❓ Mr. Nalder questions the Treasurer on progress addressing state finance challenges. The Treasurer highlights a surplus, expenditure control, debt management, and public service reforms, particularly salary growth reduction, while defending borrowing for infrastructure projects.
AnsweredQoN 741Legislative Assembly
QuestionView source ↗
STATE FINANCES — BUDGET SURPLUS
741. Mr D.C. NALDER to the
Treasurer:
Can the Treasurer update the house on the progress made to
address the challenges facing the state's finances?
741. Mr D.C. NALDER to the
Treasurer:
Can the Treasurer update the house on the progress made to
address the challenges facing the state's finances?
AnswerView source ↗
I thank the member for that question; it is a very relevant
one and I thank him for his interest in the area. Yesterday, I released the Annual Report on State Finances that
gives the audited result for 2013–14. It is a very important result
because it was the first year that included the fiscal adjustment put in place
to adjust our finances. The indications were that there is no need to hail that
everything is solved, but it illustrates a couple of things. First and
foremost, we are making progress in controlling expenditure. We are making
progress and maintaining the level of debt, and we are making reforms in the
public service. When we brought down the budget last year, there was always
some uncertainty about what the outcome would be. There were a range of large
changes, including changes in iron ore prices and exchange rates, and we
forecast a surplus in the vicinity of $183 million. The surplus came in at $719
million, which is substantially higher. We also forecast substantial reductions
in spending, particularly overall spending and salaries, and we were able to
achieve that. Indeed, salary growth was at 5.2 per cent, the lowest in 13 years,
and when we take away the one-off payments for voluntary redundancies, the
growth was 4.3 per cent, again, the lowest in decades. As we stated in the
fiscal action plan, because salaries make up 45 per cent of underlying
expenditure, the key to controlling expenditure in future was to get our
salaries vote under control. Over the last decade, salaries have been growing
at eight per cent a year on average, so we brought them down; when we take away
the one-offs, that growth is back to 4.3 per cent, which is a substantial
achievement. We also kept debt below $21 billion —
Several members interjected.
Dr M.D. NAHAN :
Members opposite might laugh, but in 2013–14 we spent $6.8 billion on
infrastructure, and we borrowed an additional $2.8 billion. In other words, 60 per
cent of the infrastructure was funded by other than debt. What did we do with
that $6.8 billion? The largest one was Western Power. Members opposite would
pretend that they would not borrow to fund Western Power, they would not borrow
to fund the Water Corporation, they would not borrow to build the Perth
Children's Hospital and they would not borrow to build housing. We have
and we are proud of it. This is a fast and rapidly growing state —
Mr B.S. Wyatt interjected.
The SPEAKER :
Member for Victoria Park, I call you to order for the first time. Treasurer, I
want you to start winding this up.
Dr M.D. NAHAN :
This is a rapidly growing state. It would be foolish not to borrow for
additional capital. The Institute of Public Affairs, by the way, always argues
that governments should borrow for capital; what it argued against was what
members opposite did the last time they were in government and in the 1990s,
which was borrowing for recurrent purposes.
Mr J.R. Quigley interjected.
The SPEAKER :
Member for Butler, I call you to order for the first time.
Dr M.D. NAHAN : I
might add that part of the debt also went to build the railway to Butler. Was
that a mistake? Should we not have done that?
Several members interjected.
The SPEAKER :
Member for Butler, I call you to order for the second time. Treasurer, you have
one minute to wind this up.
Dr M.D. NAHAN : As
a share of revenue across all states, our debt levels are the second-lowest
after New South Wales, lower than Victoria's and South Australia's,
and much lower than that of Queensland. Members opposite might say that that is
rubbish, but that is the official statement from Treasury. Are members opposite
saying that Treasury is lying?
Several members interjected.
The SPEAKER :
Member for Mandurah and member for Willagee, I call you to order for the first
time. Member for Victoria Park, I am putting you on notice.
Dr M.D. NAHAN : In
a difficult year we achieved a large surplus. We substantially reduced the
growth in salaries, we reduced the level of debt from what was forecast and we
had the best debt outlay of any state other than New South Wales—below
forecast. This was the best outcome in years and, I might add, it was during a period
when revenue growth was declining.
one and I thank him for his interest in the area. Yesterday, I released the Annual Report on State Finances that
gives the audited result for 2013–14. It is a very important result
because it was the first year that included the fiscal adjustment put in place
to adjust our finances. The indications were that there is no need to hail that
everything is solved, but it illustrates a couple of things. First and
foremost, we are making progress in controlling expenditure. We are making
progress and maintaining the level of debt, and we are making reforms in the
public service. When we brought down the budget last year, there was always
some uncertainty about what the outcome would be. There were a range of large
changes, including changes in iron ore prices and exchange rates, and we
forecast a surplus in the vicinity of $183 million. The surplus came in at $719
million, which is substantially higher. We also forecast substantial reductions
in spending, particularly overall spending and salaries, and we were able to
achieve that. Indeed, salary growth was at 5.2 per cent, the lowest in 13 years,
and when we take away the one-off payments for voluntary redundancies, the
growth was 4.3 per cent, again, the lowest in decades. As we stated in the
fiscal action plan, because salaries make up 45 per cent of underlying
expenditure, the key to controlling expenditure in future was to get our
salaries vote under control. Over the last decade, salaries have been growing
at eight per cent a year on average, so we brought them down; when we take away
the one-offs, that growth is back to 4.3 per cent, which is a substantial
achievement. We also kept debt below $21 billion —
Several members interjected.
Dr M.D. NAHAN :
Members opposite might laugh, but in 2013–14 we spent $6.8 billion on
infrastructure, and we borrowed an additional $2.8 billion. In other words, 60 per
cent of the infrastructure was funded by other than debt. What did we do with
that $6.8 billion? The largest one was Western Power. Members opposite would
pretend that they would not borrow to fund Western Power, they would not borrow
to fund the Water Corporation, they would not borrow to build the Perth
Children's Hospital and they would not borrow to build housing. We have
and we are proud of it. This is a fast and rapidly growing state —
Mr B.S. Wyatt interjected.
The SPEAKER :
Member for Victoria Park, I call you to order for the first time. Treasurer, I
want you to start winding this up.
Dr M.D. NAHAN :
This is a rapidly growing state. It would be foolish not to borrow for
additional capital. The Institute of Public Affairs, by the way, always argues
that governments should borrow for capital; what it argued against was what
members opposite did the last time they were in government and in the 1990s,
which was borrowing for recurrent purposes.
Mr J.R. Quigley interjected.
The SPEAKER :
Member for Butler, I call you to order for the first time.
Dr M.D. NAHAN : I
might add that part of the debt also went to build the railway to Butler. Was
that a mistake? Should we not have done that?
Several members interjected.
The SPEAKER :
Member for Butler, I call you to order for the second time. Treasurer, you have
one minute to wind this up.
Dr M.D. NAHAN : As
a share of revenue across all states, our debt levels are the second-lowest
after New South Wales, lower than Victoria's and South Australia's,
and much lower than that of Queensland. Members opposite might say that that is
rubbish, but that is the official statement from Treasury. Are members opposite
saying that Treasury is lying?
Several members interjected.
The SPEAKER :
Member for Mandurah and member for Willagee, I call you to order for the first
time. Member for Victoria Park, I am putting you on notice.
Dr M.D. NAHAN : In
a difficult year we achieved a large surplus. We substantially reduced the
growth in salaries, we reduced the level of debt from what was forecast and we
had the best debt outlay of any state other than New South Wales—below
forecast. This was the best outcome in years and, I might add, it was during a period
when revenue growth was declining.
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