On 7 September 2017, WA treasurer Ben Wyatt delivered Labor’s first Budget in just over nine years.

Overall, the Western Australian economy is not in a very good state and the path to a surplus will not be an easy one, with tough decisions necessary to ensure the burden of fiscal repair is shared as fairly as possible across the community. Estimated financial results for 2016-17 show a general government operating deficit of $3 billion and total public sector net debt of $32.5 billion, with the net debt to revenue ratio at a staggering 83%.

Inequitable GST revenue distribution continues to be an issue from a WA perspective, with WA’s GST grant remaining at a near record low of 34.4% of its population share. The Government has announced it will continue its consideration of a State-based major bank levy in the absence of genuine GST reform or other revenue measures.

On a more positive note, following prolonged slowdown in economic growth over the past five years, the WA economy is beginning to show signs of recovery. GDP is forecast to grow by 3% in 2017-18, a significant improvement on the prior year’s 0.25% growth. This reflects continued strong growth in net exports and a “reduced drag” from business investment.

Employment is forecast to grow by 1.5% in 2017-18, with nearly 20,000 jobs expected to be created (even though public sector jobs will go, with redundancies planned). This will be supported by growth across a range of service-related industries, as well as agriculture and the gold and lithium industries.

However, government revenue estimates have been revised down by a massive $5 billion between 2016-17 and 2019-20. In response, the McGowan Labor Government’s Budget includes a $3.5 billion Budget repair package, which will be distributed across the community, including the public and private sectors. From a private sector perspective, the impact of the Budget repair package will be felt by large business – SME businesses should not be impacted directly by the Budget repair measures.

It is worth noting that the public sector is also making a significant contribution to repairing the WA State budget. Notably 3,000 jobs will go across government by means of a voluntary redundancy program.  Furthermore, the State’s public corporations will also be required to contribute increased revenue by means of paying increased dividends to the State.

Even with the Budget repair package, the forecast general government operating deficit in 2017-18 is $2.3 billion, while total public sector net debt is expected to reach $43.8 billion by 30 June 2020, before reducing slightly by the end of the forward estimates period.

Speaking to the Government’s announced commitment to repairing the “unprecedented damage” done to the State’s finances by the previous Government, average annual expense growth is expected to be just 1.9%, and the economy is expected to be on track to a surplus of $1.3 billion in 2020-21.