Government finances back in the black

25/9/02
The Gallop Government today unveiled a better than expected $209million Budget surplus - and immediately committed it to reducing Government borrowings.
Releasing the 2001-02 financial results for Labor's first full financial year in office, Treasurer Eric Ripper said the $209million surplus was the best financial result in six years.
It was significantly better than the last published forecast of $118million when the Government delivered the 2002-03 State Budget in May. Government expenses were also $38million lower than expected by the end of the financial year.
The results also revealed a $418million capital works underspend in 2001-02 which had reduced the forecast net debt to revenue ratio from 39.1 per cent to 33.8 per cent, well short of Labor's self imposed 45 per cent ceiling designed to preserve the AAA credit rating.
Mr Ripper said a combination of financial discipline and better than forecast revenue from property conveyancing had delivered an outstanding financial result.
"The true measure of our financial discipline is that we have contained Government expense growth and invested the better than expected surplus in reducing our borrowings," he said.
"The previous Government frittered away massive revenue windfalls with rampant overspending and managed to deliver five deficits in eight Budgets."
Mr Ripper said despite the additional conveyancing duty, revenue grew by 4 per cent last year - compared to average growth of 7.7 per cent in the previous four years.
Government expense growth in 2001-02 grew by a modest 3.7 per cent - less than forecast earlier this year - compared to an average 6.6 per cent over the previous four years.
"Less than two years ago, under the steerage of Colin Barnett and Richard Court, the State's economy was contracting and respected financial commentators described the Government's finances as sinking in 'a sea of red ink'," Mr Ripper said.
"In Labor's first full financial year of Government we have seen 6.6 per cent economic growth, a healthy Budget surplus and confirmation of our AAA credit rating."
Mr Ripper said it was a fatal mistake to view Budget surpluses as extra money just waiting to be spent.
"Budget surpluses are critical to putting the State's finances on a sustainable footing. They are also an alternative to using debt, or borrowings, to finance capital works," he said.
"If we have no Budget flexibility, we are constrained in what we can borrow to invest in important infrastructure to develop our State and we would also be vulnerable to unexpected events, such as fluctuations in the Australian dollar or the world oil price.
"This Government wants surpluses to be the norm in this State rather than the exception."
Mr Ripper said the 2001-02 results meant the Government had honoured the key financial management objectives it took to the election, including measures aimed at maintaining the State's AAA credit rating, net worth, operating surpluses and tax competitiveness.
Acting Premier's office: 9222 8788