Paul Murray: State Budget surpluses haven’t been planned, they’re the result of a run of historic luck

Rita Saffioti would be praying for some good news after a week from hell.

She’s had to deal with the disclosure of massive cost increases in the Government’s IT projects — the biggest one in her transport portfolio, which she oversees despite the obvious conflicts as Treasurer, and the news that her locally-assembled Metronet railcars are not fit for use, according to the unionists who drive them.

So she’d also be hoping people think all the cash she doles out in this “Made in WA” Budget will be better handled. And that no one mentions blowouts.

When Saffioti got the job two years ago, the State’s net debt was $28.3 billion. This Budget takes it to $42.5b by 2028-29 — a 50 per cent increase — while still predicting annual cash surpluses.

Treasurers who can’t control debt in times of unprecedentedly high revenues don’t deserve applause. That’s the bad news, Rita.

Digging deep into the Budget papers it is apparent that much of this mounting debt is to fund the net zero emissions transition, although a single figure for the massive cost is elusive due to the scattered details of “public non-financial corporations sector net debt” and multiple subsidies.

Saffioti’s speech drew parallels with other States’ finances that are as nauseous as they are provocative for those planning to torch WA’s special GST deal.

“WA’s net debt as a percentage of Gross State Product is expected to be 9.1 per cent at the end of the budget year — compared to an average of over 20 per cent across the other states and the Commonwealth,” Saffioti said.

She forgot to say it was 6.2 per cent when she became Treasurer and will be 9.5 next year. That’s the measure of her profligacy.

Other State governments would love her good fortune — other than basket-case Victoria — most would probably handle the revenue windfalls far more responsibly.

“This Budget reinforces the walls of fortress WA,” Saffioti said, channelling Mark McGowan. She will need a fortress to fight off the other State treasurers infuriated by her boasting.

“Our domestic economy has grown by almost 26 per cent over the past five years, well above the 16 per cent growth nationally.”

But that’s nothing more than a demonstration of her historic luck. Her surpluses are built on booming iron ore prices that will not be there when her over-spending makes our debt peak.

Most people don’t realise how much luck contributes to Saffioti’s books. She now receives more than double the revenues enjoyed by the Barnett government in its last years thanks to inflated royalties and the generous GST deal.

After last year’s Metronet-affected blowout in spending by 10.6 per cent, this year’s increase is lower at 4.3 per cent, before falling by 5.9 per cent in 26-27.

Those businesses feeling the squeeze that government over-spending puts on the labour market are having quite a rollercoaster ride.