TREASURER Ben Wyatt said his first budget has put the State’s finances on the road to recovery, despite WA’s debt now tipped to hit $43.8 billion in 2020.
Although WA has an operating deficit of $2.3 billion this year, Mr Wyatt said the State would have an operating surplus of $1.3 billion by 2021.
Among the measures that will be used to drive the budget back into the black are a ‘temporary progressive payroll tax scale’ for large employers for five years, and a tiered royalty rate for gold miners.
Respectively these will raise $435 million and $392 million over the forward estimates period.
The hit to big businesses broke a key election promise to not increase taxes.
The government also plans to shed 3000 public sector jobs – this financial year – in order to save $355 million.
Back in June they announced increases in power and water bills, public transport fares, the emergency services levy and vehicle licence charges – saving about $238 million over the forward estimates period.
The $10,000 first home owners’ grant has been retained.
Labor campaigned on the promise it could return the state to an operating surplus of $205 million by 2019-20, and keep debt below $40 million – despite Treasury forecasts in February showing a deficit of $535 million was on the cards.
State hits bottom
Although the timeline for a budget surplus has been altered, Mr Wyatt said he is confident the economy is on the up.
“WA has a very significant percentage of its revenue outside of its control,” Mr Wyatt said.
“We don’t control, for example, the price of iron ore.
“I’m determined to get it (to surplus) but very aware that we are vulnerable to dramatic changes over those four years.
“It’s the trajectory that I’m keen to see and you can see the decreasing operating deficits across the forward estimates and that is what we hope to achieve.”
Treasurer defends business slug
Mr Wyatt defended the introduction of an increased payroll tax for large employers, breaking an election promise.
“It will impact around 1200 businesses, it is about half a per cent of total businesses in WA,” Mr Wyatt said.
“We’ve really focused on the larger businesses and I understand they won’t fully appreciate it.
“The most dramatic impact is really on those businesses above the $1 billion in payroll.
“If you have a $2 billion payroll it is about a .06 percent increase and about 40 per cent of the extra payroll tax will come form those payrolls above a billion.”
When asked if his budget went hard enough in addressing the State’s perilous finances, Mr Wyatt said he had been “mindful of the broader economic environment”.
“We’ve experienced significant contraction, we’re starting to see that turn around but I didn’t want to threaten that domestic increase or threaten what has been happening over last 10 months with respect to unemployment,” he said.
“I was very careful in that regard, so you can always go harder but also can’t burn the place down trying to get to a surplus position.”
A budget to ‘destroy jobs’
The Chamber of Commerce and Industry was unhappy with the budget, declaring it would “destroy jobs and stall economic recovery”.
“WA already has the highest payroll tax burden, and this budget puts us further out of line with the rest of the country, making WA a less attractive place for business to create jobs,” chief economist Rick Newnham said.
“Penalising businesses that employ the most people in WA will destroy job creation and could affect the viability of existing and future projects, particularly in the mining sector, effectively locking in another five years of pain.
“For the Government to claim that this payroll tax increase will limit the impact on households is completely misleading.
“A tax on jobs is a tax on every West Australian.”