Budget loosens State debt noose

BUDGET STATEMENT

30/4/98

BUDGET LOOSENS STATE DEBT NOOSE

Premier Richard Court says the Coalition Government's fifth successive balanced Budget significantly loosens the debt 'noose' that has been around Western Australia's neck since the blow out in State debt during the 1980s and early 1990s.

Mr Court said the Government's sustained commitment to a debt reduction strategy had seen net debt as a share of Gross State Product (GSP) fall by more than half - from 20.1 per cent in 1992-93 to 8.2 per cent by the end of this financial year.

Western Australia's net debt level was now amongst the lowest of any State in the nation.

The Premier said that, as part of the debt reduction strategy, the Government had used $1.776 billion from the sale of the Dampier-to-Bunbury Gas Pipeline to reduce State debt to $4.8 billion.

When the Coalition entered government in 1993, public sector debt stood at $8.3 billion.

The bulk of the debt that had been cleared as a result of the pipeline sale related to AlintaGas, while in excess of $700 million in debt associated with the Consolidated Fund had been retired.

"Retiring debt is the most responsible use for the bulk of funds from the pipeline sale; it simply makes good sense," Mr Court said.

"It is like homeowners who have a large mortgage. If they have substantial one-off funds available, it is accepted that the best way to improve their overall financial position is to pay a significant amount off their home loan.

Mr Court said that five years ago State debt was almost $20,000 per family; today it was less than $11,000. At the same time the annual interest burden per family had fallen by almost half - from over $2,250 to almost $1,000.

"With the State's finances, a reduction in public sector net debt means a reduction in the interest payments that have to be paid by the Government. That gives us more money to spend on core services such as education, health and policing - money that we just would not have available if we allowed debt to remain at high levels."

Mr Court said the Coalition's debt reduction strategy would result in the Government's exposure to net interest costs in 1998-99 falling by $408 million, compared with when the Government was elected to office in 1992-93 - money that was being ploughed back into services and facilities for the people of WA.

"It has been largely due to this sustained sound financial management that WA had its AAA credit rating restored in late 1996," he said.

"This good financial management is also ensuring that WA is becoming one of the strongest economies in our region."

Media contact: Casey Cahill 9222 9475