TREASURER Mike Nahan said there were signs the worst was over for the WA economy despite revealing the State’s biggest ever deficit in his third budget, handed down today.
WA’s forecast budget deficit of $3.9 billion for 2016-17 was a disastrous result for Dr Nahan, with expense growth forecast at 3.7 per cent.
The State’s debt is forecast to move past $33 billion next year, and is predicted to go beyond $40 billion.
But he said the State had taken “the mother of all hits” with the sharp drop in commodity prices, declining business investment and WA getting the lowest ever allocation of GST revenues.
Dr Nahan, however, was keen to spruik the positives.
“We have clear, green-shoot signs that we’ve bottomed out, especially in the mining sector,” he said.
“We’ve clawed back a lot, but if you get hit by a 22 per cent decline in (royalties) revenue and have to still provide growing services like health, education, what do you expect?
“We are a state tethered to the ups and downs of China.
“Our state government has taken the biggest hit of any government since the great depression.”
Dr Nahan lamented the state’s paltry 30.3 per cent allocation of GST revenue WA receives, declaring the system “broken” and that it “screws us over coming and going”.
“There’s something fundamentally wrong with this thing,” Dr Nahan said.
“We’re the only state forecasting budget losses this year, everyone is forecasting surpluses.
“This system’s broken.”
The treasurer flagged the sale of assets such as Western Power, Horizon Power and the TAB to fund future infrastructure projects and help restore the state’s AAA credit rating.
It is estimated the sale of those, and other assets, could raise as much as $16 billion with $5 billion to be used for infrastructure projects and the residual funds to be used for debt reduction.
“This has to be done,” Dr Nahan said.
“It’s our strong view that the state should not own a gambling business.
“The theme is you have an asset you don’t need to own … you sell the asset and put it into where you need to invest.”