The McGowan Labor Government has today released the 2020-21 Mid-year Review which highlights that Western Australia's strong economic recovery continues to exceed expectations, with improved revenue collections flowing through to the State's finances.
In 2020-21 the forecast net operating surplus has been revised up to $2.2 billion, from $1.2 billion at the Budget delivered in early October, with stronger than expected surpluses anticipated over the forward estimates.
Net debt projections have been revised down by $1.4 billion since Budget to $41.4 billion by June 30, 2024.
The Western Australian economy continues to lead the nation, with forecast growth in Gross State Product revised up from 1.25 per cent in 2020-21 at Budget to 2 per cent at the Mid-year Review - driven by a strikingly strong increase to the domestic economy.
This is the strongest projected growth of any State based on recent projections, and follows growth of 1.4 per cent in 2019-20, in contrast to most other State economies which contracted.
WA's handling of COVID-19 and the fact the McGowan Government was able to get Western Australians back to work so quickly has seen the domestic economy roar back to life.
Consumer and business confidence recovered faster in WA from COVID-19, with strong growth in retail trade, while the McGowan Government's Building Bonus and other government incentives have lifted activity in the housing market.
WA's labour market has also recovered at a faster rate than expected at Budget.
Treasury have revised up employment growth in 2020-21 from a 0.25 per cent contraction to a 1 per cent increase in annual average terms. In year ended terms, the same basis used by the Commonwealth, employment is expected to grow by 6.5 per cent or almost 85,000 jobs.
Improved economic conditions have flowed through to an increase in projected revenue collections.
Projected taxation revenue has been revised up by $1.1 billion over the four years to 2023-24, underpinned by improved activity in the housing and labour markets, and vehicle sales.
The Government has used the State's stronger financial position to deliver projects that will benefit Western Australians into the future. This includes $1.787 billion which has been set aside to build a new Women and Babies Hospital to replace the ageing King Edward Memorial Hospital.
The McGowan Government's record pipeline of infrastructure has further increased, with $28.8 billion now committed over the next four years, up $1.8 billion from Budget.
An additional $520 million in recurrent expenditure has been committed over the forward estimates.
Expenditure growth of 9.4 per cent is now expected in 2020-21, up from 8 per cent at Budget. The substantial stimulus and emergency management spending in response to COVID-19 is then expected to unwind from 2021-22.
Major initiatives included the Mid-year Review include:
- The $1.787 billion allocated to a Special Purpose Account for a new Women and Babies Hospital that is expected to commence construction in 2023;
- $1 billion for road and public transport infrastructure, announced in the Commonwealth Budget, and requiring a $272 million co-contribution from the State;
- $328 million to frontline agencies for COVID-19 preparedness and impacts including hotel quarantine costs, PPE and medical supplies and enhanced cleaning;
- $155 million for Synergy to build a Big Battery to ensure stability of the grid given increased variability in demand from roof-top solar;
- $152 million to expand the Peel Health Campus, and to return the privatised public hospital back into public hands;
- $111 million will be spent on implementation of the voluntary buy-back scheme of properties for dust-impacted areas in the West End of Port Hedland (industry funded over time);
- $100 million for the State's contribution to establish ECU's Inner City Campus at Yagan Square to enhance the vibrancy of the Perth CBD;
- $66 million to extend the time to commence construction for the Building Bonus from six to 12 months;
- $59 million for new primary schools to meet future demand, upgrading Derby District High and Hillarys Primary Schools;
- More than $60 million provisioned for an enhanced radio network for first-response agencies including police, fire and emergency services;
- $56 million for measures that form part of the State's Climate Policy including measures to increase the uptake of electric vehicles, addressing coastal erosion, carbon credits, improving household energy efficiency and more.
As stated by Treasurer Ben Wyatt:
"Western Australia's economic outlook is nation leading, if not world leading.
"WA's handling of COVID-19 and the fact we were able to get Western Australians back to work so quickly has seen our economy roar back to life.
"Business and consumer confidence is sky-rocketing in our State.
"Western Australians feel confident in the McGowan Government's safe and strong management of COVID-19 and our Recovery and Jobs Plan.
"As a result of the confidence in our economy, the State's financial position continues to improve.
"We've added $3.2 billion to our surplus projections over the forward estimates, enabling us to set aside almost $1.8 billion for a new state-of-the-art Women and Babies Hospital.
"Our geared up economy is also creating WA jobs. Projections highlight increasing employment opportunities for Western Australians over the next four years.
"The Mid-year Review showcases WA is in the best position to recover from the pandemic stronger than ever."
