Premier and Treasurer of Western Australia Mark McGowan this afternoon delivered the 2022-23 State Budget highlighted by budget repair, project delivery, and helping residents with the rising cost of living, whilst simultaneously reinforcing the strength of the State’s resource-intensive economy. Highlights include:
Taxation (up $1.4 billion), GST (up $1 billion) and Commonwealth funding (up $1.2 billion) have surged ahead of mining royalties to become the largest contributor to State revenue. The Budget shows that the Government is facing the same challenges as industry with global supply chains, material and labour costs constraining project delivery. The Budget also highlights a mixed-sector post-COVID economic recovery.
Additional funding for critical METRONET projects and a household electricity credit are two budget centrepieces that run parallel to a $1.3 billion economic diversification package that doubles down on existing project delivery.
A nation-leading operating surplus of $5.7 billion in 2021-22 has resulted in the driving down of net debt to $29.9 billion, the first time it has been below $30 billion since 2015. This surplus comes off the back of a 5.25 per cent Real State Final Demand growth for 2021-22 driven by strong household spending, with growth expected to return to a moderate 1.5 per cent by 2025-26.
The labour market will continue to face constraints, with the unemployment rate expected to remain steady at 3.75 per cent out to 2025-26. Modest population growth is expected with a 1.2 per cent forecast for 2022-23, increasing slightly to 1.5 per cent in 2025-26.
The State Government continues to take a conservative approach to iron ore forecasts, building in an assumption of US$77.50 per tonne inclusive of cost and freight and an expectation of returning to the long-term average of US$66 a tonne. As a result, revenue growth for 2022-23 is expected to tumble by 8.3 per cent when compared to the estimated results of 2021-22 with a US$139.5 a tonne price.
Inflationary pressures are expected to ease from 2022-23, with Perth’s Consumer Price Index expected to grow by 2.75 per cent, a more modest figure from the estimated 4.0 per cent from 2021-22.
Mark McGowan has provided round two of a popular sweetener – a $400 electricity credit to be issued to all Synergy and Horizon Power customers from July 2022, similar to the $600 one given in the 2020 State Budget.
While the credit intends to counter the cost of living pressures on families, other fees and charges continue to rise, with the price of power increasing to 2.5 per cent from July, car registration increasing 3.8 per cent, drivers licence fees jumping 6.4 per cent and the Emergency Services Levy increasing to 5 per cent.
The State Government is attempting to address ongoing challenges in the WA health system through a $250 million package to address ambulance ramping. The package includes $55.8 million towards the 24/7 placement of registered nurses in 15 hospital emergency department waiting rooms and $18.2 million towards the development of real-time monitoring of hospital capacity.
The State Budget includes a $223.4 million boost to health infrastructure, increasing investment in this area to $1.6 billion over the next four years.
There continues to be a strong focus on COVID response and recovery with the State Government allocating an additional $1.6 billion to a suite of measures, bringing the total response to more than $11.2 billion since the pandemic began.
The State Government continues to increase METRONET funding, with $6 billion allocated over the next four years, including commitments towards two new projects.
In addition to the METRONET spend, the State Budget includes a significant list of road upgrades around the State totalling $9 billion. Port infrastructure has also attracted significant investment with the Government contributing $332 million towards additional capacity at Geraldton Port, $78 million towards Lumsden Point at the Port of Port Hedland and $499 million towards Westport.
There are few immediate solutions offered in the State Budget to the current crunch in construction as demand for materials and labour skyrockets. The Budget contains modest measures, including a 100 per cent stamp duty rebate for the purchase of off-the-plan apartments below $500,000 and land tax concessions of 50 per cent for build-to-rent projects from July 2023.
To help Western Australians get into the market, Keystart income eligibility limits have been permanently increased to $105,000 for singles and $155,000 for couples.
The State Government continues to invest in social housing and homelessness initiatives promising:
Achieving net zero by 2050 continues to be a key priority of the McGowan Government, with the 2022-23 State Budget boosting the Climate Action Fund, taking the total to $1.25 billion. Key focuses include sustainable WA jobs, industry innovation and environmental protection. Investments include:
The State Government continues to define itself through delivery of considered and fiscally conservative State Budgets that understand the strengths of WA’s economy. The State Government seeks to provide a community dividend through further investment in transport infrastructure, health, economic diversification, innovation and environmental initiatives as well as doubling down on existing social and community measures. However, the Budget shows the State will continue to face challenges with global supply chains, material and labour.
A deeper examination of the State Budget provides plenty of insight into the State Government’s policy priorities and direction for growing and diversifying the economy. To discuss in further detail, including what opportunities it presents for you, please contact:
Lenda Oshalem, Partner & Perth Office Head, Communications, SEC Newgate – [email protected]
Bruce Campbell-Fraser, Senior Adviser, Communications, SEC Newgate – [email protected]
Joey Armenti, Senior Adviser, SEC Newgate – [email protected]
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