Budget delivered amidst sixth consecutive surplus (WA State Budget 2024-25)

On Thursday, 9 May 2024 Treasurer Rita Saffioti delivered her inaugural Western Australian (WA) State Budget, being the eight of the WA Labor Government. 

The Budget generally represented good news for Sandgropers, with the following headline measures likely to pique interest:

• A $762 million package to provide much-needed cost of living relief, the hallmark of which is a fourth $400 power bill credit for all households and small businesses, with additional relief of up to $1,086 for pensioners and eligible families;
• Grants of $5,000 for owners of vacant homes who place them on the long-term rental market; and
• Increased first homeowner transfer duty exemption and concession thresholds (see below). 

WA’s Economic Strength and Splurge 

The economic and fiscal numbers underpinning WA’s 2024-25 State Budget supported the Treasurer’s assertion that WA’s economy is “firing on all cylinders”, with a forecast sixth consecutive operating surplus of $3.2 billion attributable to 5.25% growth in the domestic economy (the strongest of any State or Territory, and more than double the national number), the strongest growth in business investment in more than a decade and record low levels of unemployment. 

• The foregoing has fuelled significant investment by the WA Labor Government across the board, including:
• A record $1.3 billion investment in education and training initiatives, including $410 million to build new schools, expand capacity, and upgrade and maintain existing schools;
• A record $3.2 billion investment to boost the capacity of WA’s health system, including $1.2 billion for the State’s public hospital services and a further $839 million in related infrastructure investment;
• $1.8 billion to diversify and decarbonise WA’s economy,  including $500 million for the Strategic Industries Fund, which will focus on facilitating clean energy; and
• $1.1 billion for housing and homelessness, including more than $800 million being invested in social and affordable housing across the State. 

Revenue Measures

Just two revenue measures were observed, both favourable to Western Australians. The first comprises amendments to the first homeowner transfer duty concession, whereas the second involves the abandonment of the proposed road user charge for zero and low emissions vehicles (ZOLEV). 

The amendments to the first homeowner transfer duty concession consist of a $20,000 increase in the limit for accessing full transfer duty exemption from $430,000 to $450,000 and a $70,000 increase in the limit for access to a concessional rate of duty from $530,000 to $600,000. This measure is expected to save around 4,800 first home buyers up to $15,390 each and is a welcome response to soaring house prices across the State.

The abandonment of the proposed road user charge for ZOLEV, which was to apply from 1 July 2027, follows a successful challenge to the constitutional validity of Victoria’s road user charge for ZOLEVs in Vanderstock. Whilst potentially saving drivers of such vehicles 2.5c per kilometre travelled, the Federal

Government’s response to Vanderstock and subsequent developments remains to be seen. 

Not All Rosy?

Despite the upbeat delivery of the Budget and the immediate strength of WA’s economy, some areas for concern were observed, including soaring net debt, a series of cost blowouts with another $707 million added to the overall bill of the WA Labor Government’s landmark Metronet projects, and tempered economic growth forecast across the forward estimates period due in part to a sharp decline in forecast royalty receipts.

Broader concern has also been expressed regarding the Budget’s failure to convert the State’s significant wealth into meaningful and sustainable economic reform, with WA Opposition Shane Love observing that “Despite the large amount of money flowing into the coffers, net debt will rise under this Treasurer”. 

Take Away

Although it is without doubt that WA’s 2024-25 Budget delivers immediate and significant benefits to WA’s economy and residents, it may be seen as a ‘missed opportunity’  for a number of reasons, including:

The absence of targeted payroll tax relief for small and family businesses of the nature seen in the Victorian State Budget delivered two days prior; and

A lack of structural reform to alleviate housing affordability and supply issues. Broad-based reform is arguably required, with a 0.4% residential vacancy rate and annual median price growth of 12.4% observed in Perth as of March 2024, and new home building applications and completions at subdued levels. 

It may also be argued that the record spending on infrastructure and cost of living measures observed could increase pressures being experienced across the State and Australia more broadly. However, this remains to be seen.

FOR MORE INFORMATION

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