Balanced Budget meets financial targets

8/5/03
The Gallop Government is to spend $11.7billion delivering services to Western Australians in the 2003-04 financial year.
Announcing the Government's third balanced Budget today, Treasurer Eric Ripper said the spending on services amounted to $5,918 for every man, woman and child in the State.
He said the Government would spend another $3.5billion building social and economic infrastructure around the State - such as roads, bridges, railways, hospitals, schools and electricity and water infrastructure - to underpin the State's strong economic growth.
Mr Ripper said the Budget was a responsible financial plan to meet pressing community needs while keeping the State's finances in the black.
The Government had targeted big spending increases to key areas, while cutting nearly $750million in other capital and recurrent programs over the next four years.
Mr Ripper said the Government had been forced to increase taxes and other revenue by $182million this year, but invested that - and more - into a massive increase in health funding of $232million in 2003-04.
The Treasurer said despite big spending cuts, the Government had faced an uphill battle to balance the Budget because of forecast revenue growth of a flat 0.6 per cent, largely reflecting real cuts in Commonwealth grants to Western Australia and an expected sharp decline in petroleum and mining royalties of $131million.
"Even with revenue measures, the State's income - needed to pay for services - will grow by an estimated 2.1 per cent in 2003-04, less than inflation."
"While the State economy is booming, most of the revenue benefits are flowing to the Commonwealth in the form of income and company tax - yet Canberra is offering a miserly 0.9 per cent increase in our grants this year, a real cut."
Mr Ripper said an expected surplus of $83million, following a $178million surplus in 2002-03, gave the Government a margin to meet emergencies and helped fund the substantial capital works program.
"We are now living in an uncertain world and we must have the financial flexibility to respond to unexpected events. The effects of the drought and the Bali tragedy are two events that had financial impacts in 2002-03," he said.
Mr Ripper said the tough Budget increased the Government's determination to fight for reform of Commonwealth-State financial relations.
"If our Commonwealth grants - which account for 45 per cent of the State's income - had kept pace with inflation and population growth, we would be $145million better off this year," he said.
"The system for distributing grants to the States and Territories has disadvantaged WA for a decade. We are punished for our economic success, and further, any revenue benefits from the GST are not expected to kick in until 2007-08.
"Reform to Commonwealth-State financial relations is long overdue, but will not occur unless the Howard Government snaps out of its third term complacency."
Mr Ripper said the Budget met the Government's self imposed financial management targets and would ensure the finances remained triple-A quality.
He said State debt - borrowings for important works projects - would rise to $5.96billion by the end of next financial year, but this was within previous forecasts and well under the State's net debt to revenue ratio of 47 per cent.
Economic growth was expected to be 4.5 per cent next year, stronger than earlier forecasts.
KEY FACTS:

	Coalition	Labor 2001-02	Labor 2002-03	Labor 2003-04
Surpluses	5 deficits in eight budgets	$197 million	$178 million	$83 million
Asset sales/privatisation	$4.8 billion	Nil	Nil	Nil
Revenue growth	6.6% average	4.1%	4.5%	2.1%
Expense growth	5.6% average	3.9%	4.7%	3%
Economic growth	-1.2% in 2000-01	5.7%	4.25%	4.5%
Business investment	- 8.7% in 2000-01	13.6%	15%	10%