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WA households entitled to expect some expenses relief

This article was first published by The West Australian, p. 21, 08/05/2018


West Australians have every reason to expect the McGowan Government’s second Budget will deliver relief for household expense growth, genuine job-creation initiatives and reductions to State debt and deficit.


For its part, the Government has no reason not to deliver. In its first year in office, it has been the recipient of one of the biggest economic windfalls from a Federal government in WA’s history — GST returns have lifted from 34¢ to 47¢ in the dollar, and there has been $483 million higher than expected iron ore royalty revenue.


The big issue is this Government’s spending. When elected, Mark McGowan inherited debt of just under $32 billion. He promised to pay down debt like a mortgage; instead it has grown by 17 per cent to $37.4 billion. There are still big infrastructure projects, like Metronet, where the State’s contribution is yet to be included in the Budget.

This Government has delivered the highest unemployment rate in Australia (6.9 per cent seasonally adjusted) and the highest number of unemployed West Australians (98,300) in the State’s history.


These numbers are a reflection of Mark McGowan’s leadership and stand in contrast to his election promise to deliver 50,000 new jobs. Families in WA are under financial pressure. There has been little or no real wages growth for years, yet homes were burdened last year with large increases in household charges (like electricity) and while there are green shoots in the economy, further increases will affect families’ discretionary expenditure, impacting retail trade and the economy.


The Government must rethink its policies on skilled and regional migration which have resulted in the number of international students coming to WA declining by 3.5 per cent last year, while in the rest of Australia they grew by 8.5 per cent. It’s also not difficult to draw a line between the chaos the Premier’s machinery of government changes inflicted on Tourism WA and the plummeting tourist visits and tourism spend happening in WA while the rest of Australia booms.

The planned introduction of a new 4 per cent foreign investment tax in six months’ time will only further damage the housing sector, exacerbating the 14 per cent collapse in housing finance approvals that has resulted from the Government’s axing of the $5000 boost to the First Home Owners Grant.


The recovery happening in our mining sector must be given concrete encouragement.

Government policies banning unconventional gas recovery and uranium mining, increases to government charges and attempts to introduce a new gold tax, have already seen the perception of WA’s policy environment for mining investment, fall from ninth in the world to 17th.


The WA mining economy is transitioning from construction to production. This, along with disruptive technologies, requires sensitivity to re-skilling the workforce to prepare for the future.


The Government should be trying to lower payroll tax, not increase it through removing exemptions to retrain existing staff.


Before the removal of exemptions, WA businesses already pay 30 per cent more payroll tax per employee compared with the average across the rest of Australia. Manufacturing and

producing goods locally is good but not at any cost. The Government says 50 per cent of the manufacture of 246 new rail cars must happen in WA, potentially adding $615 million to their cost.


The Government must show the modelling to prove this is the best outcome for WA for the additional spending. Premier McGowan has staked his political reputation on Metronet.

What he has never revealed is the total cost of the project including station upgrades, signalling and rail car facilities, or the biggest elephant in the room, the ongoing operating subsidy.


While the Federal Government has chipped in substantial capital to help build Metronet, the taxpayers of WA will take sole responsibility for the ongoing operating costs. WA taxpayers currently subsidise the public transport system by $860 million every year, nearly 80 per cent of annual operating costs.


The Government must explain the ongoing operational impact of Metronet and not leave it as a surprise for future generations.


In this week’s Budget, the Government must demonstrate a credible plan to reduce debt, reduce unemployment, refrain from policies with adverse economic outcomes and

provide economic leadership that is not based on increasing taxes and the cost of living.


Dean Nalder is WA shadow treasurer


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