- Asset sales key to debt reduction
- Land tax and social concessions reform to realise $1 billion over four years
- Deficit of $2.7b forecast for 2015-16
- Debt of $31b in 2015-16
The State Government will sell, through a long-term lease, Fremantle Port and use the proceeds to retire debt and fund major new projects.
Premier Colin Barnett and Treasurer Mike Nahan announced the plans as part of a second tranche of asset sales in today's State Budget.
Announcing a forecast net operating balance deficit for 2015-16 of $2.7 billion and a net debt projection of $31 billion by June 30, 2016, Mr Barnett said the Government had decided to sell Fremantle Port in order to continue the vital task of building the economic infrastructure of the State without adding to debt.
"The decision to pursue a sensible program of further asset sales will enable the Government to build new infrastructure to support future growth without putting further pressure on the State's finances," Mr Barnett said.
Dr Nahan said while the 2014-15 State Budget showed a projected general government operating deficit of $1.3 billion, this would fall to $788 million when the recently announced Australian Government contribution of $499 million for road infrastructure flowed through to the State.
"This is a good outcome for Western Australia. We will build the Forrestfield line, we will get the rolling stock and we will reduce debt," he said.
As well as Fremantle Port, the Treasurer confirmed that the Government would sell the State-owned TAB after consultation with the racing codes, along with the Forest Products Commission and other Government assets. (See Fact File for full list).
Dr Nahan said the Government had responded to the 'perfect storm' of economic conditions which had seen revenues fall (relative to the estimates included in the 2014-15 Budget) by $3.9 billion, or 13 per cent, in 2015-16 and $10.21 billion over the four-year period from 2014-15 to 2017-18.
"Commodity prices have plummeted, our share of GST revenue has been driven to record lows and softening economic conditions have directly reduced all other major sources of State tax revenue," he said.
The Treasurer said the Liberal National Government was determined to return the Budget to surplus by vigorously pursuing reforms and efficiencies throughout the public sector while minimising the impact on business and families.
The Government has introduced new revenue and savings measures to reap net debt savings totalling $1.3 billion over the next four years.
Dr Nahan said the Government had made great strides in containing wages growth, with annual expense growth being limited to 2.5 per cent on average over the next four years, and in reducing the public service by 3,750 Full Time Equivalents without affecting frontline services.
The Government's Workforce Renewal Policy announced in the Mid-year Review is also expected to save $1.3 billion over the forward estimates and the Agency Expenditure Review program had already reaped $137 million from six agencies and would be expanded to all Government agencies.
Major new revenue and savings measures include:
- a new flatter land tax scale to be introduced from July 1, 2015 to raise an additional $184 million in 2015-16 and $826 million over four years
- more targeted social concessions to realise $199 million savings over four years
- removal of the $3,000 First Home Owner Grant for established homes, in line with other States.
The Treasurer said WA offered Seniors Card holders the most generous suite of concessions, discounts and rebates of any jurisdiction in Australia, which would total about $380 million in 2015-16.
"The Liberal National Government values the important contribution seniors make to the development of the State, however, with the proportion of seniors in the State continuing to grow, it is critical these concessions remain both affordable and targeted to those most in need," he said.
Dr Nahan said although savings would be achieved by targeting social concessions to those most in need, at the same time there was significant funding boosts for social housing ($560 million over two years); disability services (up $98 million or 11 per cent) and child protection (an additional $172 million over four years).
The Government will also introduce a no-fault catastrophic injury cover to expand WA's Compulsory Third Party insurance scheme from July 1, 2016 which will give all Western Australian motorists access to long term care in the event of catastrophic injury from traffic accidents where fault cannot be proven.
While WA continues to have the lowest unemployment rate of all States, labour market conditions are softening, with the unemployment rate forecast to peak at 6.25 per cent in 2015-16. The Government's Asset Investment Program (AIP) of $24.1 billion (over the next four years) is a significant contributor to employment growth and recent and current major projects will result in the creation of more than 93,000 jobs to 2023.
"The AIP is not only transforming the city and building the infrastructure of the future in education, health, water, power and transport but providing jobs today as the economy moves from the construction phase in the resources industry to the production and export phase," the Treasurer said.
Budget papers show net debt forecast to peak at $36.3 billion in June 2018 but decline to $35.8 billion by the end of the following year as a consequence of Government savings measures and an expected return to general government operating surpluses from 2017-18. However, these figures will reduce by $499 million when the Australian Government assistance on road infrastructure is booked by the end of the current financial year.
Further, the forward estimates make no provision for asset sales, the proceeds of which will not be booked until the sales are completed.
While household fees and charges will rise by 3.8 per cent or $198.54 per average household compared to 2014-15, WA will still have among the lowest expenditure on State Government goods and services when compared to other States.
"This is a responsible Budget that aims to meet the economic challenges facing the State, recognising that the fundamentals of the Western Australian economy remain strong over the longer term," Dr Nahan said.
Economic growth is forecast at 2 per cent in 2015-16, rising to 3.5 per cent in 2016-17.
Securing Our Economic Future
- $1.3b of new revenue and savings measures that build on previous reforms, including:
- a revised land tax scale from 2015-16, to bring WA more in line with other States
- reforms to social concessions, to ensure assistance is targeted to those most in need
- savings from Agency Expenditure Reviews, to ensure programs are being delivered efficiently and effectively
- removal of the $3,000 First Home Owner Grant for established homes, in line with other States
- $499m in additional Australian Government funding for key road projects, in recognition of unfair GST distribution
- Significant expansion of assets sales program to manage debt
- Additional support for tourism, including $21m for events and $11m for marketing
Tranche 2 Asset Sales
- Fremantle Port and Kwinana Bulk Terminal
- Forest Products Commission
- Portfolio of Government Regional Officer Housing (GROH)
- Securitisation of Keystart loan book
- State Fleet (sale and lease back)
- Some Government office buildings (sale and lease back)
- Specific LandCorp land holdings
- Individual generation assets of Horizon Power and Synergy and non-core assets of Western Power
Efficient Delivery of Quality Services
- $8.1b for the delivery of health services in 2015-16, with a $243m (4.6%) increase in spending on public hospital services
- $4.8b for delivery of education services in 2015-16, up $294m (6.5%) on 2014-15
- spending per public student up $600
- ongoing implementation of significant reform in education sector
- $1.4b on police services in 2015-16, up $53m (4.1%) on 2014-15
- on track for additional 550 police and auxiliary officers by end of 2016-17
- Strong focus on mental health initiatives, including $26m for new suicide prevention strategy and $28m for new subacute services in Karratha and Bunbury
Supporting and Protecting Our Community
- Introduction of no-fault catastrophic injury Compulsory Third Party insurance scheme from July 1, 2016 to provide lifetime care and support for people catastrophically injured in a motor vehicle accident
- New $560m Social Housing Investment Package delivering 1,000 additional social housing dwellings and halving the number of seniors and families with children on the priority waitlist
- Additional $172m over four years for child protection services
- Spending on disability services up $98m (11.3%) in 2015-16
- Additional $35m over two years for National Partnership Agreement on Homelessness
- $7m over two years for State-wide co-ordinated CCTV strategy
Investing in Infrastructure to Support Our Growing State
- $24.1b infrastructure program over next four years, including $6.3b in 2015-16, will support jobs and growth across the State
- New infrastructure investment in this Budget includes:
- an additional $1.18b over four years for school infrastructure
- $140m in 2015-16 for Western Power, primarily for wood pole and electrical conductor management programs
- $53m over four years for new radio system for rail services
- $28m (as part of $40m overall package) to alleviate traffic congestion on metropolitan roads
- $105m to improve access and build the new Aubin Grove Train Station
- $22m over three years for New Women's Custodial Centre
For more information, visit http://www.ourstatebudget.wa.gov.au
Premier's office - 6552 5000
Treasurer's office - 6552 5700