WA STATE BUDGET 2019
With his third State Budget, Western Australia’s Treasurer Ben Wyatt has handed down the first state budget surplus in five years.
The budget continues to deliver on Labor’s 2017 election themes of combating rising unemployment through job-creating infrastructure projects, increased access to housing, and tackling congestion.
With the exception of a $182 million Employer Incentive Scheme, today’s budget contained very few surprises, all big-ticket items had been revealed in advance during a pre-budget announcement bonanza.
By using the GST windfall to pay down debt, this budget plays straight to the heart of economic conservatives, leaving little room for criticism by the state opposition.
WA is a key battleground state for the upcoming federal election. The strategy to date of both federal campaigns to match significant commitments to road and rail infrastructure in WA are complemented by the flagship State Government projects supported in this budget including METRONET, upgrade of Stephenson Ave and the new Fremantle Traffic Bridge.
WHERE DOES THE MONEY COME FROM?
The budget surplus has been fuelled by iron ore prices exceeding last year’s forecast. The increase in demand for WA’s iron ore stems from the world’s largest producer, Vale, seeing dam collapse disasters at mines in Brazil, causing significant disruptions in iron ore supply. This has resulted in surging iron ore prices, and subsequent increases in WA Government royalties.
Under the new GST arrangements, WA is guaranteed 70 cents in the dollar and equating to $1.2 billion GST top-up this year.
Despite bringing the budget back into surplus and a continued union campaign pushing for pay increases, the Government has held to its hard-line wages policy and preserved the public sector wages cap, limiting pay rises to $1000 a year.
- The 2019-2020 budget has been enhanced by a forecast surplus of $553 million for 2018-19;
- Total public sector net debt to peak at $37 billion at June 2020, then decline to $35.6 billion by June 2023;
- Unemployment forecast to drop by 0.5% to 6%;
- Economic growth forecast to increase by 1.5% to 3.5%;
- Population Growth forecast at 1.3% in 2019-20, increasing to 1.7% by 2022-23.
JOBS AND INFRASTRUCTURE
Premier Mark McGowan has set his Government a target of creating 150,000 new jobs by 2023-24. The 2019-20 budget outlines funding for several big infrastructure projects, which will create significant job opportunities aimed at helping the Government reach its job creation target.
Big ticket infrastructure projects and associated jobs created via a $1.7 billion roads package the government claims will create 8000 jobs and see the transformation of Tonkin Highway and the eastern corridor. (See below for a detailed list of spending items)
Over the next four years the Government has allocated $4.1 billion for the construction of METRONET, it’s signature infrastructure project.
$415 million has been allocated in the budget for the removal of level crossings along the Armadale Line. Of the $415 million outlined for the projects, $207.5 million to be spent over the next four years. $17.5 million in 2019-20 will fund preparation of detailed designs and business cases for the projects.
Funding for METRONET is significantly boosted by $207.5 million in Commonwealth funding for the removal of three level crossings at Oats Street in Carlisle, Welshpool Road in Welshpool and Mint Street in East Victoria Park.
The Government expects to announce the contract to develop the Thornlie-Cockburn Link and Yanchep Rail Extension this year, with construction following shortly thereafter, as well as the contract for the construction of the new METRONET railcar assembly and commissioning facility in Bellevue.
Palliative care funding appears to reflect the Government’s commitment to reforming end of life choices. Palliative care services in WA will receive a significant increase in funding, with $41 million outlined in the budget, bringing the Government’s overall spend for 2019-20 to $47.4 million, and totalling $206.2 million over the next four years. The $41 million package includes a 74% increase in funding for regional palliative care services.
The Government has also delivered on its 2017 election promise to improve treatment of mental health and drug and alcohol affected patients and reduce emergency department waiting times. It has outlined $22.2 million in funding for more mental health beds and support.
The transition of Western Australia’s only coal mining town, Collie, continues to be a major issue for the Government. In a pre-budget announcement last week, the government confirmed the shift in the $60 million funds earmarked for a biomass and utility-scale solar generation facilities in Collie to a new Industry Attraction and Development Fund. The diversion of funds was signalled due to a lack of commercial interest in biomass and solar generation facility investment in Collie. $10 million has been allocated from the fund for an adventure trails plan which aims to establish Collie as WA’s premier ‘trail adventure town’. The Collie adventure trails plan and Industry Attraction and Development Fund aims to attract jobs to Collie.
The termination of the Financial Assistance Agreement with Carnegie Clean Energy for the Albany wave energy technology development project, has seen $13.125 million diverted to delivering radiotherapy services in Albany.
The Government will invest a total of $6.7 million from 2019-20 to 2021-22 on the establishment of the Energy Transformation Implementation Unit. It will assist with the delivery of the Government’s Energy Transformation Strategy. Funding for the unit has been derived from a one-off special dividend applied to the electricity Government Trading Enterprises.
With the Government buoyed by the latest visitor numbers, this budget increases investment in attracting local, domestic and international travellers to holiday in WA. This is in line with the McGowan Government’s two-year action plan.
The Government has outlined plans to secure the future of the State’s agricultural efforts. The 2019-20 budget includes $131.5 million of additional expenditure in the Department of Primary Industries and Regional Development.
- More than $22 million in funding for the creation and ongoing management of national parks, marine parks and conservation reserves, which will create positive flow-on effects for the tourism sector; and
- Investing $4.44 million towards the operations of the container deposit scheme.
The Government will be introducing the TAB (Disposal) Bill to Parliament in this sitting year to set out the legislative framework to privatise the TAB. The balance of funds from this sale, after the establishment of a racing infrastructure fund, will be set aside for the planned new women’s hospital to replace the King Edward Memorial Hospital.
The partial privatisation of Landgate is progressing, with the Government seeking binding proposals and announcing the successful respondent before the end of 2019.
DETAILED SPENDING WA STATE BUDGET 2019
BIG TICKET INFRASTRUCTURE PROJECTS AND ASSOCIATED JOBS CREATED
- $1.7 billion roads package the government claims will create 8000 jobs and see the transformation of Tonkin Highway and the eastern corridor, involving:
- $1.52 billion for eight new road projects across the eastern suburbs of Perth, including;
- Widening of Tonkin Highway; from Great Eastern Highway to just north of Guildford Road;
- Tonkin Highway grade separated interchanges at Kelvin and Welshpool Roads, and a new flyover at Hale Road;
- Tonkin Highway extension from Thomas Road to South Western Highway in Mundijong;
- Great Eastern Highway Bypass grade separated interchanges at Roe Highway and Abernethy Road;
- Abernethy Road upgrade;
- Grade separated interchange at Leach Highway and Welshpool Road;
- Lloyd Street Extension from Great Eastern Highway Bypass to Clayton Street in Midland; and
- Thomas Road and Nicholson Road intersection upgrade in Oakford.
- $1.52 billion for eight new road projects across the eastern suburbs of Perth, including;
- $230 million for the new Fremantle Traffic Bridge (50% Commonwealth contribution), creating 1,500 jobs;
- $186 million funding injection for the expansion of Casuarina Prison, allowing for 344 new beds to be added to the prison in addition to the 512 new beds already under construction. The expansion projects will create hundreds of jobs for local workers during the construction period;
- $182 million to establish an Employer Incentive Scheme. This will provide a base incentive payment to employers of $2,125 per year for each new apprentice or trainee. The scheme will be funded from the savings of changes to payroll tax.
OTHER SIGNIFICANT COMMITMENTS
- $34.7 million to the Office of Digital Government for investment in public sector digital transformation;
- $30.9 million to address family and domestic violence,
- $30 million for site works at East Perth Power Station;
- $7 million over three years to build and operate a state-of-the-art marine finfish nursery in Geraldton. The project builds on the McGowan Government’s election commitment to examine options for establishing a fish nursery in Geraldton.
- $12.3 million fortification of Greenough Regional Prison; and
- $3 million for the Office of Defence West, to continue to support the Federal Department of Defence to achieve its objectives, and work with local industry to deliver sovereign capability requirements.