2019 State Budget - CCIWA's Analysis

The State Government has delivered on its promise to rein in spending and start to pay down debt. Spending restraint, a CCI championed GST deal and an iron ore royalties windfall have resulted in the first surplus in five years of $553 million and a $6.8 billion reduction in peak net debt since the Government’s first Budget.

The Chamber of Commerce and Industry WA (CCI) congratulates the State Government for its commitment to rein in expenditure growth. While the Government has benefited from surging iron ore prices and a GST floor that will contribute an additional $2.5 billion in GST over the forward estimates, this surplus would not have been possible without the Premier and Treasurer’s commitment to spending restraint.

Interest payments on debt will peak at $1.1 billion next year. This is a billion dollars a year that West Australians will pay in tax that isn’t going towards funding essential services such as schools, hospitals or roads.

While the WA economy is still recovering it is essential that the Government continues to not introduce any new taxes. New taxes act as a hand-break on economic recovery and are not necessary given the Government has needed to fix a spending problem, not a revenue problem.

CCI’s Pre-Budget Submission called for the State Government’s tax on jobs – payroll tax – to be cut to support small business job creation. WA has the highest jobs tax in the country, making it more expensive to create a job in WA than any other state. It’s no coincidence that WA has the second highest unemployment rate in the country at 6.1 per cent.

West Australians, small businesses and industry peak groups will be disappointed that CCI’s call for small business tax relief was not heeded, given 73 per cent of West Australians and 82 per cent of WA businesses backed reducing the jobs tax as a priority in today’s Budget. Reducing the State’s jobs tax remains unfinished business for CCI.

Payroll tax is a critical lever to boost job creation because it supports every industry, from manufacturers, retailers, construction to farmers, as opposed to cherry-picking winners in a fiscally constrained environment.

CCI welcomes the Government’s $182 million commitment over four years to establish an Employer Incentive Scheme. While we believe the Payroll Tax Exemption provided employers with more effective support to upskill and retain their workers and boost apprenticeship and traineeship numbers, this funding will provide businesses with certainty while ensuring WA can leverage additional Commonwealth funding under the Skilling Australian’s Fund National Partnership Agreement. 

CCI welcomes the Government’s $4.5 million investment in StudyPerth’s International Education Action Plan and additional $22 million boost to WA’s international destination marketing efforts, including $10 million for an aviation development fund. This will go a long way toward driving WA’s position as the Western Gateway to Australia and boosting the State’s international student market share.

For the Government to receive the largest return on its investment, CCI’s Pre-Budget Submission has called for a more comprehensive and coordinated strategy across internationally-focused portfolios, including tourism, international education and trade to be implemented to better target its international activities.

The Government’s constrained electricity price increase of 1.75 per cent, in line with inflation, will support West Australians struggling to make ends meet. Almost three in five (59%) West Australians consider cost of living pressures to be their biggest dampener on confidence and over two-thirds (68%) do not expect to make a major purchase in the next quarter according to CCI’s latest Consumer Confidence Survey.

CCI has been calling for a long-term and consistent pipeline of infrastructure projects to ensure businesses can plan their investments, manage their workforce and retain critical specialised skills within the State.  

A $5.4 billion investment over four years on road and rail projects, including the Government’s well-flagged METRONET, will help create a long-term pipeline of works while boosting job creation. The State Government must continue to review all public assets for privatisation or long-term lease to accelerate infrastructure spending in WA. This will unlock funds to enable future infrastructure investment without having to increase the State’s high debt. 

Source: www.cciwa.com.au

Nicola Edwards