WA Budget Highlights
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Budget Outlook According to the budget papers,growth in the economy is starting to moderate as business investment declines from record high levels and major resource projects continue to transition from construction to the production and export phase. Western Australia is expected to enter a period of below-trend growth, with Gross State Product (GSP) expected to grow by 1% in 2015-16 and 1.25% in 2016-17. Employment growth is expected to moderate with projected growth of just 0.25% per annum in 2015-16 and 2016-17, before recovering to 2% by 2019-20. The State’s unemployment rate is projected to increase from 5.4% in 2014-15 to 6.25% in 2015-16, before peaking at 6.75% in 2016-17. Growth in the State’s population is expected to ease to 1.2% in 2015-16, remain subdued at 1.3% in 2016-17, and then gradually increase to 1.9% by 2019-20 as net overseas migration increases. Growth in Perth’s Consumer Price Index (CPI) is expected to moderate further to 1.25% in 2015-16, before increasing to 1.75% in 2016-17. Property Sector Take-Outs: Analysis This was a budget with infrastructure at the heart of it with the highlight being the announcement of a $5Billion infrastructure fund coming from the sale of Western Power. We see this as the first step in creating and funding an infrastructure plan for the state. This is desperately needed to support growth and create certainty in the development and investment sectors. Despite the commitment of no major property tax increases in 2016-17, the Government failed to come through on our proposed land tax and stamp duty reforms. We had hoped that the budget would include measures to roll back some of the land tax increases over the last 3 years and stamp duty reforms to support seniors downsizing and off the plan purchases. The only tax increase in the budget was on the Perth Parking Levy. From the 1st of July 2016, the Perth Parking Levy will increase by 1% ($10) for short stay and street bays, by 2.5% ($26.60) for long stay bays, and by $38.30 (3.5%) for tenant bays. Overall the budget was a steady and safe budget which didn’t bring any really significant change. However, the announcement of the $5Bn infrastructure fund is welcome news and we will be looking for bipartisan support in ensuring this fund is used to deliver critical infrastructure in the state. Taxes and charges The highlight here is the no increases in key property taxes in 2016-17. Unfortunately we did not see any meaningful attempt to introduce tax reform. The only tax increase in the budget was on the Perth Parking Levy. From the 1st of July 2016, the Perth Parking Levy will increase by 1% ($10) for short stay and street bays, by 2.5% ($26.60) for long stay bays, and by $38.30 (3.5%) for tenant bays. Infrastructure This really was an infrastructure focused budget. Alongside the announcement of the $5B infrastructure fund coming from the sale of Western Power, the budget included a number of key infrastructure announcements, which are outlined below. Transport In 2016-17, investment in transport infrastructure is expected to be $1.8B. Over the remainder of the forward estimates period, a further $5.9B is budgeted to be spent on transport infrastructure. This investment in transport includes: Health Investment in healthcare infrastructure is expected to contract with only a further $1B out of a $7.2B investment to be spent over the next four years. This investment in health includes: Education In the next four years the Government will embark on $1B investment program in schools across WA. This major investment includes: Utilities The Government has allocated $4.1B over the next four years for investment in power infrastructure including investment to ensure that Western Power’s Network is safe and reliable. Housing The Government will invest $1.5B for the provision of affordable housing and land in WA. This includes: Sporting infrastructure Over $179M will be invested in 2016-17 on publicly owned sporting and cultural infrastructure. This includes continuing work on the new Perth Stadium. Royalty for Regions The Royalty for Regions program underpins the Government’s commitment to building sustainable and wealth generating regions. Over the next four years, the Royalty for Regions budget estimate is expected to increase steadily. Major regional investment initiatives include: • $58.3M allocated over the forward estimates period to the Margaret River Perimeter Road project |
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