Western Australia’s Government Faces Calls to Increase Spending Amid Budget Surplus

Premier of Western Australia Mark McGowan speaks during the Labor Party election campaign launch at Optus Stadium in Perth, Australia, on May 1, 2022. Paul Kane/Getty Images

The state opposition and experts in public affairs are calling on Western Australia’s (WA) Labour government to increase its spending to tackle the healthcare and housing crises after the state reported a $5.7 billion (US$3.92 billion) budget surplus in the 2021-2022 financial year.

While confirming the surplus and announcing the state budget for 2022-2023, Premier Mark McGowan said he suspected other state governments would be “green with envy.”

The new budget projected a conservative $1.6 billion surplus for 2022-2023 based on the US$77.50 per tonne price of iron ore and predicted that GST revenue would rise from $5.9 billion in the next financial year to $7.4 billion in 2025-2026.

Analysts at credit agency S&P Global, which has affirmed WA’s AA+ credit rating, hold a positive view toward the state’s budget.

“Despite the recent spread of COVID-19 in Western Australia, revenue growth is strong and underpinned by elevated commodity prices and GST reforms,” analyst Anthony Walker said.

“We could raise the ratings within the next one to two years if it continues to achieve strong financial outcomes.”

Nevertheless, critics are pointing the finger at the WA government for unresolved healthcare and housing problems.

State Opposition Leader Mia Davies said that the $5.7 billion surplus was “eye-watering” as last year the state also announced a record $5.8 billion figure.

“How can this be? When we have a crumbling health system and a housing crisis,” Davies said.

“You can’t have multi-billion dollar surpluses two years in a row and not share the wealth of the nation with Australian households struggling to make ends meet.”

Mia Davies, Leader of the Opposition and Nationals WA, attends a luncheon at the Perth USAsia Centre in Perth, Australia, on June 9, 2021. Photo by Matt Jelonek/Getty Images

Meanwhile, hospital emergency departments across WA are wrestling with a sharp increase in ambulance ramping, a situation in which patients are left in the backs of ambulances or in a corridor because there is no room in the emergency department.

The Australian Medical Association’s WA President Mark Duncan-Smith welcomed the state’s $252 million injection to redress the problem; however, he did not expect immediate results to come soon.

Under the new budget, WA government spending on health will rise to $11.2 billion in 2022-2023.

Dr. Duncan-Smith noted that the state ranked last of all Australian jurisdictions in terms of hospital beds per capita and said that reopening another 430 beds would make a change.

“It‘ll probably see WA get off the bottom of the list ... but we’ll probably only get to second from the bottom,” he said.

To alleviate the burden of the public hospital system, WA needs to provide another 500 beds, which is equivalent to building a new tertiary hospital, said Dr Duncan Smith.

In the meantime, the state government will set aside $1.6 billion to respond to COVID-19. Out of the amount, $635 million will be spent on rapid antigen tests.

The premier said that, despite the government spending on pandemic measures, WA would repay $1.2 billion in public borrowing, bringing the state’s net debt to below $30 billion in 2022.

However, Shadow Treasurer Steve Thomas said McGowan broke a 2017 promise to pay down debt using half of the state’s iron ore revenue.

“Here again, we have a massive budget surplus but no plan for economic reform and an inadequate debt repayment program,” he said.