2021-22 WA State Budget Update

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Premier and Treasurer of Western Australia Mark McGowan this afternoon delivered the 2021/22 State Budget, which included impressive headlines:

  • A $5.6 billion actual net operating surplus for the 2020/21 financial year.
  • Royalties income overtakes taxation, GST and Commonwealth Grants for the first time.
  • Significant investment in health, housing and homelessness.
  • Infrastructure program timelines extended to safeguard the future of WA’s economy.

Beyond the headlines, the Pilbara’s red dirt is paving the way for WA’s green future. A $750 million investment in climate change, energy security and the environment will help meet future challenges and support energy market developments. As Net Zero becomes a reality, this budget enables the State Government to make real headway in diversifying and future-proofing the WA economy.

Mining royalties take top spot in government revenue

While the Federal Government argues strongly for the opening of borders, the WA State Budget gives no indication or commitments on timing. The Premier highlighted the benefits of the hard border in protecting the resources sector and growing the WA economy. The record surplus gives weight to his argument.
Income from mining royalties now makes up 27 per cent of general government sector revenue and is the largest contributor to the State Government’s revenue for 2021/22, moving ahead of tax revenue, Commonwealth Grants and GST income.


While real Gross State Product growth is projected to reach 3.5 per cent in 2021/22 – the highest in eight years – the State Government expects this to drop dramatically to 1.0 per cent in the next financial year. The unemployment rate is expected to continue to fall, dropping to 4.75 per cent.

Household fees and charges will increase by 1.6 per cent, with CPI projected to be 1.75 per cent in 2021/22. While some motor vehicle charges and the Emergency Services Levy will increase by at least 3 per cent, public transport fares will remain frozen for another year and take into account the rezoning of fares by the Public Transport Authority from the beginning of 2022.

The State Wages Policy, implemented in 2017 and capping the rise of public sector wages by $1,000 each year, was expected to be reviewed in 2023. Crediting the State Government’s financial position, the Premier announced this review will now be brought forward, with consultation to commence with public sector unions and stakeholders and a new policy due to be announced by early 2022.

Health spending boosted

The State Government committed to a $1.9 billion investment towards health and mental health, including opening 332 new beds across WA hospitals and the recruitment of 100 new doctors and 500 new nurses to support hospital wards. $1 billion is also committed towards boosting immunisation rates and keeping the COVID-19 virus out of WA. 

Additional spending in health includes:

  • The Mental Health Commission received an increase of $495 million in funding to meet the increase in demand for services.
  • An additional $311 million invested in community-based mental health services.
  • $88 million allocated for extra staff and beds at Perth Children’s Hospital (PCH).
  • A $100 million Emergency Department Support Package being implemented bringing at least 50 additional staff, boosting capacity at PCH.
  • The new $1.8 billion Women and Babies Hospital at the QEII Medical Centre has received an additional $5.4 million to further support business case development and planning.

In acknowledgement of the constrained supply of healthcare workers, the State Budget includes specific measures to boost recruitment from local, national and international markets, as well as the hiring of more graduate nurses to keep up with the demands of the healthcare system.

New spending initiatives focused on future challenges

A $750 million Climate Action Fund has been established to help WA transition to net zero emissions by 2050. This includes:

  • $350 million towards the expansion of the State’s softwood plantation estate to work in tandem with this week’s announcement of the ending of logging of WA’s native forests.
  • $206 million for renewable energy initiatives including $150 million for standalone power stations and a State Government contribution towards the investigation of green steel.
  • $50 million to support the development of the renewable hydrogen industry through approved business cases.
  • $118 million provisioned for future responses to emerging climate-related initiatives.

The largest one-off investment in social housing has been funded from this additional surplus with a dedicated $750 million Social Housing Investment Fund, including earmarking $228 million of this fund for the short-term increase of social housing and $522 million to deliver a pipeline of new homes from 2022/23. This additional funding will bring the total investment of social housing in this State Budget to $2.1 billion, funding around 3,300 homes.

The establishment of a $500 million Digital Capability Fund will enhance cyber security as well as upgrade ICT systems to improve government service delivery. Of this fund, $200 million is set aside for health sector IT projects. 

The Westport project also receives a boost, with $400 million allocated to a new Special Purpose Account to support strategic land acquisition.

Vital infrastructure funding committed

The State Government has set aside $4.4 billion to pre-fund future strategic infrastructure including $1.8 billion for the new Women and Babies Hospital and $1.4 billion for the State’s third water desalination plant.

The surplus has also enabled Government Trading Enterprises (GTEs), including the Water Corporation, to retain $2.4 billion in dividend payments in 2021/22. These funds are quarantined for future infrastructure investment.

Emerging skill shortages and capacity challenges remain a persistent risk to the delivery of key infrastructure projects for the State Government. The State Government expects population growth of just 0.7 per cent in 2021/22, increasing to 1.3 per cent in 2024/25. Timelines for a number of State Government initiatives have been pushed back, including on key road and METRONET projects in an effort to ease workforce pressures across the economy.

The State Government has established a Major Projects Directorate within the Department of Finance to ensure that designated major projects, including the Fremantle Film Studio and the new Women and Babies Hospital, are delivered in accordance with the Government’s expectations. This will complement the Office of Major Transport Infrastructure Delivery, which has been created to ensure the efficient delivery of major projects within the Transport portfolio.

Future focused agenda

Following the State Government’s significant electoral victory earlier in the year, the windfall revenues feeding into the State Budget enables the government to focus on the future. It creates the opportunity for the Premier to deliver innovative, game-changing projects and reforms, particularly in the space of energy, climate action and local manufacturing.

A deeper examination of the Budget provides plenty of insight into the State Government’s policy priorities and direction for growing and diversifying the economy.

Related News and Views – Trade and Investment Update – August 2021 

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