Shadow Treasurer Steve Thomas says the $5.1 billion budget surplus revealed in the Annual Report on State Finances today is a slap in the face to WA families who are struggling to put food on the table and pay their mortgages.
Dr Thomas said was nothing to celebrate in returning an above forecast surplus while state debt is tipped to continue to grow and families were financially worse off as a direct result of government policies.
“The actual surplus announced today of $5.1 billion comes on top of the $1.7 billion, $5.8 billion and $6 billion surpluses in the three preceding years,” Dr Thomas said.
“On top of that total of $18.6 billion in profit over the past four financial years, this Government is forecasting surpluses of $3.3 billion, $2.4 billion, $2.5 billion and $2.9 billion in this financial year and the three out years.
“That means the McGowan-Cook Labor Governments will have total surpluses of $29.7 billion over the eight years of the current mining boom.
“That is more than the current state debt.”
Dr Thomas said the current financial year’s budget (2023-24) was also looking like exceeding expectations given the buoyant iron ore price, which was sitting currently around US$120 a tonne, despite expectations it would decline more rapidly.
The 2023-24 budget suggested iron ore would average US$74 this year and US$66 in the forward years, but the real average to date this financial year has been $US111 a tonne.
“That high price in the first quarter of the 2023-24 financial year has already added $750 million to the expected $3.3 billion surplus,” Dr Thomas said.
“We have also seen a softening of the exchange rate to well below the Government prediction of US67.7 cents, and that decline drives up revenue in an export-based state such as WA.
“At the same time the strong Perth economy is seeing high state income in taxes and charges, especially stamp duty and payroll tax.
“The Annual Report on State Finances shows the Government underestimated its tax revenues by $274 million in this year’s budget prediction.
“Payroll tax revenue was $427 million higher than in the 2022-23 budget estimate, and stamp duty was $380 million higher over the same period.
Dr Thomas also said the Government’s habit of consistently underestimating its revenue and surpluses was wearing thin, making it hard to believe the Treasury estimates.
“Iron ore royalties stayed high at $9 billion for 2022-23, despite the Government projecting it would nearly halve in their original 2022-23 budget,” Dr Thomas said.
“In 2022, the Government predicted that iron ore royalties would drop $4.4 billion, but it only dropped by $838 million, which accounts for $3.5 billion of the actual 2022-23 surplus.
In the May 2022 budget, the Government predicted a $1.6 billion surplus for 2022-23, and despite the high iron ore price it only raised the estimate to $1.8 billion in the December mid-year review.
The actual result from the September 2023 Annual Report on State Finances was $5.1 billion.
“That means that the Premier has an even greater capacity to help Western Australian families that are struggling with cost-of-living pressures brought on by massive CPI increases that show no signs of easing yet.”
Dr Thomas said there was a range of options available to the new Premier and new Treasurer when they were looking at what to do with this latest cash windfall.
“In the first instance, a reduction of Government fees and charges should be looked at,” Dr Thomas said.
“Another option is to freeze the increase in fees and charges, or to reduce charges on a means-tested basis to ensure it gets to those who face the greatest economic distress.
“Economic reform through the reduction of taxes on employment and housing would also be a welcome option. This could boost pay packets and give people a greater ability to maximise their income.
“The Government should also be paying down debt in a meaningful way rather than simply paying lip service as they have to date.
“They inherited debt of $32 billion, and while it has been reduced to $27.4 billion as at the 30th of June 2023, their own figures project it to rise to $36 billion by 2026-27 despite the rivers of cash flowing into their money bin.
“There are plenty of options for the Premier to use this massive surplus to help people; the unacceptable option is to hoard the money for himself and the political future of his Government.”