Hon Mike Nahan BEc MS PhD MLA

Hon Mike Nahan BEc MS PhD MLA

Former Treasurer; Minister for Energy; Citizenship and Multicultural Interests

    Record low spending for two years in a row

    22/09/2016 9:30 AM
    • Expense growth of 2.4% in 2015-16 - the second lowest in 21 years
    • Growth in general government sector salaries expenditure was just 2.6% in 2015-16 - the lowest since 1998-99
    • Total public sector net debt at June 30, 2016 was $27.3 billion, $513 million lower than estimated in the 2016-17 Budget 

    The Liberal National Government has brought spending growth down to 2.4 per cent in 2015-16, its second lowest level in more than two decades, according to the Annual Report on State Finances released by Treasurer Mike Nahan today.


    The report also found salaries across the general government sector grew by just 2.6 per cent in 2015-16 - the lowest increase in 17 years.  It also highlighted that total public sector net debt came in $513 million lower than the 2016-17 Budget estimate, and a substantial $3.6 billion lower than the original 2015-16 Budget forecast, at $27.3 billion for 2015-16.


    Dr Nahan said the results were achieved in the face of unprecedented revenue downturns over the past two financial years.  In 2015-16, these included:

    • a substantial decline in royalty income (down $477 million or 10.4 per cent on 2014-15), primarily due to a 28 per cent fall in the iron ore price
    • a $377 million (or 16.7 per cent) reduction in the State's GST grant relative to 2014-15, bringing the total reduction since 2013-14 to $626 million or 25 per cent
    • a $249 million (or 28.7 per cent) decline in the State's North West Shelf grants, reflecting a significant weakening in the oil price
    • very modest growth in taxation revenue (up $187 million or 2.1 per cent), largely reflecting increased land tax collections and landholder duty, partially offset by lower transfer duty receipts and the first decline in payroll tax collections in more than two decades.  

    "As we said at the time of the 2016-17 Budget, an operating deficit in 2015-16 was unavoidable in the face of the State's declining revenue base," the Treasurer said.


    The general government sector recorded an operating deficit of $2 billion in 2015-16, $688 million lower than the original 2015-16 Budget deficit projection and in line with the 2016-17 Budget estimate.


    "General government spending grew by a low 2.4 per cent in 2015-16 - the second lowest rate of expenses growth in 21 years following the result of just 2.2 per cent in 2014-15," Dr Nahan said.


    "Those outcomes required substantial restraint and commitment, particularly when compared with the average annual expense growth over the preceding decade of 7.7 per cent.


    "These results show the impact of successive measures implemented to improve the efficiency of the public sector workforce, including the temporary recruitment freeze announced in the 2015-16 Mid-year Review, voluntary separation programs, the Workforce Renewal Policy, leave liability management and the Government's Public Sector Wages Policy.


    "The State Government has worked hard to keep this collapse in revenue away from households and businesses, while continuing to provide the high quality services expected by West Australians.


    "The increase in borrowings is required to fund essential infrastructure through the Asset Investment Program and was pushed higher in 2015-16 by the revenue downturn.  This highlights the importance of keeping a tight rein on spending and pushing ahead with the Government's asset sales program."


    Fact File

    • GST grant declined by $377 million in 2015-16 (State's GST relativity fell from 37.6% of WA's population share in 2014-15 to just 30% in 2015-16)
    • Payroll tax collections decreased by $100 million or 2.8% relative to 2014-15 (the first decline in payroll tax in more than two decades)
    • Commodity prices were significantly lower than in the previous year (the iron price continued to weaken in 2015-16, falling from an average of $US71.1 per tonne in 2014-15 to $US50.9 per tonne in 2015-16, while the oil price declined from $US73.5 per barrel to $US43.4 per barrel)
    • To read the Annual Report on State Finances, visit http://www.treasury.wa.gov.au 

    Treasurer's office - 6552 5700


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