GOVERNMENT BUDGET SURPLUS
Motion
Extract from Hansard
[COUNCIL — Wednesday, 28 February 2024]
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Hon Dr Steve Thomas; Hon Tjorn Sibma; Hon Neil Thomson; Hon Dan Caddy; Hon Colin De Grussa; Hon Stephen Dawson; Hon Wilson Tucker; Hon Peter Collier
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HON DR STEVE THOMAS (South West) [1.12 pm]: I move —
That this house —
(1) notes that —
(a) the 2023–24 Government mid-year financial projections statement, also called the midyear review, released in December 2023 has again shown that the Cook Labor government has underestimated state revenue for this financial year, especially iron ore royalties revenue;
(b) the latest figures are again predicting a multibillion-dollar surplus for Western Australia; and
(c) Western Australian residents and families continue to struggle with higher costs of living while the Cook Labor government continues to roll in and flaunt its wealth, which it owes to high international iron ore prices rather than its own financial management.
(2) calls on the Cook Labor government to urgently do more for struggling Western Australian residents and families.
This is not exactly what I had expected today, but this is another parliamentary sitting day and another example of the mountain of cash that the Cook Labor government is rolling in. The government is continuing its process of underestimating its revenue, so it has plenty of cash in the money bin available for the next budget to roll into the next state election. Let me guess that is what is going on. I thought we might have seen a more honest change in the government and a more accurate set of figures revealed. I think we are supposed to see the next round of quarterly financial statements soon. I am a bit disappointed that on 28 February they have not yet been released because
I suspect they will show that the Cook Labor government has again underestimated its revenue and is pushing money back into the money bin. We might have lost Scrooge McDuck, but Donald and Daisy are still pushing money into the money bin at a massive rate.
The midyear review was interesting because although the government sort of half acknowledged that the iron ore price was still high and that it was still doing reasonably well out of the GST changes, it moved the potential budget surplus up only a fraction. It went from $3.3 billion projected in last year’s budget up to $3.8 billion, so that is half a billion dollars extra. But what happened to the projections of iron ore prices? The iron ore price, which was lifted in the midyear review to $US104.20 per tonne, needs to be compared with the average and the price today. The prediction in the midyear review was $US104.20 a tonne, and I imagine the government had to crank up its miserly projections prior to that. It has managed to crank it up a little bit, and that has pushed an extra half a billion dollars into the budget surplus. The government is obviously starting to crank up spending. We can expect that it will crank
up spending this financial year and that this budget is going to be an election budget. I am sure government members are running around, working out where this largesse is going to go. The government is going to crank up its revenue a little bit—not to the point of reality, just a little bit. It will be a stepping stone.
The next step is the quarterly financial statement. That might even come out this afternoon. It would have been useful if it had come out this morning; we could have included it in this debate, but no. The government is a bit tardy. We might be lucky that there is a 29 February this year because it is due at the end of the month.
Hon Darren West: There’s a lot going on!
Hon Stephen Dawson: It might’ve come out yesterday, but the news cycle got in the way!
Hon Dr STEVE THOMAS: It did. The Minister for Emergency Services makes a good point! I have been watching for it, and I am still watching for it. There will be economic debates in this house that I will still be very much part of, so government members should not assume for a minute that they are going to be let off the hook. They should not assume that it is all comfortable and easy now! This is still going to occur. I am going to stand up here and berate the government for its financial mismanagement. This will still occur.
Several members interjected.
The PRESIDENT: Order!
Hon Dr STEVE THOMAS: I am pleased to hear members on the other side talking about piles of cash, because I have been talking about it as well.
Hon Pierre Yang: That was yours!
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Extract from Hansard
[COUNCIL — Wednesday, 28 February 2024]
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Hon Dr Steve Thomas; Hon Tjorn Sibma; Hon Neil Thomson; Hon Dan Caddy; Hon Colin De Grussa; Hon Stephen Dawson; Hon Wilson Tucker; Hon Peter Collier
Hon Dr STEVE THOMAS: Hon Pierre Yang just repeated it, so I thank him very much. He can go outside and repeat it a bit more. I am more than happy to be quoted. I will give Hon Pierre Yang some budget numbers that he can use, and guess what? He will be proved more right than the Treasurer. He will be far more accurate than Hon Rita Saffioti if he takes my numbers and starts talking about them—he is welcome to! I will send him a copy, if he likes. When the quarterly financial statement comes out, I will probably put out a press release, and I will probably send the member a copy of it, if he likes, because he can use those numbers! I should not seek interjections
from the other side. Even though I am not in my previous role, I might still receive a letter later this year, despite that.
What has actually happened? We saw iron ore move up in the midyear review to $US104.20, but what is the actual price today and what is the average for the year to date, bearing in mind that we are at the end of February and are about to go into March. We are eight months into the financial year. The average price to date is $US121.49. Today’s price, depending on which measure is used, is anywhere from $US117 to $US175 a tonne. The average for the year has been around $US121. It has declined a little from $US125-plus, but what does that mean for the budget of Western Australia? What does it mean for the money bin? That is what we are talking about; we are talking about the Cook Labor government’s money bin from which it can throw money around. The price of iron ore has had an impact to date, to the end of February; I know we have one day to go, but let us assume it is not going to change much. It has added $1 billion in revenue because the difference between the $US121.49 actual and the budgeted $US104.20 is $US17.29. If we multiply that by $US93—even members opposite could probably add that up, although some might have to take their shoes and socks off—over the year, it will be $US1.6 billion. That is a billion dollars already. The government is a billion dollars wealthier than it is telling people it is.
It will be interesting to see what the quarterly financial statement that is due out today or tomorrow actually contains. Will the government crank it up a little higher because it is a little embarrassed about the process of keeping all that money hidden? It is very good at keeping money hidden. It takes revenue from normal government trading enterprises and keeps it in so that the dividends are retained and do not go through the budget papers. There are billions of dollars more that should have been flowing into the money bin, but they are in the little money bin. They are not sitting in the big Scrooge McDuck money bin. They are in the little government trading enterprises money bin, still sitting there ready for the government to use. If the government was a sound financial manager, as is traditionally the case, it would put it all together and it would say that, overall, its infrastructure spend is such and such. But no, the government puts it in the little money bin and says that is for the desalination plant. Let us face it, Water Corp gives the government the little money bin. The billions of dollars that are in the little money bin do not go through the budget papers in the same way, so the government gets to pretend they are not there. Instead of bringing
it in and saying it is revenue, because it is revenue the government has received, the government runs a set of black books out to the side. The government is involved in a fanciful accounting process.
I am not going to have time to get into a lot of detail, but we could discuss what happens with the debt reduction account, which is another little black book and off-the-edge item whereby a bit of insurance corporation funding comes in, and what does is done with it? For the most part it does not go to debt reduction. It goes to this thing the government says is offsetting new debt. It is another fanciful accounting trick whereby it says it will pay money out of this particular account so it does not have to take on debt. It is another little fiddle on behalf of this Treasurer and this government. It is a few extra millions of dollars, hundreds of millions of dollars, that go through and a few extra billion dollars that look different. The government is very good at disguising what it is doing, and it is not very good at openness and accountability.
Other parts of the motion also need to be addressed. When I say that Western Australian families and residents continue to struggle, that is true. When I say that the Cook government continues to roll in and flaunt its wealth, I suspect that we will never see that at a greater level than we are about to see in this budget process. We see Labor members rolling around the place waiting for the money bin to open and start pouring out revenue into electorates. That is what will happen. It is because the government has been very good at squirrelling it away. It has not changed anything. Labor financial management has not shifted—except in a few bad examples. For the first two years after Labor came into power in 2017, the debt and deficit forecast did not change. It was not new brush, new team in and different financial management. The financial management did not change until 2019. What happened? The current iron ore mining boom started.
The current iron ore mining boom has poured $6 billion surpluses year in, year out, into the Labor Party money bin. It had a $6 billion surplus. Until Queensland’s surplus last year of, I think, $9 billion, WA had the biggest surpluses of any state’s history in the Federation of Australia since colonies. It was the largest amount of money a state has ever had year in, year out—$6 billion surpluses. The wealth is astounding and not because of financial management. The government has been lucky to be the recipient during the biggest boom of royalties in this state’s history. What will the government spend it on and how will it manage its accounts?
We are talking about financial management, which is interesting, because one of the things this government has done is throw out its very strict wages policy. All those who are on the right wing of the political spectrum and like
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Hon Dr Steve Thomas; Hon Tjorn Sibma; Hon Neil Thomson; Hon Dan Caddy; Hon Colin De Grussa; Hon Stephen Dawson; Hon Wilson Tucker; Hon Peter Collier
to see good economic management also like to see a standardised and reasonably strict wages policy. Guess what? The new broom is in. The new Premier Roger Cook said he was chucking that out. What is the first thing that happened? There were public sector pay rises of $40 000 and $50 000 for people right at the top of the sector. How on earth is the government justifying that to nurses and teachers and people working at the bottom end of the process? Some people in the public service do not earn $40 000 or $50 000.
Hon Pierre Yang: It’s SAT. It’s not a government decision.
Hon Dr STEVE THOMAS: The member makes a very good point. I am going to give him credit here, which will probably destroy Hon Pierre Yang’s career. The member has a brain and his input is not terrible, some of the time.
Hon Pierre Yang is absolutely right; the Salaries and Allowances Tribunal makes that decision. But do members know what? The Salaries and Allowances Tribunal takes the government’s wages policy into account. The government removed the wages policy and SAT said, “What are we going to use to measure what public service wages should be? We’ve thrown the pullback model out the window. What will we use? We’ll use competition with everybody else.” Funnily enough, some directors general make $600 000 or $700 000. I am surprised it did not jump in and compare it with the federal sector, because it pays a bit better again. But it remains the case that because the government threw out its very strict wages policy, SAT had free range to give pay rises of $40 000 and $50 000, which is more than many of the people the Labor Party purports to represent earn in a year. There might be some public sector union representatives before the state. Is that the Missos? Who is in that group? I am not sure which union I should be referring to. The Labor Party represents people who earn less than the pay rises at the top end. I am interested to see how government members justify that and think that is reasonable.
Do members opposite know what the outcome of that will be? Everybody else is going to say, “If you’re going to give $40 000 or $50 000 to the top end, do you think we’re going to stand by and accept four per cent or five per cent?” Guess what? The government should get ready for the tsunami, a deluge. The government might say that because it is an election year, it will throw reasonably big pay increases at a lot of public servants. It is very dangerous making public sector wage rises a part of a political campaign, but maybe that is where we will end up. I suspect that the pressure will be high because now that the government has allowed the standard to be set, it will have a lot of very difficult negotiations on its plate. How do the unions feel—I do not know, but members opposite can tell me when they stand up to contribute to this motion—having accepted a pay rise of four per cent each year for the next two years when it is now open slather? I am sure the government negotiated fairly hard by saying that it had a standardised wages policy. That policy is now out the window.
I suspect that in this cost-of-living crisis in which we find ourselves, the impact on directors general is reasonably modest. If they have just had a $40 000 pay rise, they can probably afford to plug their Tesla car into an electrical outlet. However, the standard worker is still struggling. Families out there are in crisis because of the higher interest rates. Yes, I understand that they are not as high as they used to be. I remember 15 per cent, 16 per cent and 17 per cent interest rates. Members who are getting a bit long in the tooth like me can probably remember that as well. The people of Western Australia are, in some cases, struggling to put a roof over their heads and food on the table, and that struggle is not benefited by $40 000 pay rises to directors general and the government filling up its money bin. I suspect that in a few months, the government will open the door and throw some more dollars at people who are struggling, but here is a tip. Why did the government not throw open the doors last year? Why does it take an election year before the enormous money bin of the McGowan and Cook Labor governments is directed towards the cost-of-living needs of the people of Western Australia? Why has the government put the political expediency of the Labor Party and the McGowan–Cook Labor governments ahead of the needs of the people of Western Australia?
Why will the government wait until the pre-election budget to do that? It could have done it last year or the year before. The boom started in 2019 and, at that point, the economy looked very different, but that is what it was supposed to do.
I used to have great economic debates with Hon Alannah MacTiernan, whom I miss, although I am sure that Hon Stephen Dawson will put in a valiant effort here. For those Keynesians in the chamber, let us talk about what Keynes said. He said that when things are good, governments step back, and when things are tight, governments step up their expenditure. Some people say that is communism or government intervention, but Keynes was pretty moderate. He was fairly middle of the road. What has this government done? As the economics developed, as we got into this boom, it increased its spending. Instead of following the so-called left-wing mantra of Keynes, those guys over there plunged into modern monetary theory. They are sitting there going, “We’ll just accumulate all this wealth and throw it out there with massive infrastructure spends”, at the expense of all those people trying to build houses. There is a reason why trying to build a house, which used to take 10 months, is now taking two years, and on occasions three. The building industry cannot get workers or materials. The government added a state stimulus package to a federal stimulus package and made it worse in Western Australia. It doubled up. Other states did not do it; they relied on the federal package. This mob put in a state package and overheated the marketplace. All this construction was suddenly trying to get into the marketplace, and, at the same time, the government shifted its
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Hon Dr Steve Thomas; Hon Tjorn Sibma; Hon Neil Thomson; Hon Dan Caddy; Hon Colin De Grussa; Hon Stephen Dawson; Hon Wilson Tucker; Hon Peter Collier
state infrastructure spend up to $8 billion and then $9 billion; it is now $11 billion. That was in direct competition with everybody trying to build a house. Is it no wonder that people are struggling to put a roof over their heads? They are in direct competition with the government.
It will be really interesting; we are about to go into a pre-election budget, and I think the government will make it worse. I think the government will walk in and start chucking a bit more money about. Maybe that is its plan. Maybe the government has it finally worked out that it cannot afford to add anything more into the infrastructure budget because it has overcooked the marketplace. It is a burnt sausage! It is blackened and sitting on the edge of the barbecue, and nobody can eat it. The government has overcooked this marketplace to blazes. Maybe the government’s strategy is to spend the money somehow, so it is going to chuck it into wages. The Minister for Emergency Services will maybe tell us about this and outline the magic strategy. The government cannot do anymore infrastructure; it has cooked that. Where is it going to put the money? I think it will be really interesting; the pre-election budget will have so much money that the government cannot spend. It means that the government has not been able to set things out over a time frame and it does not have a plan for infrastructure expenditure that actually works. It is a bit like its plan for power transition; that does not work either. None of these things are properly and strategically put together. Its economic management is actually bad, not good.
Despite everything the government says, it has been incredibly lucky in being the recipient of the biggest royalties boom we have ever had, but its economic management is falling down. The people of Western Australia are suffering. The group of people that the government is not giving a $40 000 pay rise to are struggling to put food on the table. The government has overcooked the marketplace, so people have been waiting two years to get a house built. It has overcooked the marketplace. At the same time, the construction cost of a house has gone up by more than the combined state and federal grants that were handed out. A lot of those houses are now $100 000 more expensive than they were when the build first started. The government has overcooked this marketplace to a point, and now it will try to chuck more money into it to buy the next election and save the reputation of this government, and the people of Western Australia will suffer for it.
HON TJORN SIBMA (North Metropolitan) [1.33 pm]: It is with a great deal of enthusiasm that I address the chamber today on the first substantive motion of 2024. If I speak in absolute wholehearted support of the motion, the spirit with which it has been written and the contents, it is because it behoves us to concentrate our minds on the flow of money in Western Australia. I use that phrase advisedly. Over my summer break I reacquainted myself with a number of film classics that I had never got around to viewing. One of them was All the President’s Men. Aficionados of American political history will understand the significance of that. A phrase was used when people were trying to get to the bottom of the President’s complicity in the Watergate scandal. The phrase was “follow the money”. I think any sensible observer of the state of politics in Western Australia and the performance of this government has to follow the money and not be mystified or waylaid by its enormous budget surpluses. It is a story about the way that surplus has been accumulated and how that funding has been utilised to address dire areas of public need in Western Australia. It needs to continually be the focus of this chamber.
I am a nerd, and like any good political nerd, I like to read government reports. My friend Hon Dr Steve Thomas likes to read government reports too, and he referred to one in the opening statement of his motion. I want to draw the attention of members present today to another catalogue of annual reports; I will not say that the reports are speedily published, but they are generally published annually. I will refer to a report that the Western Australian Electoral Commissioner is obliged to deliver. It is a report on the operation of part IV of the Electoral Act 1907. What is all this about? It is about political finance. Why would I bring that up? Well, it is a way of referring to
a category of expenditure that every statutory department or government trading enterprise undergoes each year. It tries to measure how much of the money of the taxpayers of Western Australia is being given to advertising agencies, market research organisations, polling organisations, direct mail organisations and media advertising organisations. This is done by instruments of governments, not political parties—largely the public service.
I wondered how much money has gone out the door to fund propaganda over the course of the McGowan and Cook governments. These are statements of record and get to the sense of whether this is an appropriate level of expenditure. Some variability can be explained, but I want to go through the sum totals. In the first year of the McGowan Labor government, $92 million was spent on government propaganda; in 2018–19, $103 million was spent; in 2019–20, $107 million was spent; in 2020–21, $115 million was spent; and in 2021–22, $147 million was spent. That last figure can be explained to a degree by the COVID pandemic and the need for government communication. I am not saying that there is never any need to communicate to the public, but I am trying to understand if this scale and scope of huge expenditure is justifiable in the main.
The interesting thing about this is that those sum totals equate to about half a billion dollars. Half a billion dollars has been spent on advertising by this government. However, that is a dated figure. If I am to round it accurately, it is more around $560 million. There is a delay in the reporting. I have asked the Electoral Commissioner for an explanation of why we do not have the most recent document, which was tabled in November last year in the last or