Mr McGowan described Thursday’s budget as one for every West Australian, given the energy handout was not means tested, but denied it would stoke inflation. He had been assured the massive assistance package would have a negligible impact on inflation.
With a $3.3 billion operating surplus expected for 2023-24, the WA budget is expected to remain in the black over the forward estimates, though its net cash position is forecast for a $1.1 billion deficit next financial year. Thursday’s budget was the sixth consecutive surplus for WA.
Despite surging revenue, with WA exports representing close to 45 per cent of the national output, the state’s net debt is expected to climb over the forward estimates.
The surplus for the current financial year has soared, from a predicted $1.8 billion at the mid-year update, to $4.2 billion. The government paid down more than $1 billion in net debt in the last financial year, though Treasury has tipped it to climb from $29 billion in 2023-24 to almost $36 billion by 2027.
Mr McGowan was quick to point out those forecasts were predicated on conservative Treasury forecasts for the iron ore price of $US74 a tonne, despite the commodity recently trading above $US110.
“It’s predicted to rise, but in practice, debt may well fall,” he said.
S&P Global Ratings analyst Martin Foo agreed that iron ore assumptions were modest, and said the state was likely to be able to further pay down debt if prices remained above $US90 a tonne for the next two years.
“If our assumptions prove correct, Western Australia should comfortably beat its own medium-term forecasts and further pay down debt,” he said.
Dwindling housing supply
Mr McGowan said his dream on assuming the WA premiership was to make the state the strongest in the nation.
“It’s all I’ve ever wanted, and we are,” he said.
Moves to address Perth’s dwindling housing supply formed a major element in Thursday’s budget, with close to half a billion dollars set aside for new social and affordable housing as well as other measures to encourage overseas builders into WA.
A further $2.8 billion will be spent on a major restructuring of the state’s energy grid, including a new, large battery storage system to be constructed in the southern coal town of Collie.
The state’s languishing healthcare system, struggling with ongoing ambulance ramping and staffing shortages, will receive $1.2 billion for major public hospital infrastructure projects. Another $840 million will be spent on increasing hospital services.
The state’s economy is expected to continue to grow through the forward estimates, though Mr McGowan said RBA rises were affecting consumption, as well as people travelling overseas on holiday.
Gross state product was up 4.25 per cent for the 2022-23 financial year, and forecast to increase by 2.25 per cent next year, followed by 1.75 per cent in 2024-25.
Meanwhile, CPI is expected to fall from 3.5 per cent in 2023-24 to 2.75 per cent the following year.
The premier said the cost of living assistance was measured enough to not encourage inflation and burden future generations with “epic amounts of debt”.
“[This budget] surmounts the high bar we have set for budgets throughout our entire time in office,” he said. “We have sown the seeds for a strong economy.”