WA State Budget 2024: Treasurer Rita Saffioti announces WA’s sixth surplus in a row, Metronet blowout

Treasurer Rita Saffioti expects to bank a $3.2 billion operating surplus this year – WA’s sixth in a row – but has revealed another significant blowout to Labor’s flagship Metronet project. Promised cost of living relief has been delivered in the form of a $400 power credit for both households and small businesses, while home ownership is slightly more attainable for young couples through a boost to first buyer stamp duty concessions. Reprising one of Mark McGowan’s favourite lines, Ms Saffioti said the State’s bulging balance sheet and rapid economic growth – double the rest of the country – would make “Western Australia the envy of the nation today”. She was less keen to talk about the latest $706m overrun to the sprawling rail program she has steered since Labor won office in 2017. What began as a $4.8 billion promise ahead of that election has now bloated in both cost and scale to $12.6 billion. Elevated labour and material costs have been blamed for increases to the price tags of three of the four lines currently under construction: Yanchep is up $288 million, Thornlie-Cockburn $228 million and the Armadale Line upgrade and Byford extension $190m. The Commonwealth Government is expected to cover $450 million of the latest blowout, taking Canberra’s total contribution to Metronet over the past seven years to $5.5 billion. The budget reveals the value of WA’s four-year infrastructure pipeline swelling to a record $42.4 billion, although Metronet accounts for just $4.8 billion. Ms Saffioti said Metronet – now nearing completion – was not expected to balloon much further and the focus was now shifting to utilities, including a new desalination plant in Alkimos, batteries, transmission lines and wind farms. “Our feedback already in areas such as reinforced steel, concrete – some of the key services for transport infrastructure – is that they are now tailing off,” she said. The centrepiece cost-of-living spend is a fourth round of electricity credits valued at $400, which will be handed to more than 1.1 million households and 90,000 small businesses at a total cost of $492 million. As with the last round of credits, the rebates will be delivered in a pair of $200 instalments: first in July/August and then in December/January. Further savings for some families come in the form of free public transport for students – estimated at $280 per child a year – which results in the overall Government fees and charges paid by the “representative household” dropping 2 per cent to $6183.30. That masks a 2.5 per cent hike to electricity and water charges from July, and a third consecutive 5 per cent increase in the emergency services levy, attributed to the increased threat of bushfires and natural disasters. Motor vehicle licence fees will rise 3.9 per cent while compulsory motor injury insurance will jump 2.5 per cent. The $3.2 billion surplus now expected in 2023-24 is $500 million below what was forecast in December, largely the result of a delay to $1.4 billion in promised Federal grants for transport projects, including Metronet. Exemplifying the volatility of the commodity market, lithium royalties crashed from just over a $1 billion last year to just $422 million, blowing a further $260 million hole in the mid-year forecasts. But that was offset by iron ore royalties, the State’s perennial budget superstar, which is now tipped to contribute $879 million more than expected just five months ago. At $9.9 billion, iron ore royalties accounts for more than a fifth of the Government’s entire revenue base. There was another major windfall in the shape of stamp duty, which came in $478 million above expectations as a result of a migration-driven run on property that shows no sign of easing. WA’s population swelled by a record 94,000 in the year to September – the equivalent of all the people in Bunbury and Karratha – and is on track to eclipse 3 million next year. “I recall people saying (during the pandemic) no one would come back to WA and the opposite has happened,” MS Saffioti said. “A strong population supports the economy, brings a workforce and keeps consumption strong. But the challenge is housing and the cost of services.” Housing was one of five “key pillars” of the budget identified by Premier Roger Cook, alongside cost of living support, health, infrastructure and economic growth. In addition to the previously announced $1.1 billion in new spending on social housing and homelessness, the budget unveiled the first change to first homebuyers stamp duty threshold in a decade. In an $82 million measure expected to benefit around 5000 first buyers, homes purchased for up to $450,000 – up from $430,000 – will attract no stamp duty at all. A concessional rate will apply for sales up to $600,000, translating to a saving of around $7200 for a property that transacts for $530,000. Other housing-focused initiatives – also already announced – are a $5000 incentive for the owners of vacant homes to rent them out long-term and, in a bid to boost the construction workforce, $1000 retention payments to apprentices in each completed year of their trade. A healthy $2.6 billion operating surplus is expected next year, followed by another trio totalling $7.7 billion in the outyears. Bucking a recent trend, net debt came in $1.5 billion worse than expected in the mid-year review at $28.6 billion. It is forecast to rise to $40.9 billion by the end of 2028, although Ms Saffioti was at pains to highlight even if it reaches that level it would remain below 10 per cent of gross state product – a far superior ratio to every other State. WA’s domestic economy is on track to grow a nation-leading 5.25 per cent in the current financial year while business investment growth of 13.25 per cent – much of it resources driven – was the best in a decade. “What was the nation’s weakest domestic economy seven years ago is now the strongest,” Ms Saffioti said. “What was the nation’s highest debt burden is now the lowest.” Adopting the same theme, Mr Cook said the budget illustrated “how far our State has come since WA Labor was elected in 2017”. While 300,000 jobs have been added since then and unemployment remains historically low, Mr Cook acknowledged “everyday costs are impacting many families”. “The good news is global inflation is easing and wages are going up,” he said. “Even in the midst of global uncertainty WA is heading in the right direction.” The budget has wages growth of 4.25 per cent in WA this year, outpacing inflation at 4 per cent. Inflation is tipped to fall to 3 per cent next year, wages growing 3.75 per cent. S&P Global Ratings analysis Anthony Walker echoed Mr Cook’s rosy sentiment, noting WA’s “very strong fiscal outcomes and modest debt levels” reinforced the agency’s AAA credit rating assessment for the State - the best of all Australian jurisdictions. Mr Walker noted forecast iron ore prices at $US75 a tonne next year and US$71 across the out years - upgraded from the previous $US66 - remained well below the current $US115 price for the steel-making ingredient. “We believe there is substantial upside to these forecasts,” he said. “Stronger royalties would more than offset the government’s modest cost-of-living package, housing investment, and increased capital expenditure.” The Cook Government continues to resist long-running calls for an overhaul of WA’s payroll tax system, which the Chamber of Commerce and Industry says is the most onerous in the country and holding back growth. “The Government expects to reap $5.8 billion next financial year from payroll tax, increasing to an eye-watering $6.7 billion by 2028,” CCIWA chief economist Aaron Morey said. “Fixing WA’s sky-high payroll tax was one way the Government could have relieved the pressure on small and family businesses, and it is regrettable they have missed the opportunity to do so.” Opposition Leader Shane Love accused the government of being out of ideas to solve WA’s cost of living crisis. “Yet again, trotting out the sugar hit of a $400 rebate, which I’m sure will be well received by Western Australian families but doesn’t address the ever growing costs which those families are enduring,” Mr Love said. “Net debt will rise under this Treasurer because... (she) is unable to control the costs of the projects which she is slowly delivering across Western Australia.” Shadow Treasurer Neil Thomson said the budget was full of “band aid measures” that did not go far enough to reverse years of “neglect and disinvestment in the services that really matter”. “How can it be in the state as rich as Western Australia that we have a health system which is on life support?” Mr Thomson said.