WA Premier Mark McGowan says the return to surplus will end six years of deficits. (ABC News: Eliza Laschon)
The WA Government has foreshadowed a budget surplus in its upcoming mid-year review — one year ahead of schedule.
- Mark McGowan says the surplus will be more than just “squeaking over the line”
- It will be the first time in six years the WA budget will not post a deficit
- The Government is also boosting Keystart loans to help low income borrowers
Premier Mark McGowan unveiled the news at the WA State of the State event, a gathering of the Perth business community.
“I am very happy to announce to you all today that in the forthcoming mid-year review, that the next financial year 2019–20, Western Australia will once again be in surplus,” Mr McGowan said.
The Government was previously forecasting a return to surplus in 2020–21 of $1.3 billion.
“This is the first time Western Australia will be in surplus in six years.”
Mr McGowan did not give an expected figure, but said it would be significant.
“We will not just be squeaking over the line either, this will be a substantial surplus, in the hundreds of millions of dollars,” he said.
“The sooner we’re in surplus, the sooner debt is reduced, the lower our interest payments.”
Boost for low-income home buyers
The Premier also announced the WA Government would be expanding its Keystart loan book by more than $420 million to help stimulate demand in the housing market.
Keystart provides loans to disadvantaged and low-income buyers who are unable to meet the deposit requirements of mainstream lenders.
“It’s evident APRA’s credit control measures of the past three to four years, and further tightening to come from the Banking Royal Commission, has dampened activity across the nation,” Mr McGowan said.
“To respond to this situation … Western Australia will be expanding its Keystart loan … to stimulate demand, and allow more first homebuyers the ability to enter the market.”
Mr McGowan said the move would have no impact on net debt.
“Last year, 77 per cent of Keystart loans were used for construction of homes, a clear benefit for our construction industry,” he said.
The loan program began in 1989 and 66,000 loans have been approved.
“Keystart is one of the main reasons why WA has the highest percentage of first home buyers in the nation,” Mr McGowan said.
“This is exactly the sort of policy my Government is keen to pursue.”
Liberals flag housing concerns
Shadow Treasurer Dean Nalder said the Government had been responsible with its spending, but had also been the beneficiary of many other factors that were largely out of its control
“Definitely on the revenue side it’s Federal Government grants, it’s the GST and it’s definitely iron ore royalties that are driving that, not necessarily State Government policy,” Mr Nalder said.
“If I give the Government credit on something, it’s expense management. They have managed to keep the expenses down, although there’s still a jury out on the integration of the machinery of government changes.”
Mr Nalder said parts of the economy remained a concern.
“We still have parts of the economy that are really struggling and one of them we’ve said in Opposition has been the housing sector,” he said.
“We’ve been calling on the Government to do something. They’ve announced something today but … we think there are shortcomings in what they are doing right at this point in time.
“The increases in household charges are really biting … [and] one in six houses now in Western Australia owe more on their mortgages than what their house in worth.”
“We’ve [also] really got a split economy in WA at this time,” Mr Nalder said.
“We’re seeing the mining sector doing very well, the agricultural sector looks like it will have a fantastic year which is great for regional communities, but definitely the household and retail sectors here in Western Australia are really struggling.
“So we’re really concerned about these elements within our economy.”
The Premier and his Treasurer, Ben Wyatt, will hand down the mid-year review on December 20.