Pioneer of the
Australian Iron Ore

WA continues to be the Regina George of the Federation

Article by Jenna Clarke courtesy of The Australian.

So about that GST share…

The Hermit Kingdom of Western Australia may not be popular but it’s rich.

Handing down his second state budget as Treasurer, Premier Mark McGowan proudly showed off an Apple Wallet with a balance of $5.7bn.

The eye watering operating budget surplus is not the biggest in history. Last year the state – better known for shunning visitors and stunning sunsets – banked $5.8bn as the rest of the country was in and out of Covid lockdowns.

Hermit King Mark McGowan. Picture: Colin Murty

Where did WA find all that cash?

In the ground and from around Australia.

Iron ore keeps WA’s books in the black. But it can also hurt like a hangover.

The \”Big State\” is a mining state and because of that it lives and dies by the boom and bust of commodities that are dug out of the ground and shipped to places like China. When prices are high, companies like BHP and Rio Tinto tip a lot of royalties into WA’s back pocket.

Mining stipends in this year’s books delivered $11.5bn. Out of that pot of gold came $10.3bn from rusty looking gold – iron ore.

WA Treasury – who do all the modelling and estimates for the books – are a conservative bunch of number crunchers. Projections show WA’s surplus will drop to $1.6bn next year, based off an assumed average iron ore price of $US77.50 per tonne, dropping back to $US66 in the years following.

Iron ore – the stuff which makes stuff like steel – is, right now, trading at an average of about $US120 per tonne.

WA also cashed in about $5.4bn of GST chips, money from the federal government’s carve up of revenue from the goods and services tax.

Even though it’s loaded already, and one of the only economies in the world with a surplus, WA is expected to receive another $5.9bn cut next year.

The GST in WA is akin to Basil Fawlty mentioning the \”war\”.

Don’t mention the GST

An arduous overhaul of the GST back in 2017 now guarantees WA 70c of every dollar of GST revenue it generates.

This is set to rise to 75c in the dollar by 2025 before the way that birthday cake is cut is reviewed in 2026.

Both Prime Minister Scott Morrison and Opposition Leader Anthony Albanese have ruled out moving that review forward while on the hustings during the federal election campaign (probably because they’re not masochists who want to go toe-to-toe with a cult like leader people still call \”State Daddy\”).

McGowan is popular due to his parochialism.

His strong arm and stronger rhetoric helped him reduce his political opposition to just two members in WA’s lower house at last year’s state election but he’s also single-handedly turned WA into the Regina George of the Federation.

\”I suspect [other treasurers] will be green with envy, some of them will look like they’ve swallowed a bumblebee,\” McGowan said when asked how he expects leaders around the country will react to WA’s budget.

McGowan has called this set of a books \”a fair and responsible budget\”.

It gives in one hand, takes in the other.

How to spend such a big budget?

Inflation in WA is already biting, coming in at about 7.6%, compared to the national rate of 5.1%.

The average West Australian household won’t pay a power bill for three-months thanks to most homes receiving a $400 credit, but car regos, the emergency services levy and electricity costs will go up.

All West Aussies will also continue to get \”free RATs and capped airfares for travel around regional WA,\” McGowan said, as Covid cases explode around the state this week.

There are 18,000 people in WA who are on a public housing waitlist. To help with that backlog private developments that include at least 5% social or community housing will also be granted new density limits.

The income eligibility limits for Keystart – similar to the federal Help to Buy housing initiative Albo is promising -will be permanently increased to $105,000 for single people trying to get into the housing market and $155,000 for couples.

There will be a 100% stamp duty rebate for people who buy of off-the-plan apartments that cost less than $500,000.

But housing and health are the two things already at breaking point.

The health sector will receive an additional $2.5bn in funding for front line and mental health services. Taking the annual spend to about $11bn.

A specific focus will be on emergency departments and the ambulance service, which just this week, had about 25% of its metro fleet parked outside Perth hospitals with sick patients waiting to be seen to.

The extra resources will be welcome.

As McGowan was announcing another massive financial windfall for the state on Thursday, nurses and front line workers, speaking to The Oz on the condition of anonymity, vented their ongoing frustration with a lack sustainability and a commitment to a real pay rise for them and other public servants.

Instead they got cupcakes.

Let them eat cake.