Treasurer Troy Buswell has been forced to inflict another $330 million of cuts to the public sector as the Government tries to protect its skinny $196 million 2012-13 surplus from volatile but lower iron ore prices, a persistently higher Australian dollar and falling GST grants from the Commonwealth.
The cuts, announced today in conjunction with a better than expected surplus for the 2011-12 financial year, come on top of the 2 per cent efficiency dividend announced in the May Budget.
And more cuts are certain to be announced in the December mid-year review.
Mr Buswell announced an immediate lowering of the ceiling of full-time equivalent employees in the general Government sector, which will apply from today until further notice. The directive, which aims to save $150 million in 2012-13 by lowering the total number of public servants by about 1500 people, means agencies will not be able to hire people to fill existing vacancies unless they get approval from the Treasurer.
Mr Buswell has also capped public sector leave liabilities at June 30, 2012 levels, while announcing a 1.5 per cent reduction in agencies' 2012-13 procurement budgets for purchasing discretionary consumables, stationary, communication, travel, administration and consultants.
The Treasurer claimed the cuts, which were foreshadowed last week by The West Australian, would not affect the delivery of frontline services to the general public.
"If we don't target these sorts of savings now, the WA public sector will ultimately face more severe measures such as those we have seen in the Commonwealth, in Queensland and in NSW," Mr Buswell told Parliament this afternoon.
The annual report on state finances reveals a final operational surplus for 2011-12 of $649 million, slightly larger than the $484 million that was forecast in the May State Budget.
Mr Buswell said the better-than-expected result was impacted by the bringing forward by a year of $306 million of grant payments from the Commonwealth, a decision taken by Federal Treasurer Wayne Swan to protect his own skinny projected surplus in 2012-13.
Expenditure growth remains a huge problem for the Government, with expenses growing by 10.2 per cent last financial year. Revenue, meanwhile, grew only 5.5 per cent.
The public sector wage bill grew by 8.8 per cent and Mr Buswell said the Health Department was responsible for the largest share of that growth.
He admitted the Government faced a continuing challenge to rein in health spending, with Fiona Stanley Hospital set to open in 2014.
The domestic WA economy, as measured by state final demand, which excludes the impact of exports, grew by an extraordinary 14.7 per cent, more than double the forecast at the 2011 Budget.