No agency safe from razor gang
Treasurer Mike Nahan claims he will deliver the lowest spending growth since the mid 1990s in next week’s State Budget as he vows to extend his expenditure razor gang to every Government department.
The first round of so-called agency expenditure reviews was announced in the December midyear review. Eight departments were required to come up with reform plans that would then be ticked off by the Economic and Expenditure Review Committee.
If the internally developed plans were not approved, agencies were subjected to external review by a razor gang led by a former Commonwealth public servant.
Next week’s Budget will book about $137 million in savings from the first six agencies, with two agencies subject to the second stage.
In a pre-Budget interview, Dr Nahan said the model would be extended to all departments.
“We will go through all agencies, big and small, doing this process. It puts a reform agenda down and makes sure these are sustainable,” he said.
The Department of Child Protection could be one of the first agencies targeted.
The number of children in care has increased 40 per cent and Treasury modelling suggests that a business-as-usual scenario would see its spending grow by 7.5 per cent a year.
“That is not sustainable,” Dr Nahan said. While the falling iron ore price has been well chronicled, the Budget is also set to be hit by writedowns to payroll tax and stamp duty as a result of Treasury’s pessimistic view of the State’s economy.
Dr Nahan claimed revenue for 2015-16 would be 12 per cent lower than projected in last year’s Budget — a figure that equates to about $2.6 billion.
But he said spending growth would have a “2” in front of its figure after averaging about 8 per cent for the past decade.
Dr Nahan admitted there would be a “sizeable” deficit but refused to be drawn on an exact number. “We are preparing for this to be the worst year, knock on wood,” he said.
He admitted debt would be “substantially” over the mid-$20 billion figure that the Premier previously indicated he would be comfortable with.
“Borrowing for recurrent purposes, I don’t like that,” he said. “We will announce a raft of new asset sales in the Budget ... not poles and wires.”
But he claimed the Budget aggregates would show net debt peaking and the Budget returning to surplus within this four-year forward estimates cycle as WA’s share of the GST rebounded and the asset investment program slowed.
“I’m not going to brag that, but I am confident by the mid-year review we will start to see the debt coming down,” he said.
Tony Abbott’s $600 million GST assistance has not been included in the Budget because it was not formalised before the cut off date.
Dr Nahan did not rule out new revenue measures but couched his response in language that said the Budget would try to shield household and small business from pain.
In State Parliament yesterday, the Opposition attacked the Government’s financial management as a new Bill to extend the Government’s borrowing limit by a further $8 billion was debated.
“We are in a diabolical spiral in our finances now where we’re seeking to borrow money to pay for the salaries of our public servants,” shadow treasurer Ben Wyatt said.
“The Opposition will be demanding in this upcoming Budget that we see a long term plan around the finances.”
