WA’s Budget woes have been driven by the biggest increase in spending by any State in the country, a new report out today suggests.
Compiled by right-wing think tank the Centre for Independent Studies, the report finds that the only way for the State to get its Budget under control is to take a tighter control of its spending.
The State’s AAA credit rating was lost late last year following the August Budget and backdowns by the Barnett Government on key initiatives aimed at reducing expenditure.
In its analysis of the performance of State Budgets, the CIS found that on many counts the WA bottom line was in a worse shape than that of Tasmania.
In the three years to 2012-13 WA recorded the largest State increase in real per capita operating expenditure while its increase in debt – pumped into infrastructure – was also among the largest in the Commonwealth.
According to CIS senior fellow Robert Carling, WA’s finances had deteriorated in a similar fashion to those of Queensland but started a few years later.
"Rampant growth in real per capita operating expenditure and a greatly increased capital program in the context of strong population growth took their toll as strong real revenue growth came to a halt in the three years to 2012–13," he said.
The CIS did find that since the advent of the Global Financial Crisis the revenue flows of all States had dried up. Spending growth had also slowed sharply since the GFC.
It also argued that apart from Tasmania, WA was one of the lightest taxed States in the country.
"Combined with their deteriorating financial ratios, this suggests that Queensland, Western Australia and Tasmania are not raising enough taxation to finance their chosen levels of expenditure," the CIS found.
But Mr Carling cautioned so great had spending grown over recent years, new State Treasurer Mike Nahan faces a tough battle.
"The State Government has increased a range of taxes from relatively low levels, but the key to halting the deterioration in its finances is tighter control of operating expenditure," he said.