West Australian Treasurer Ben Wyatt is set to defy the global economic downturn and forecast a modest surplus in Thursday’s state budget.
A resurgent iron ore price has effectively ensured the finances will be kept in the black despite the $5.5 billion cost of the McGowan government’s COVID-19 state recovery plan.
Further infrastructure spending is expected to dominate a budget focused on job creation ahead of the state election next March.
“This budget is about continuing to get Western Australia back on track,” Premier Mark McGowan said this week.
“It’s about keeping Western Australia strong, getting our jobs growth back and making sure we keep our state safe.”
While an operating surplus for 2020-21 is tipped, it won’t be on the scale of the $2.6 billion that was projected for last financial year.
That figure has already been reduced to $1.7 billion in last month’s annual report on state finances, which highlighted a fall in most revenue sources.
The unexpected strength of the iron ore price, which remains around $US120 per tonne, has helped significantly to counter that decline.
The state government also credits its decision to prioritise removing restrictions within WA ahead of reopening state borders for cushioning the economic blow.
“We have got back 90 per cent of the working hours lost during COVID,” Mr McGowan said.
“No other state in Australia can say that and that is because we kicked in our recovery plan very, very quickly, we kept COVID out and we kept our state safe.”
A legal settlement almost 30 years in the making has paved the way for the major sweetener announced ahead of Thursday’s budget.
Every WA household will receive a $600 credit towards their electricity bills which is expected to cover average power costs for about four months.
The one-off credit, to be received from November 1, is being funded out of the recent Bell Group settlement, which returned about $665 million to WA taxpayers after costs.
The government anticipates about 70 per cent of the money will be spent and 30 per cent saved.
It has encouraged recipients to spend the money on travelling to regional WA, having announced discounted flights to Broome, Kununurra and Exmouth.
State and federal Liberals have questioned whether a surplus is appropriate under the circumstances.
“It is the responsibility of government to step up, to support business, to support the economy, to support jobs,” Federal Finance Minister Mathias Cormann said.
The intervention from Senator Cormann came as new polls showed the WA Liberals are facing another bruising defeat at the March state election.
The McGowan government said it had provided significant support to help individuals and businesses ride out the pandemic.
Taxpayers have benefited from a freeze on electricity and water tariffs, motor vehicle-related charges and public transport charges.
And the average WA household can expect a one-off reduction of about 10 per cent on household fees and charges this year.
Botica’s Bunch spoke to Minister for Finance Mathias Cormann on Wednesday…