- Expense growth of just 2.2% is lowest rate of growth in 20 years, lower than 2014-15 State Budget forecast of 2.6%
- Wages growth more than halved from an average of 8.4% to 3.8%
- First revenue contraction in 18 years - due to substantially lower royalty income, declining GST revenue and flat taxation growth
- A general Government sector operating deficit of $431 million in 2014-15, $856 million lower than forecast
- Infrastructure spending totalled $5.8 billion in 2014-15 - bringing it to $45.8 billion since the Government came to office in 2008
- Net debt for public sector $2.1 billion lower than forecast at $23.4 billion
The State Government's Budget savings measures have helped deliver a sharp reduction in the projected deficit from $1.287 billion to $431 million, according to Western Australia's Annual Report on State Finances for 2014-15 released today by Treasurer Mike Nahan.
The final deficit was $856 million below the forecast in the May State Budget, on the back of the lowest expense growth in 20 years of just 2.2 per cent.
Overall expenditure growth of 2.2 per cent was below the 2.6 per cent growth forecast in the 2014-15 State Budget. This built on the Government's strict wages policy and other measures which saw a $203 million lower spend on salaries across the general Government sector compared with the forecast in the 2015-16 Budget.
"We targeted workforce reform, wages policy and improvements in the efficiency of the public sector in the face of unprecedented revenue collapse and it's working," Dr Nahan said.
The Treasurer said salaries growth was 3.8 per cent in 2014-15, less than half the 8.4 per cent average rate of growth over the preceding decade. This result underlined the importance of continuing the current wages policy and other public sector efficiencies to ensure the State remained in a strong financial position.
Dr Nahan said the result was driven by the fiscal discipline imposed on the public sector in the face of the first revenue contraction to the State's finances in 18 years brought about by sharp reductions in iron ore and oil prices.
In particular, 2014-15 included the impact of:
- a decline in royalty income (down $1.4 billion or 23.6 per cent), primarily due to a substantial fall in the iron ore price (which averaged $US71.1 per tonne in 2014-15, compared to $US122.8 per tonne in 2013-14)
- lower recurrent grants and subsidies from the Australian Government (down $148 million or 1.8 per cent), largely due to lower GST revenue and North West Shelf grants. This was partially offset by $499 million in additional Australian Government capital funding for roads
- little growth in taxation revenue ($33 million or 0.4 per cent). This is down from 5.2 per cent growth in 2013-14 and is the lowest rate of growth in tax collections since the Global Financial Crisis in 2008-09.
"As we said at the time of the 2015-16 State Budget, an operating deficit in 2014-15 was unavoidable given the change in the revenue outlook," the Treasurer said.
"Aside from the additional $499 million in Australian Government road funding, the improvement is due to lower agency spending outcomes, highlighting the impact of the Government's efforts to rein in recurrent spending growth."
The State's Asset Investment Program totalled $5.8 billion in 2014-15 and included substantial investment in electricity infrastructure ($1.1 billion), roads ($985 million), water infrastructure ($670 million), hospitals and other health facilities ($588 million) and schools ($432 million).
"This is a very substantial spend on infrastructure that is building our productive capacity and supporting our growing population while at the same time providing jobs," Dr Nahan said.
Net debt for the total public sector was $23.4 billion, $2.1 billion lower than forecast in the 2015-16 State Budget. Growing net debt reflects the increase in borrowings required to support the State's Asset Investment Program.
Fact File
- Lowest rate of growth in tax collections since 2008-09
- The State's GST revenue in 2014-15 was the lowest since the introduction of the GST in 2000-01
- Commodity prices were significantly lower than in the previous year (iron ore price down 42% and oil price down 33%)
- The State's net interest costs represented 2.0% of revenue in 2014-15
- The 2014-15 Annual Report on State Finances is available at http://www.treasury.wa.gov.au
Treasurer's office - 6552 5700
