Federal help for WA positive but GST reforms needed
The annual round of number-crunching which leads into the week of the Federal Budget is well under way.
And this year the numbers being crunched look very big.
Unfortunately for the Federal Government, and the nation, the numbers being bandied around this year come in various shades of red.
The expectation is that Treasurer Joe Hockey will announce on Tuesday that the Budget deficit will be more than $40 billion, with some estimates putting the figure at around $45 billion.
And there is little sign that things will improve in the short term.
JP Morgan economists predicted this week that there would be a Budget shortfall of $24 billion in 2017-18 and that it was likely it would be many years before the Budget was back in the black.
And Deloitte Access Economics estimated that total Government debt would blow out past $500 billion early next decade.
This means that spending measures must be well-targeted.
In that context revelations by The West Australian this week provide welcome news for the State.
Firstly came the news that northern WA had been earmarked for renewed Budget attention.
Karratha, which has grown on the back of the iron ore and liquefied natural gas sectors, is set to be one of five cities across WA, the Northern Territory and Queensland which are in line for special attention.
And Kununurra is set to benefit from renewed interest in the expansion of the Ord River Irrigation Scheme.
Among suggestions which would be of direct benefit is a plan to seal outback roads to give primary producers in WA’s north improved road access to southern markets.
Prime Minister Tony Abbott has agreed to throw more Commonwealth money at WA in recognition of the State’s “particular challenges”, although he said the State also had to pursue further microeconomic reforms.
The move comes after a strident campaign by the State Government to reform the grants process to take into account the hole punched in WA’s finances as its share of the GST plunges below 30¢ in the dollar from July 1, down from the existing 37.6¢.
The Federal handout by no means brings an end to the matter.
The grants system is clearly not working and is in need of drastic overhaul to better reflect financial realities.
But the extra Federal cash is a good sign that Canberra has at last recognised WA( has found itself in unique and difficult (times.
