Even more evidence of Western Australia’s monster budget surpluses thanks to iron ore and the GST fix

Dec 16, 2021 | State News, Steve Thomas MLC

The Shadow Treasurer Dr Steve Thomas says that today’s release of the Government’s Mid-year Financial Projections Statement has again highlighted the massive cash income the McGowan Government has received during the current financial boom, and again highlighted the opportunity the McGowan Government has squandered to reform the Western Australian economy.

“The incredible $5.8 billion surplus recorded for the 2020-21 financial year has been confirmed” Dr Thomas said. “This Government is looking at $16 billion worth of surpluses over five years in an unprecedented flow of incoming cash.”

“The McGowan Government should be thanking the current iron ore boom and the new GST deal introduced by the federal Coalition Government” Dr Thomas said. “To suggest that their financial management has been responsible for this outcome is a ridiculous sleight of hand that should not be allowed to go unchallenged.”

The Mid-year review reflects a slight increase of $24 million in the already high GST income this financial year.

“This is yet another Treasury report demonstrating that the McGowan Government has received a mountain of cash, yet it has failed to maintain services like health and housing, and it has utterly failed to take advantage of the boom times to prepare us for the next downturn.”

Dr Thomas said that the first signs of that downward cycle could be seen in the Mid-year Review.

“The projected average iron ore price for 2021-22 has been dropped from US$121 to US$105 in the three months since the budget, and it is expected to continue to decline” he said. “This has resulted in a reduction in expected iron ore royalty income this year of $1.5 billion this year.”

“The boom-and-bust cycle that the WA economy is stuck in only gets smoothed out when a forward- thinking Government uses a boom to diversify the economy and insulate it from future busts” Dr Thomas said. “Most importantly boom periods should be used to get the Government’s bureaucratic foot off the hose of commercial and industrial development.”

“This includes making the approvals process more efficient and effective and cutting back taxes that undermine economic growth.”