WA achieves budget surplus thanks to increased ore prices and a higher GST allotment; The EPA gives approval recommendation for $516 million Greenbushes lithium mine expansion; McGowan’s Government allocates $1.52 billion to fixing Perth’s busy roads, and; tax reprieve in sight for WA businesses as Treasurer hints at a possible payroll tax reduction in the near future. All these stories covered in our West Australian Monthly news wrap-up.
Rise in GST and ore price help WA achieve budget surplus
The Western Australian budget is out of the red as a surge in iron ore prices coupled with a GST revenue top-up helped the state roar back to surplus.
According to WA Treasurer, Ben Wyatt, the state has been able to achieve a $553 million operating surplus in the current financial year. The turnaround is a sharp contradiction to yester-year’s forecasts that had predicted that the state’s budget would be in the red by about $ 1 billion this year.
WA households, which have seen years of sharp increases in charges and utility costs, will benefit from the improved finances with the state government offering some relief. Electricity costs will increase by a marginal 1.75% this financial year while other government charges go up 2 percent. This is the smallest rise in 13 years as noted by the Premier, Mr. McGowan.
State debt still remains high despite the positive finances and is expected to peak at $39.5bn in the coming year. This, Mr. McGowan stated, was $4.1bn lower than what was forecast when his government took over the reins, making WA the only Australian state with falling debt.
While the government did make some effort to cut on expenditure, the financial turnaround has mainly been driven by spiking iron ore royalties. Iron ore prices have increased from $80 a tonne a year ago to the current price of around $128 a tonne.
The state will also benefit from a GST top-up of $434m in the 2019 financial year as the Federal Government takes the first steps towards setting a floor for the sharing of GST receipts with the states.
The improved balance sheet will, however, not bring any good tidings for public servants expecting a pay rise. A salary increase cap of $1,000 per worker each year instituted back in 2017 when Labour came to power remains intact for this term according to Mr. Wyatt.
EPA Approves $516m Greenbushes lithium expansion
Talison Lithium has gotten the green light from the Western Australian Environmental Protection Authority (EPA) to proceed with plans to expand the Greenbushes lithium mine located about 250 km from Perth.
The expansion, which is expected to cost $516 million, will include the construction of a lithium concentrate plant with a production capacity of 520,000 tonnes/year, a crushing plant and other necessary infrastructure. This will see the Greenbushes mine increase production capacity to 1.95 million tonnes/year – a 608,000 tonnes/year increase.
The approval will, however, come with several conditions including a requirement for Talison Lithium to protect the threatened black cockatoos; a species that’s unique to the south-west region of Australia.
In addition to the provision of detailed management plans on how the fauna would be protected, the EPA also recommended that Talison provide funds for targeted land acquisitions as well as funding research that would offset any impact of habitat loss for under-threat species that include the Western ringtail possum, Carnaby’s and Baudin’s black cockatoos, and the numbat.
Perth’s busy roads get $1.52b allocation
The McGowan Government has allocated $1.52 billion to eight new road projects in this year’s budget. The projects, majority of which are slated to begin next year, are expected to create 7,000 jobs. The works, funded by the state and the Commonwealth, will fix some of the most congested roads and intersections along the Tonkin Highway corridor.
Construction on Tonkin Highway is scheduled to begin next year, with work alone expected to create 520 jobs. The project will include:
- Widening of Tonkin Highway starting from the Great Eastern Highway to a point slightly north of Guildford Road.
- Interchange upgrades at Welshpool and Kelvin roads and construction of a flyover at Hale Road.
- Extension of Tonkin Highway from South Western Highway in Mundijong to Thomas Road.
Roe Highway will also be fixed in the coming year and will create 1,050 jobs. Works will include:
- Construction of Bypass interchanges on the Great Eastern Highway at Abernethy Road and Roe Highway.
- Upgrade for Abernethy Road.
The intersections at Welshpool Road and Tonkin Highway, and Welshpool Road and Leach highway will also be fixed in the coming year, with additional work being carried out on Thomas Road, Lloyd Street and Nicholson Road.
Projects on the eastern suburbs will commence this year and will see the completion of the duplication of Reid Highway and Roe Highway-Kalamunda Road interchange. This will inject another 1,000 jobs to the state’s economy.
In total, there will be 28 major road projects being undertaken in the metro area in the next couple of years creating thousands of jobs.
Tax relief in sight for WA businesses
Businesses operating in WA could soon get some tax relief with the Treasurer, Ben Wyatt, hinting at the possibility of payroll duties being revised downwards when the state’s budget gets further into surplus.
During the customary post-Budget breakfast event with the Chamber of Commerce and Industry, Mr. Wyatt expressed sympathy towards business owners who have been advocating for a reduced payroll tax for some time now.
In Its first budget in 2017, the McGowan Government raised payroll duties for the state’s largest employers to generate an additional $435 million over the course of four years – funds which would be used for fiscal “repair”.
Now that the state has gotten back to surplus, the CCI is calling for a wind-back of the hike in order to spur investment and rebuild business confidence. This comes at a time when a recently released survey by the CCI indicated a sharp rise in pessimism in the business community in regards to trading conditions over the last three months.
The Treasurer stated that although the government did not have any immediate plans to revise payroll taxes, such a move could be up for consideration as soon as planning for the next year’s budget begins.
Payroll tax accounts for about 40% of the governments total tax collections annually, with budget papers indicating an expected growth of about 5.3% – or $189 million – which will raise payroll collections to $3.7 billion in the fiscal year 2019-2020.
([VIDEO: Source: https://thewest.com.au/news/wa/state-budget-payroll-tax-next-up-on-the-agenda-ng-b881194765z)