Today’s update on Western Australia’s dire financial position reinforces the need for expansive savings measures, says the Chamber of Commerce and Industry of Western Australia (CCI).
Under Treasurer Michael Barnes has announced that WA Treasury’s forecast of net debt will be $42.3 billion by 2019-20, up from the $41 billion estimated in February in the Pre-Election Financial Projections Statement (PFPS). The state’s deficit is also now expected to be $1.1 billion by 2019-20, up from $535 million at PFPS.
CCI Chief Economist Rick Newnham said amid soft economic conditions, it was important the government stuck to their election commitment of no new or increased taxes on West Australians.
“The state’s finances are in trouble because of excessive spending, not a lack of revenue – reining in spending must be the foundation of all budget and debt repair efforts,” Mr Newnham said.
“Treasurer Ben Wyatt must leave no stone unturned in his search for savings – every single area of expenditure must be reviewed to bring the WA budget back to surplus and ensure taxpayer dollars are being efficiently spent.
“Any tax increases in such challenging economic conditions would put severe pressure on businesses who are already struggling – CCI welcomed Premier Mark McGowan’s election commitment to no new or increased taxes on West Australians, as this will be instrumental in ensuring WA business owners have the funds needed to grow and create jobs for workers.
“A state in overwhelming debt is not an attractive place to do business – a balanced budget and manageable debt is critical to growing business confidence, stimulating investment and driving recovery in the economy.”
CCI’s latest Survey of Business Expectations for the March quarter has found medium-term business confidence lifted despite economic challenges, with 29 per cent of respondents expecting the economy to improve over the next 12 months, up by eight per cent from the previous quarter.
The number of businesses expecting the economy to weaken over the next year fell by a sizeable 13 percentage points down to 31 per cent, while nearly 40 per cent of businesses expected conditions to hold steady for this period.
Mr Newnham said WA business confidence was resilient but any increase to taxes or failure to implement further savings measures would quickly shatter that confidence.
“Given today’s update on the state finances, it is vital that the new Labor Government creates conditions that will reassure business and investors, and allow the uptick in business confidence to continue,” Mr Newnham said.
“Helping business work helps West Australians work – four out of five jobs in Western Australia are in the private sector, so if we want to bring the jobless rate down and maintain revenue to the budget, businesses must feel confident enough to invest in projects or ventures that will see their business grow and more jobs created.
“CCI and the business community look forward to working with Premier Mark McGowan, Small Business Minister Paul Papalia and the rest of the WA Labor Government to grow business confidence, strengthen the economy and create jobs for Western Australian workers.”
Read the full Survey of Business Expectations here.
Media contact: Kate Hodges – 0448 928 227