attributed to: 

1. the high iron ore price resulting in massive iron ore royalties – to a peak of $12 billion in 2020-21 which is more than double the amount expected in a normal price year, 2. higher payroll and land taxes, up $1.1 billion on 2019-20, including payroll tax which is  up by $314 million or 8.4%, transfer duty which is up 58% or $770 million, and 3. the GST fix put in place by the Federal Government which added $1.5 billion to the  state coffers last financial year and $1.85 billion this year. 

Dr Thomas said the Government is expecting to have budget surpluses totalling $14.9 billion  over the five years from 2020-21 to 2024-25 - an unprecedented mountain of wealth. 

“Over that period however the net debt of the state will not decline - instead it will rise from $33.5  billion at the end of last financial year to $36 billion in 2024-25,” Dr Thomas said. 

“At a time of wealth previous Governments could only dream of, the McGowan Labor  Government will have $15 billion in surpluses and still go out and have to borrow another $2.5  billion.” 

Dr Thomas said on the revenue side, the Labor Government has been the beneficiary of the  biggest boom in our history, but questions have to be asked about how well the community has  benefitted from this boom which commenced two and a half years ago and is still going today. 

“How can we have a health crisis, a housing crisis and a skills crisis after thirty months of boom  that has poured rivers of gold into Labor’s treasury,” Dr Thomas said. 

“It is not the case that this wealth arrived recently, so there is no excuse for the service delivery  crisis position we now find ourselves in.” 

Dr Thomas said that the once in a lifetime series of surpluses should be used to set the state up  for the future. 

“The Government should be positioning the state for the end of the current boom so that when  we return to normal economic circumstances we can still thrive.

“We have a one-off opportunity to reform taxes and approvals processes to help businesses here  grow, and it is disappointing that the Government not grabbed it with both hands. 

“In particular, there will never be a better opportunity to reform payroll tax, because the upfront  cost of reform is high and can only be done in times of plenty like we now enjoy. 

“Sadly, the Labor Party has avoided any significant reform of tax despite having the best  opportunity in history to do so.  

“The greatest disappointment I have in this budget is the tiny and unremarkable section entitled  “economic reform”, which includes only a reannouncement of the last $120 million for 150 new  public servants (announced on the 21st of July this year) and an extension of $150 million for  industry grant funds. 

“This is completely underwhelming in a budget with $15 billion worth of surpluses - where is the  vision for tax reform, or economic diversity and growth?” 

Media contact: Dr Steve Thomas 0427 908 717