Eric Ripper

Eric Ripper

Deputy Premier; Treasurer; Minister for State Development

    Growing economy puts pressure on expenses, says Treasurer

    27/12/2007 1:00 PM
     
    27/12/07

    Western Australia’s economy is continuing to grow at an impressive rate but the surge is also putting significant upward pressure on the cost of providing services and capital works, Treasurer Eric Ripper said today.

    Releasing the mid-year financial review, Mr Ripper said although Government revenue was up significantly, there were also major increases in expenditure, especially in capital works programs and key services delivery.

    “The State’s economy is travelling extremely well but strong economic growth also has a downside,” the Treasurer said.

    “There are hefty increases in the cost of providing services that are impacting on our record capital works program and in salaries to key service areas.

    “Salaries, for example, will rise by a forecast $1.9billion over the next four years.”

    Mr Ripper said the general Government operating balance had been revised up from $1.45billion to $1.83billion.

    “Every cent of the surplus is being reinvested to build a brighter future for our State,” he said.

    “Strong surpluses allow us to deliver massive public transport projects, such as the Perth-to-Mandurah railway, completely debt-free.”

    While the State’s strong economy was reflected by a $922million or 5.2 per cent increase in revenue, Mr Ripper said that amount had been significantly offset by a $544million or 3.4 per cent rise in spending required to keep pace with demands.

    “Revenue growth has been very strong, with wages and employment growth resulting in a $237million increase in payroll tax revenue in the current financial year,” he said.

    “Conveyance duty has also risen $528million, largely because of stronger than expected activity in the non-residential property market and major one-off assessments.

    “But this also needs to be measured against the Government’s salaries bill, which has been revised upwards by $252million - largely because of Enterprise Bargaining Agreement offers to doctors, nurses, teachers and other key services staff. These increases are essential to sustaining critical services to our burgeoning population.”

    The Treasurer said other important features of the mid-year review included:
    • Gross State Product forecast to increase by seven per cent in 2007-08 - up from 4.5 per cent at Budget time;
    • an extra $3.5billion in infrastructure spending since the Budget, bringing the record capital works program across the next four years to $25.1billion;
    • improvements to the design of the Fiona Stanley Hospital, with a consequent increase of $669million in the cost, bringing the total cost of the project to $1.76billion;
    • a net debt to revenue ratio forecast to reach 38 per cent in 2010-11 - unchanged from the Budget and well below the Government’s upper limit of 47 per cent;
    • mining royalties, including the North-West Shelf petroleum royalties, up $948million over three years due largely to higher iron ore and oil price assumptions ($1.9billion) offset by a loss of $1billion due to exchange rate movements; and
    • an extra $249.5million over the forward estimates for shared services reforms. This project is estimated to deliver savings of $84million over that period.
    Mr Ripper also said he would ask the State Parliament to approve an increase in the 2007-08 Treasurer’s Advance, following increases in Government spending on vital services such as education and health, public housing and childcare initiatives.

    He said the overall economic outlook for the State continued to be excellent but the figures also highlighted the need for a prudent approach by the Government, with expenses growing along with a strong economy.

    The Treasurer reiterated that the Government had funded a series of major projects as part of the mid-year review process including:
    • $114million for payments of children who were abused while under the protection of the State;
    • an additional $110million to ensure the completion of stage two of Indian Ocean Drive from Lancelin to Cervantes;
    • a $73million funding package for the arts in WA - the biggest in the State’s history;
    • $63million for expansion and ongoing implementation of the Mental Health Strategy 2004-07;
    • $25million to turn Ellenbrook Secondary College into a senior high school; and
    • $25million to expand Comet Bay College at Secret Harbour to include Year 11 and 12 students.
    “The Government has always said we want to maximise and sustain our economic growth and to ensure that the benefits are shared with as many Western Australians as possible, ”Mr Ripper said.

    “Clearly, we are working towards that aim by reinvesting record amounts in capital works and ensuring we can attract and keep the best doctors, nurses and teachers.”

    Treasurer's office - 9222 8788