Treasurer speaks to State's economic and fiscal outlook
Yesterday the newly elected Treasurer, Ben Wyatt, laid the State’s economic and financial position bare at a series of Treasury Briefings and it’s not a pretty picture.
During the stakeholder briefing the CPSU/CSA attended, the Under Treasurer described the State Wages Policy of 1.5% increases as “looking like a pretty generous policy”.
The “pretty generous policy” is predicated on the Wage Price Index and Consumer Price Index projections. The Wage Price Index for the Public Sector is 2.6% and for the Private Sector it is 1.4%. The Consumer Price Index is currently 0.5%. It’s worth noting that these measures are at an all time low.
In a later briefing with the media, when asked a question about a possible wage freeze, the Treasurer refused to rule anything out. This was not an indication that a wage freeze was on the cards. You can read the Treasurer’s media statement which does not mention a wage freeze here.
In December 2016 as part of the Public Sector Policy announcement, WA Labor gave an undertaking to maintain the current wages policy. We expect that WA Labor will honour their election commitment to our members. A copy of that policy is located at www.cpsucsa.org/wavotes
It is undeniable that the Government has been left in a very difficult fiscal position.
• This is the 5th year of contraction in the domestic economy;
• The Economic and fiscal overview indicates $1.2 billion downward revision to revenue from pre-election estimates;
• Net debt is now forecast to reach $42.3 billion by June 30, 2020;
• Gross State Product has significantly declined by 4.7%;
• General government revenue has been revised down by a further $1.2 billion since pre-election forecasts;
• With debt repayments now at 11% of the increase in Government spending, it’s clear that debt payments will continue to make up a larger and larger part of the State budget.
At the briefing, Branch Secretary Toni Walkington raised the issues of revenue and the folly of prevention programs being cut in the pursuit of savings.
“The previous government cut public services to the marrow. That’s not an option any longer and it didn’t solve the problem.”
“We need to balance out efficiencies with a genuine public debate about revenue.”
“Savings in agencies like the Department of Child Protection and Family Services and the Department of Corrective Services have been made as demanded but there has been a huge cost to service delivery.
“Supporting families and preventing kids going into care saves money in the future but prevention programs are often the first to go when savings are being sought.”
“We need enlightened policy that invests in West Australians and a genuine public debate about how we raise revenue. It’s not enough to avoid that debate any longer and the precarious state of the WA finances is an opportunity to do just that.”
See the Under Treasurer’s presentation here.
We will continue to advocate for secure decent jobs and quality public services in a challenging environment. We have requested meetings with the Treasurer and the Minister for Commerce and Industrial Relations.
Teachers and police officers are among public sector employees due to negotiate new enterprise agreements this year.
Community & Public Sector secretary Toni Walkington said 1.5 per cent was an extremely modest increase and "any wage freeze needs to be completely taken off the table".
Servicing the interest on the state's debt was costing more than the annual funding for entire departments such as Corrections and was forecast to peak at $1.2 billion a year by 2019-20 and WA government bonds are considered riskier than those of the other states.
Key services including prisons and child protection are in line for savage cuts to their budgets over the next four years as Treasury grapples with a widening gap between spending and revenue.
Under Treasurer Michael Barnes yesterday described a 1.2 per cent decline in general State Government revenue between 2013-14 and 2016-17 amid a 3.2 per cent increase in spending as a “structural imbalance” in the Budget.
Before Treasury can even begin to bridge the gap, it needs to achieve $442 million in agency cuts between this year and 2019-20 booked by the previous government.