Western Australia’s economic outlook is anything but positive with the State set to record its first budget deficit in 15 years.

The Treasurer has commented that it is the slowest period of domestic demand growth since he began watching the economy in 1982.

To assist in securing the State’s economic future, the budget brings an acceleration and extension of the government asset sales and privatisation program previously announced. It also deliberately resists cutting infrastructure projects to support the WA job market.

The headline items from the Budget are:

• a net operating deficit of $1.3 billion this financial year, growing to $2.7 billion in 2015-16, before returning to surplus in 2017-18
• a public sector net debt increase from $25.5 billion at 30 June 2015, to a peak of $36.3 billion at 30 June 2018, to fund the deficit
• a decrease in the State’s share of the GST revenue to a new historic low of 30% in 2015-16 (down from 37.6% in 2014-15)
• a reduction in 2015-16 iron ore revenue to $3 billion  (down from $5.5 billion in 2013-14)
• moderate overall economic growth of 2%

Major announcements

Major announcements from the Budget included: 

• an Asset Investment Program totalling $6.3 billion to transform Perth (including the Children’s Hospital, Perth Stadium, Elizabeth Quay and City Link) and create 93,000 construction jobs, as well as additional jobs for offsite suppliers and services 
• the sale of the Fremantle Port Authority assets and operations via a long term lease 
• the sale of the TAB 
• $1.2 billion over four years to build new high schools and primary schools 
• an investment of $713 million to maintain high quality and reliable water and wastewater services 
• an additional $417 million over the next four years on health 
• $300 million to assist the agricultural sector capitalise on the growing global demand for food and agricultural products 
• a $294 million increase in education spending (up 6.5% from 2013-14) 
• commitment of $140 million to address safety and reliability issues in the Western Power network in 2015-16 
• $137 million for the Gateway WA project in 2015-16   
• $104.4 million on 21 new rail cars and 105 Transperth buses in 2015-16

Social responsibility

Social responsibility measures included:

• $1.4 billion for WA Police, including 120 new Police Officers and 51 new Auxiliary Officers
• $560 million to deliver 1,000 additional social housing dwellings 
• an increase in compulsory third party insurance premiums by a maximum of $99 to fund a scheme which will provide lifetime care to Western Australians 'catastrophically' injured in a no-fault motor vehicle accident (applicable to policies renewed after 1 July 2016) 
• $172 million over the next four years to strengthen child protection and family support services 
• $25.9 million over the next four years for the implementation of a new suicide prevention strategy

State taxes

State taxes measures included:

• the payroll tax exemption threshold will increase from $800,000 to $850,000 (from 1 July 2016)
• a flat $300 land tax will be introduced for property values between $300,000 and $420,000 (from 1 July 2015) 
• land tax rates, except for the top rate of 2.67%, will be increased (from 1 July 2015) 
• the $3,000 first home owner grant for established homes will be removed (from 1 July 2015)

Tony Windle, National Head of Indirect Tax, E tony.windle@au.gt.com T +61 7 3222 0381