Treasurer Ben Wyatt today released the 2018‑19 Annual Report on State Finances, which delivers on the McGowan Government’s pledge to return the Budget to surplus and does so two years earlier than expected.
The Annual Report on State Finances details the audited financial outcomes for the 2018‑19 financial year, and outlines a significant turnaround in the State’s finances. The $1.3 billion general government operating surplus for 2018-19 is the first positive result since 2013‑14 and is a substantial turnaround from the $2.5 billion deficit recorded two years ago in the final year of the previous Liberal National Government.
The surplus was $851 million higher than expected at the 2019-20 Budget. The largest driver of the improved outcome was lower Government expenditure, which was $316 million less than expected at the 2019-20 Budget.
The Government’s disciplined management of expenditure continued with general Government expenses growing by 2.1 per cent in underlying terms in 2018‑19 (or 2.5 per cent after Commonwealth funding decisions that flowed through to State spending).
Iron ore royalties were $288 million higher than expected at the 2019-20 Budget, due to a temporary lift in iron ore prices in the June quarter, partly offset by lower than expected export volumes. Iron ore prices fell sharply following the end of the financial year, with a 32.8 per cent drop in a thirty‑day period, highlighting the importance of maintaining a “buffer” against revenue volatility.
A $250 million settlement with BHP over a royalties dispute also provided a one-off improvement to the operating balance. This funding was directed towards the construction of a new women’s and maternity hospital and a Pilbara school and hospital package.
The Government’s Budget repair strategy is delivering better financial outcomes, with net debt now sitting at $35.5 billion at the end of 2018-19, compared to $40 billion projected under the previous Liberal National Government.
Notably, 2018‑19 was the first year since 2013‑14 that no new central borrowings were undertaken.
The 2018‑19 Annual Report on State Finances can be downloaded from the Department of Treasury’s website at https://www.treasury.wa.gov.au
As stated by Treasurer Ben Wyatt:
“The return to surplus in 2018-19 shows that the Government’s financial plan is working. We continue to turn the finances around and fix the mess left by the previous Liberal National Government.
“Achieving the surplus in 2018-19, two years earlier than we expected in our first Budget, is very welcome news for every Western Australian.
“As a result of the McGowan Government’s financial management, taxpayers of WA have seen electricity price increases kept to the lowest level in 13 years, schools and hospitals have received a $281 million job creating maintenance boost all while WA is the only State in the country with decreasing debt.
“Net debt is $4.5 billion lower than forecast under the Liberals and Nationals and WA is the only State where debt will decline over the next four years.
“We continue to focus on managing expenditure growth as this can be controlled by the Government, and to provide a buffer against volatile sources of revenue.
“Our controls on expenditure growth continue to lead the State’s finances from the wilderness they were left in. Over the first two years of the previous Liberal National Government expenditure growth was an eye-watering 26 per cent, in stark contrast to the 4.4 per cent this Government has achieved over the same period.
“Our strong fiscal resolve has been recognised by the credit ratings agencies, with the first upgrade to the State’s credit rating in 2018-19 since the former Government lost the State’s AAA credit rating.”
