Western Australia’s government has promised a debt-fuelled record $27 billion infrastructure spend over the next four years in a pre-election budget aimed at creating jobs and safeguarding the economy against COVID-19.
Treasurer Ben Wyatt on Thursday delivered his fourth budget, defying the global economic gloom with a $1.2 billion surplus this financial year driven by a resurgent iron ore price.
Big-ticket items include:
- A promise to hire an additional 800 police officers over the next four years
- A $300 million mental health spend
- A previously-announced $600 credit towards every WA household’s power bills
But public servants will be disappointed after the government ruled out a wage hike beyond the current freeze.
The finances are forecast to remain in the black over four years but an estimated $6.6 billion will be shaved from the surpluses projected last December.
An $18 billion net debt blowout is set to almost double the state’s borrowings to $43 billion.
“Responding to the COVID-19 pandemic has been the toughest challenge we have faced,” Mr Wyatt told parliament in his budget speech.
“In response to the impact of COVID-19 and its ongoing effects, the McGowan government’s fiscal strategy and targets have been redirected from paying down the debt left by the previous Liberal-National government to supporting our economy and creating a pipeline of jobs for Western Australians.”
WA’s unemployment rate is forecast to climb to eight per cent by next June but jobs growth is forecast in each of the following years.
The budget includes modelling of a second wave of COVID-19 outbreaks under which $5.6 billion and 30,000 jobs would be lost from the economy.
The WA Border
Like the federal budget, it assumes WA’s hard borders will reopen from April 1 – after the March state election – but Mr Wyatt cautioned that it was only a projection and the actual reopening date could be earlier or later.
“It would have a very benign impact on the assumptions,” he told reporters.
Most of the infrastructure spend will be on road and rail projects, including $5.7 billion towards the McGowan government’s signature Metronet train network extension.
Overall government revenue is set to fall by $1.7 billion over four years but it has been countered by the surging iron ore price, which is tracking around $US120 per tonne and is tipped to remain well above the long-run average in coming months.
Mr Wyatt said the decision to prioritise removing restrictions within WA ahead of reopening state borders had bolstered confidence and ensured the state’s financial position was better than forecast at the height of the pandemic.
More than $7 billion of the promised infrastructure bonanza will be spent in regional WA as Labor seeks to consolidate its pole position ahead of the state election.
After being urged by the state and federal Liberals to spend big rather than banking a surplus, Mr Wyatt promised “every cent” of the surplus positions would go towards infrastructure spending rather than paying down debt.
“It’s not about how much you spend, it’s how you spend it,” he said.
He said public sector wage increases would remain frozen at $1000 per year for the next two years before reverting to inflation.