WA Budget reveals $5.6 billion surplus but no border reopening date, delays to infrastructure

Premier and Treasurer Mark McGowan says crushing COVID has kept WA's economy strong.

Sky-high iron ore prices have fuelled Western Australia's record $5.6 billion budget surplus, making it the best performing economy in the nation.

The state was expected to stay in the black over the coming years, with a $2.8 billion surplus expected this financial year.

In his fifth state budget and first since appointing himself Treasurer, Premier Mark McGowan said WA had the nation's strongest economy, while other states were awash with debt and deficit.

"Even in the middle of a global pandemic, unlike any other jurisdiction, Western Australia's financial position is strong and on a sustainable footing," he said.

Given the state's economic position, Mr McGowan said he expected debate between the states would reignite over the GST carve-up.

The budget did not include forecasts on when the state's border would reopen. (ABC News: Eliza Laschon)

The state's budget surplus was significantly boosted by GST revenue.

"They will be wildly angry and they will want to undo the GST deal," he said.

"We will have to keep fighting for it."

GST revenue added more than $4.5 billion to the state’s coffers last financial year, with more than $5 billion expected in 2021-22.

Taxation was also higher than expected, up 11.7 per cent or $1.1 billion, largely due to the state's booming property market.

No border reopening date

The state budget made no assumptions about when the state's interstate border would open, although Mr McGowan has previously said he expected it would open to COVID-plagued states like New South Wales and Victoria next year.

The budget estimates international travel will resume in September 2022, but there's no word when interstate borders will come down. (ABC News: Hugh Sando)

But it did base assumptions around the international border, with a gradual reopening expected from September 2022.

Treasury expected the international border reopening would see economic growth slow, as people took their money overseas for travel.

Many of the big spending items had already been announced, including $1.9 billion on health and mental health, an extra $1 billion for the state's COVID-19 response and $875 million towards social housing.

$1.9 billion will be spent planning the construction of WA's third desalination plant. (Supplied: Water Corporation)

New announcements included $1.4 billion to be set aside for a new desalination plant, $500 million on a "digital capability fund" to improve cyber security and $400 million towards relocating Fremantle port to Kwinana.

Infrastructure delays

While the budget includes a $30.7 billion infrastructure program over the next four years, the timelines for 16 major projects have been significantly pushed back due to the significant workforce and skills shortages.

This will include delaying key Metronet rail projects, upgrades to Perth's highway network and renovations to TAFE sites.

Rail projects under construction in the state have been delayed, such as the Yanchep line. (Supplied: WA Government)

Households can expect their fees and charges to rise by 1.6 per cent, an increase of around $99.36 a year.

The strong financial position allowed the state government to bring forward its review of its tough public sector wages policy, which had been capped at $1,000.

The current policy for 150,000 public servants was due to last another year, but the Premier said a review would start next week, and a new policy was expected by next year.

The WA government's record operating surplus came off the back of surging iron ore prices, driven by Chinese demand.

In mid-May the iron ore price reached a record $US235.6 per tonne, around $US140 to $US150 per tonne above prices prior to the outbreak of the pandemic.

Iron ore royalty income was estimated to decrease from its peak of $11.3 billion in 2020-21 to $9.2 billion in 2021-22.

But the listed iron ore price has dropped to about $US66 a tonne over the next four years, something Mr McGowan described as a "conservative" estimate.

While net debt fell for a third consecutive year to $32.1 billion, it was expected to climb again from next financial year – when it is expected to be $34 billion.

Projects delayed:

  • Albany TAFE expansion (delayed to mid 2024)
  • Armadale TAFE expansion (mid 2024)
  • Balga TAFE expansion (mid 2024)
  • Bindoon bypass road construction (2026)
  • Casuarina Prison expansion (late 2024)
  • Geraldton Finfish Nursery (mid 2023)
  • Great Eastern Highway Bypass and Roe Highway upgrade (2024)
  • Joondalup TAFE auto workshop construction (mid 2024)
  • Manuwarra Red Dog Highway construction (2024-25)
  • Metronet-Thornlie to Cockburn rail link (late 2024)
  • Metronet-Yanchep rail extension (late 2023)
  • Muresk trade workshop construction (early 2023)
  • Reid Highway upgrade — Altone, West Swan Road, Drumpellier Drive (2026)
  • Port Hedland Spoilbank Marina construction (2022-23)
  • Tonkin Highway upgrade — Welshpool and Hale Roads (mid 2025)
  • Tonkin Highway upgrade — Kelvin Road (2025-26)

What is inkl?

Important stories

See news based on value, not advertising potential. Get the latest news from around the world.

Trusted newsrooms

We bring you reliable news from the world’s most experienced journalists in the most trusted newsrooms.

Ad-free reading

Read without interruptions, distractions or intrusions of privacy.