❓ Treasurer Nahan addresses the WA Parliament regarding Standard and Poor's credit rating assessment, attributing concerns to falling iron ore and oil prices and criticising the GST distribution. He defends the government's financial management and accuses the opposition of inaction on the GST issue.
AnsweredQoN 262Legislative Assembly
QuestionView source ↗
WESTERN AUSTRALIAN ECONOMY — CREDIT RATING
262. MR N.W. MORTON to the Treasurer:
Can the Treasurer update the house
on the credit rating assessment for Western Australia released on 14 April?
262. MR N.W. MORTON to the Treasurer:
Can the Treasurer update the house
on the credit rating assessment for Western Australia released on 14 April?
AnswerView source ↗
I thank the member for the question.
As everyone knows, on 14 April, the Standard and Poor's credit rating
agency announced a number of what it calls event-driven credit ratings. ''Event-driven''
means it was in response to the recent decline in iron ore and oil prices. At
that time it announced that eight major iron ore producers were on credit
watch, including Rio Tinto, BHP Billiton, Fortescue, Vale and Anglo American—and
Western Australia. The main reason for that was, as I said, the 50 per cent–plus
drop in iron ore prices over the last year and a 45 per cent drop in oil
prices. As everyone here should know, royalties account for a large proportion
of our total state income and therefore over this last year we have seen the
royalty income drop by —
Several members interjected.
The
SPEAKER : Member for Warnbro, I call you to order for the first time. Member
for West Swan and member for Cockburn!
Dr
M.D. NAHAN : Total revenue, including royalties, has dropped by about 12 per
cent. People opposite were avoiding this debate and cringing from it, but the
other issue is the GST. It was also recognised that the GST revenue did not
cushion the reduction in royalties but actually accentuated it. The forecast
for the 2015–16 relativities is that the GST revenue will decline from
the 2014–15 rate by a further $330 million; that is, if relativities
are adhered to, we will receive a total of $1.9 billion. That compares to the
Northern Territory receiving $3.2 billion, and I remind members that the
population of the Northern Territory is the size of the City of Stirling, so it
is accentuated. If the relativities are achieved, we will receive —
Ms
R. Saffioti interjected.
The
SPEAKER : Member for West Swan, I call you to order for the first time. That
is enough now.
Dr
M.D. NAHAN : We will be required to contribute $4.5 billion of GST payments
paid to the commonwealth to be distributed to the other states. That is why
throughout the debate the Premier and I have been arguing that members opposite
have been missing in action and that they will be held accountable for it in
the end. Over the last few months we have done a lot. I might add that when we
came to government, the wages bill was growing at 12 per cent a year and under
our watch it has grown at 5.2 per cent.
Mr
B.S. Wyatt interjected.
The
SPEAKER : Member for Victoria Park!
Dr
M.D. NAHAN : Over the year to the December quarter it grew by 2.1 per cent.
People opposite were expanding the wages bill in this state on average, year
after year, at 12 per cent, and we are running it at two per cent. Expenses
growth under the former Labor government grew on average at 7.8 per cent.
Mr
B.S. Wyatt interjected.
The
SPEAKER : Member for Victoria Park!
Dr
M.D. NAHAN : Ours has grown at 5.3 per cent and, as we will see in the
budget, it will go down further. Standard and Poor's recommended that
we immediately move to a five per cent surplus relative to revenue.
Mr
B.S. Wyatt interjected.
The
SPEAKER : Member for Victoria Park!
Dr
M.D. NAHAN : This would require a 35 per cent increase in our own tax take
and we are not going to do that. When Standard and Poor's issued its
assessment, it did not bother to talk to Treasury. It usually talks to Treasury
to make sure it gets its data right, but this time it issued an assessment that
included an estimate of royalty rates at 50 per cent below what is reasonable.
It also expects the GST share to decline each year in the forward estimates
below 30 cents in the dollar. That is not to be expected. Standard and Poor's
got some things wrong. This was a response to iron ore prices and we are
pulling ourselves through it. These are difficult times. We are fighting for
the GST share, which the opposition —
Several members interjected.
Dr
M.D. NAHAN : I remind members opposite that everyone in WA knows that we are
getting dudded in the GST and one of our requirements is to inform them that
the only ones who are not standing up for it are the Labor Party. The Labor
Party has done nothing; it has squibbed the debate. We now know that the Leader
of the Opposition is a whinger not a leader. We are working to drive down costs
in the public sector with these people opposite fighting us all the way.
As everyone knows, on 14 April, the Standard and Poor's credit rating
agency announced a number of what it calls event-driven credit ratings. ''Event-driven''
means it was in response to the recent decline in iron ore and oil prices. At
that time it announced that eight major iron ore producers were on credit
watch, including Rio Tinto, BHP Billiton, Fortescue, Vale and Anglo American—and
Western Australia. The main reason for that was, as I said, the 50 per cent–plus
drop in iron ore prices over the last year and a 45 per cent drop in oil
prices. As everyone here should know, royalties account for a large proportion
of our total state income and therefore over this last year we have seen the
royalty income drop by —
Several members interjected.
The
SPEAKER : Member for Warnbro, I call you to order for the first time. Member
for West Swan and member for Cockburn!
Dr
M.D. NAHAN : Total revenue, including royalties, has dropped by about 12 per
cent. People opposite were avoiding this debate and cringing from it, but the
other issue is the GST. It was also recognised that the GST revenue did not
cushion the reduction in royalties but actually accentuated it. The forecast
for the 2015–16 relativities is that the GST revenue will decline from
the 2014–15 rate by a further $330 million; that is, if relativities
are adhered to, we will receive a total of $1.9 billion. That compares to the
Northern Territory receiving $3.2 billion, and I remind members that the
population of the Northern Territory is the size of the City of Stirling, so it
is accentuated. If the relativities are achieved, we will receive —
Ms
R. Saffioti interjected.
The
SPEAKER : Member for West Swan, I call you to order for the first time. That
is enough now.
Dr
M.D. NAHAN : We will be required to contribute $4.5 billion of GST payments
paid to the commonwealth to be distributed to the other states. That is why
throughout the debate the Premier and I have been arguing that members opposite
have been missing in action and that they will be held accountable for it in
the end. Over the last few months we have done a lot. I might add that when we
came to government, the wages bill was growing at 12 per cent a year and under
our watch it has grown at 5.2 per cent.
Mr
B.S. Wyatt interjected.
The
SPEAKER : Member for Victoria Park!
Dr
M.D. NAHAN : Over the year to the December quarter it grew by 2.1 per cent.
People opposite were expanding the wages bill in this state on average, year
after year, at 12 per cent, and we are running it at two per cent. Expenses
growth under the former Labor government grew on average at 7.8 per cent.
Mr
B.S. Wyatt interjected.
The
SPEAKER : Member for Victoria Park!
Dr
M.D. NAHAN : Ours has grown at 5.3 per cent and, as we will see in the
budget, it will go down further. Standard and Poor's recommended that
we immediately move to a five per cent surplus relative to revenue.
Mr
B.S. Wyatt interjected.
The
SPEAKER : Member for Victoria Park!
Dr
M.D. NAHAN : This would require a 35 per cent increase in our own tax take
and we are not going to do that. When Standard and Poor's issued its
assessment, it did not bother to talk to Treasury. It usually talks to Treasury
to make sure it gets its data right, but this time it issued an assessment that
included an estimate of royalty rates at 50 per cent below what is reasonable.
It also expects the GST share to decline each year in the forward estimates
below 30 cents in the dollar. That is not to be expected. Standard and Poor's
got some things wrong. This was a response to iron ore prices and we are
pulling ourselves through it. These are difficult times. We are fighting for
the GST share, which the opposition —
Several members interjected.
Dr
M.D. NAHAN : I remind members opposite that everyone in WA knows that we are
getting dudded in the GST and one of our requirements is to inform them that
the only ones who are not standing up for it are the Labor Party. The Labor
Party has done nothing; it has squibbed the debate. We now know that the Leader
of the Opposition is a whinger not a leader. We are working to drive down costs
in the public sector with these people opposite fighting us all the way.
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