Western Australian Treasurer Rita Saffioti has delivered the State Labor Government’s eighth Budget which contains an operating surplus of $3.2 billion for 2023-24, enabling the State Government to provide significant relief to households facing cost of living pressures.
With a State Election in March 2025, today’s State Budget has focused on major community concerns related to cost of living and housing. The State Budget also contains some programs which will enable further initiatives to be announced in the lead up to both State and Federal election campaigns.
Highlights include:
The State Budget points to an ongoing strong Western Australian economy, albeit with some volatility associated with commodities such as lithium and nickel. After growing by 94,000 additional people in 2023-24, the State is forecast to grow by another 80,000 in the coming financial year, adding to housing strain felt by the community.
The strong surplus and tight labour market will add weight to the arguments posed by public sector unions, including teachers and nurses in coming months.
The State Government continues to be frustrated in delivering their infrastructure program by skilled labour shortages, rising costs and sourcing reliable supplies. Delivery, including timeliness and cost of key infrastructure projects, will likely be a key feature of next year’s State Election.
The State’s investment in the critical minerals sector has been dealt a blow, with nickel and lithium royalties falling well below expectations, the latter by more than half. However, mining royalties are expected to reach $11.2 billion in 2023-24, bolstered by a stronger than expected iron ore price. The usual approach of making lower iron ore price assumptions has reduced expected royalty income in 2024-25 to $7.7 billion.
Strong population growth of 2.8 per cent and a powerful 5.25 per cent in Real State Final Demand growth in 2023-24 underpins those continuing struggles felt across the State, including the availability of housing and rising cost of living with 4.0 per cent in Perth’s Consumer Price Index growth across the same period. Assumptions to population growth return to a more manageable 1.8 per cent in 2024-25 and similar in the outyears.
Despite the national commentary on the fairness of current GST distribution arrangements, the following excerpt from the budget papers will be certain to heighten the disgruntlement of other State Treasurers towards the current horizontal fiscal equalisation policy:
“Even with the reforms to the GST distribution, Western Australia will continue to receive far less GST than its population share. Over the five years from 2023-24 to 2027-28, Western Australia will receive $13 billion less than its population share of the GST – effectively a GST subsidy from Western Australia to other States.”
With cost of living the number one issue on voters and politicians’ minds – as confirmed by SEC Newgate’s most recent Mood of the Nation survey – the State Budget is at pains to highlight the $762 million in cost-of-living relief provided to Western Australian families and small businesses.
Budget Day only brought confirmation of the State Government’s widely expected fourth electricity credit; a further $400 to be delivered in two instalments over the year at a cost of $492 million.
In addition, the State Budget included already announced measures such as $103 million for the WA Student Assistant Payment, $41 million for free public transport for students and for all Smartrider holders on every Sunday, $65 million to continue regional airfare caps, and $20 million for a $100 boost to the Regional Pensioner Travel Card, as well as a focus on existing State Government relief programs.
However, the question remains whether the State Government will be rewarded for a $400 electricity credit that the public have come to expect, as rents, mortgages, insurance notices and grocery bills continue to take an ever-increasing bite out of voters’ disposable income.
Like State Budgets before it, infrastructure continues to be a State Government focus with more than $12 billion spread across both the regions and metropolitan Perth to keep the State’s construction pipeline healthy. The Treasurer’s signature infrastructure program of METRONET has ballooned yet again, with the State and Federal Government committing more than $700 million to WA’s rail transformation just to cover the blowouts.
However, with the State Government signalling an end in sight for many of METRONET’s individual projects, attention is turning to the next mega-infrastructure development, Westport. The State Government has committed $116 million of new money for planning and enabling infrastructure, including planning for marine, civil and road works, indicating a renewed focus on the development of the new port area, ahead of a planned business case release in mid-June.
The Federal Government is expected to continue its contributions to the project, recently announcing $36 million in new planning money and flagging more in Federal budgets to come as it aligns its own priorities with Westport. This is anticipated through further defence spending to accommodate its AUKUS commitments.
Heeding growing calls by some in the business community to accelerate the State’s economic diversification and energy transition, the State Budget commits an additional $1.8 billion to support industry development and energy initiatives. Of this, the largest commitment is the $500 million Strategic Industries Fund, aimed at facilitating key projects aligned to the State’s diversification objectives. The Fund also gives latitude for project announcements by the State Government ahead of the next State Election.
Continuing the enormous task of the clean energy transition, the State Government has committed $324 million to help upgrade the South West Interconnected System in the hope it will streamline transmission solutions for new industrial proponents ahead of the proposed 2030 shutdown from coal. $148 million has also been committed to develop common user electricity infrastructure in partnership with the State’s industrial heavy hitters in the Pilbara.
The State Government has also funnelled an additional $36 million into approvals reform with the establishment of cross-government triage teams as well as accelerating the rollout of Environment Online. Whether this is enough to clear the backlog of environmental approvals amid frustrated project proponents remains to be seen.
Acknowledging the difficulty investors and businesses are having in finding areas to easily establish or grow their operations, the State Budget includes $180 million for DevelopmentWA to acquire and develop strategic and general industrial land across the State.
Housing has been a hot button issue since early 2021. The State Government were caught flat-footed during COVID-19 with strong migration, a hot economy and weak public housing delivery, resulting in dwelling shortages and price spikes in the housing and rental markets. Despite allocating significant funds in recent State Budgets, delivery has been underwhelming with the State Government unable to translate dollars into homes.
This State Budget allocates a lofty $1.1 billion in new housing-related investment, with the centrepiece of the first change to stamp duty concessions for first home buyers in a decade, a reality of rapidly rising property prices around the State. The exemption threshold for first home buyers will rise to $450,000 and increase the concession threshold to $600,000 meaning around 4,800 first home buyers per year will likely benefit from an average additional saving of $4,163.
Also included in that spend is an additional $400 million for the Social and Affordable Housing Investment Fund, $179 million in maintenance investment for social and government worker housing, $144 million for new housing projects, $92 million in new homelessness initiatives, $85 million to boost the capacity of Western Australia’s residential construction workforce and $5 million for $5,000 payments to encourage owners of vacant homes to make them available on the rental market.
Beyond rapidly ballooning costs in service delivery and new regional hospitals, the State Budget includes multi-million dollar investments in pressure points, such as $155 million for emergency department initiatives to reduce ambulance ramping, $47 million to expand Virtual Emergency Department services into mental health responses, $46.6 million for child and adolescent mental health crisis care and an additional $39 million for child development services.
With regards to Health’s asset investment program, this State Budget allocates an additional $839 million including:
This State Budget lays the ground for some synergies with next week’s Federal Budget, particularly in relation to Westport emerging as the replacement for METRONET as the next big infrastructure project for the State, AUKUS investment and the new Strategic Industries Fund.
The 2024-25 State Budget is a pre-election budget with any obvious bad news or difficult decisions absent, and new initiatives in the form of cost-of-living relief, infrastructure delivery and boosts to services are legion. But delivering only good news comes at a cost.
Over the past seven years, the State Government has been determined to be seen as strong financial managers, with Treasurers Wyatt and McGowan both putting a premium on WA Labor being perceived by the public as fiscally conservative and responsible managers of money. That premium has carried the political risk of disappointing and disaffecting public sector, community and industry stakeholders, and will continue under Treasurer Saffioti.
However, with just 10 months until the next State election, their fiscal strategy means there is still scope for more funding announcements this year as well as a flurry of campaign commitments and promises. Whether this strategy is successful, both time and voters will tell.
To discuss the opportunities that this budget presents for you, please contact:
Bruce Campbell-Fraser, Partner, Communications, SEC Newgate – [email protected]
Joey Armenti, Senior Adviser, Communications, SEC Newgate – [email protected]
