I rise today to briefly outline the Government's agenda for this forthcoming year.
I do so briefly because this is a somewhat unique situation. The calling of the early election and the swearing in of the Liberal- National Government on 23 September last year, meant that the Governor outlined the Government's legislative priorities and policy agenda for this coming term on the opening of the first session of the 38th Parliament of Western Australia on 6 November.
Given this was just four months ago, I intend to provide an update on the decisions and actions made by the Government and briefly reiterate our policy and legislative priorities for 2009.
We enter this Parliamentary year in not only a different political environment, with a Liberal-National Government, but also a very different economic environment with the world, the nation and Western Australia facing immense economic challenges.
The global financial crisis has sent many of the major economies of the world into recession. Just yesterday, the World Bank predicted the world economy would shrink in 2009 for the first time since World War Two. The United States is in decline and forecast to record negative growth in 2009. Europe is likely to move into negative growth of two to three per cent or more and Japan's December quarter result showing a contraction of 3.3 per cent was the country's worst since the 1970's oil crisis.
Growth rates in developing economies such as China and India are also falling, although from much higher bases.
Figures released last week showed the Australian economy contracted by 0.5 per cent in the December quarter and grew by only 0.3 per cent through the year. It is likely that Australia will also experience a period of negative growth.
Clearly, Western Australia is not immune from the effects of the global financial crisis. This Government is acutely aware of the impact it is having on the lives of Western Australians and their concerns about their jobs, the value of their assets and the future of their children.
In response to these concerns and the global financial crisis, the Liberal-National Government's approach is to make practical, common sense decisions that will build confidence and ensure that we can emerge from these difficult times stronger and better placed than when we entered.
The Western Australian economy is fundamentally different than most other States' economies and those of other countries.
Our economy is driven by primary production, predominantly in mining and petroleum, and agriculture, and the export of those commodities.
In 2008, Western Australia exported $84 billion worth of product. That equates to an extraordinary 38 per cent of Australia's exports.
As a result, our economy is highly dependent on commodity prices, which have declined over the past two years. For example, base metal prices have fallen by 55 per cent since a peak in May 2007. This has been partially offset by the reduction in the Australian dollar however the net result will be a significant loss of revenue, which could be around $1 billion a year. It is the responsibility of this Government to ensure that the State's finances are not put at risk as a result of declining revenues, while continuing to provide for economic growth.
One of the ways we will do that is by ensuring government operates efficiently and effectively and that the taxpayers' dollar is well spent.
We have asked government CEOs to save three cents in every dollar spent, to improve the efficiencies and operations of their agencies. I acknowledge the tensions that identifying these savings creates. But it is a necessary and worthwhile exercise in this economic environment and the Government does not resile from it.
Government advertising has been reduced by 15 per cent and government media and marketing functions have been cut by 25 per cent.
The Government has already established the Public Sector Commission to restore and reinforce the professionalism and independence of our public service. Public servants continue to work hard to deliver quality services to our community.
We have also announced a ceiling on the number of full time equivalent positions (FTE) in the public service. The public service has grown by 22,000 people over the past eight years. The Liberal-National Government has placed a ceiling on the size of the public sector at around 99,000 FTE.
We aim to reduce the number of boards and committees to around 500. Interestingly, we do not know exactly how many boards and committees currently exist - that is an issue in itself but there are at least 1000. Boards and committees play an important role in providing advice to government but we must examine how many of them have outlived their relevancy and usefulness.
In its determination to responsibly address the State's finances, the Government has also made the difficult decision to increase electricity tariffs for residential customers - by 10 per cent in April and 15 per cent in July - and for business customers. These increases, while regrettable, are an effort to stem the unacceptable level of Verve Energy's losses, which could total $1 billion over the next five years.
While all of these measures are focused on ensuring the State's finances are not placed at risk in these difficult economic times, the Government is also acutely aware of the need to balance prudent fiscal management with the need to stimulate the economy, to ensure Western Australia's continued development through government and private sector investment and job creation.
On the government side, $7.7 billion of capital works are under way this financial year. That is a significant program - 28 per cent up on the previous year.
We have also re-ordered our capital works priorities to focus on essential services -schools, hospitals and housing.
The Government has:
· Brought forward building of a new children's hospital, Kalgoorlie Hospital and Albany Hospital;
· Fast tracked the building of 1000 new public houses at a cost of $316 million;
· Committed to extend the northern suburbs rail line to Butler and Brighton;
· Taken the building of a new football stadium off the agenda for two years;
· Scrapped the previous government's plan for a new museum at the old East Perth power station in favour of a new museum on the existing site within the Perth cultural precinct; and
· Scrapped Labor's plans for the Perth foreshore in favour of a more modest redevelopment with greater private sector involvement and investment;
· Re-committed to an additional $300 million for new schools.
Two important regional projects that had stalled under the Labor Government - the Muchea Saleyards and the Regional Prison at Derby - have also been progressed by the Liberal- National Government. The Muchea Saleyards are already well into construction.
Regional Western Australia will also benefit through Royalties for Regions funding, particularly the Country Local Government Fund - $100 million for minor capital works throughout the State that will generate jobs, stimulate investment and improve amenities in regional communities.
The Government's priorities for Infrastructure Australia funding - Ord Stage 2, Oakajee Port, the sinking of the rail line through Northbridge, roads around Perth airport and Pilbara housing - also reflect our commitment to invest in our future and underpin economic development beyond the short term.
I will briefly outline the first three of these priorities and why they are so important. The transformation into reality of the long-held dream of expanding agricultural production in the Ord River region has begun. Ord Stage 2 will more than double the irrigated area and advance agriculture in this State so that we can better capitalise on the opportunities presented by the global demand for quality food and other agricultural produce.
The development of a deep sea port, associated rail infrastructure and a purpose-built, world class industrial estate at Oakajee is the single most important project for Western Australia's economic development over the next 50 years.
Oakajee is about far more than iron ore. The region is rich in a variety of natural resources and the port will provide an important stimulus to the establishment of a new mining-based industry in the region, the economic spin-offs of which cannot be underestimated. But the building of a world class industrial estate adjacent to the port and rail infrastructure will also allow us to take a further step toward economic maturity. It will provide the opportunity to finally make more of our natural resources through value adding.
Western Australia has lacked a site for sophisticated processing of our vast reserves of mineral and gas resources. Oakajee is a chance to build something that this State does not have - an industrial estate, adjacent to a deep water port, close to an established city in a resource-rich region. It provides the opportunity to attract our customers, mainly manufacturing companies, that can bring some of their production capacity to Western Australia to transform our natural resources into higher value products. As such, it will finally enable us to broaden our economy from the selling of raw materials to the production and export of a wider range of processed products. Oakajee will provide Western Australia with a more sophisticated future with a wider range of industry and employment.
The third priority for Infrastructure Australia funding is the sinking of the rail line through Northbridge - a project that has been talked about for a century. Doing so will open up Perth by removing the barrier between Northbridge and the CBD and provide for a centrally located civic square or park.
While these projects will be funded by the State Government and, hopefully, the Commonwealth Government, they will also attract private investment, create jobs and have the capacity to meet the future demand for industries that underpin the future of the State's economy.
The private sector will play a pivotal role in helping the Government to keep the economy moving forward in these difficult economic times. Last year business investment in Western Australia rose by 18.3 per cent. While this Government recognises that decisions by the private sector are largely based on commercial grounds, we also recognise that Government action can affect those commercial decisions. The Liberal-National Government is unashamedly pro-development and will strive to attract sustained investment in this State through bold thinking and brave decision making.
We have lifted the ban on uranium mining in Western Australia. We are the world's leading mining economy and banning the mining of uranium was nonsensical. Lifting the ban on uranium mining will unlock tens of millions of dollars in royalties revenue, provide significant employment opportunities and allow the State to respond to the growing global demand for cleaner energy by sovereign nations wanting to reduce their greenhouse gas emissions.
And we are working hard on a number of fronts to streamline approvals processes to encourage investment, rather than stymie it, while properly considering environmental, Aboriginal heritage, native title and planning issues.
These important issues are currently being considered with respect to the development of an LNG precinct in the Kimberley. A precinct will stimulate the development of the massive Browse Basin and other gas resources off the Kimberley coast. The Government has announced its preferred site for the LNG precinct at James Price Point and will aim to secure relevant approvals for mid 2010. Our preference is to secure the site through negotiation with Aboriginal people and that negotiation is underway. If that cannot be achieved, then we will use existing powers under the Native Title Act.
There are a host of private sector projects, worth billions of dollars and many thousands of jobs, that are already under construction or poised to come on stream. These include:
· the CITIC Pacific mining project at Cape Preston;
· Woodside's Pluto 1 project, which is about half way through and, hopefully, Pluto 2;
· the Gorgon project on Barrow Island;
· Apache's Devil Creek domestic gas project;
· BHP Billiton's and Rio Tinto's iron ore expansion in the Pilbara; and
· Perdaman Chemicals and Fertilisers urea project at Collie.
There is an extraordinary period of advancement ahead for Western Australia, despite the economic downturn. We have the opportunity to be counter-cyclical.
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