Hip pocket hit in State Budget

The Barnett Government will slug homeowners, car owners and the children of skilled immigrant workers to keep a lid on ballooning State spending fuelled by a burgeoning population.

Treasurer Troy Buswell today unveiled a Budget that will slug the 112,000 WA businesses and owners of investment properties, increasing the rate of land tax by 12.5 percentage points.

The Budget also halves the subsidy for people with rooftop solar panels by July 2014, and cuts the first home buyers grant for established homes to $3000 while boosting it for new homes to $10,000.

Commuters should also brace for big hikes in fares with the Government signalling it plans to slash its subsidy of public transport fares to 60 per cent from 69 per cent over the next four years.

The Budget is forecast to deliver an operating surplus of $386 million this financial year but a deficit of $147 million in 2014-15. Once all government capital spending is taken into account the Budget is running a cash deficit this year of $2.8 billion.

“It is at the lower end of what you would call a range for a comfortable buffer,” Mr Buswell said.

“Would I like it to be higher? Of course. But in the current environment we have had to work very hard to deliver that surplus.”

Car registration for private vehicles will be lifted $36 a car from January in a move that will raise $155 million over four year.

The Government will slug 457 Visa holders $4000 a child in school fees if they attend a public school. That will affect about 8600 students and raise $120 million over four years.

Another $450 million is hoped to come by tightening payroll tax collections and through other tax administration measures.

On the expense side, the Government complement its previously announced cuts in public servants with reductions in programs.

Mr Buswell described the 12.5 per cent lift in land tax as an “adjustment”, saying that the total land tax take will increase only 5 per cent due to downward revaluation of some properties.

“None of the money is going towards keeping the lights on or getting the staff paid,” he said.

Despite the hikes in taxes and fees, the Government’s net debt level will soar by 30 per cent over the next four years.

This year it is forecast to reach $21.9 billion before climbing to $24.3 billion next year on its way to $28.4 billion by 2017-18.

And that is before the lion’s share of spending on the Government’s “big three” transport projects – the MAX light rail, the airport rail and the Perth-Darwin Highway – falls due.

Only $931 million of those projects’ total $4.75 billion cost will be spent in this four year budget cycle, leaving a further $3.8 billion to be found beyond the forward estimates.

Mr Buswell said the Government faced a choice, of either cutting infrastructure or letting debt climb to enable key election projects such as the MAX light rail.

He said the Government had legal advice it could vary the contracts of people with feed-in tariffs for solar power, but argued the current 40 cent rate was “exceedingly generous”.

The Budget reveals the State economy is going to face a tough time with growth expected to slow.

This will flow into slower jobs growth that will drive up the unemployment rate to an expected 5.75 per cent through the 2014-15 financial year.

Figures today showed the jobless rate at 4.6 per cent.

The softness in the economy will keep a lid on overall consumer prices and wages which are now forecast to grow slower than expected.