The Western Australian government has posted its first deficit in 15 years because it faces the toughest economic and fiscal environment in twice that long, according to Treasurer Mike Nahan. But he promises to claw that back through public sector cuts that won’t hurt businesses or households very much at all.
As the mining state looks sadly at the deflated iron ore price, its Treasury has posted a deficit for the current financial year, going deeper into the red next year before it gets back on an upward trajectory. Nahan claimed the government could achieve “a strong return to surplus” in 2017-18 in his budget speech, and said:
“We will achieve this by vigorously pursuing reforms and efficiencies throughout the public sector. Impacts on businesses and households will be kept to a minimum.”
Expenditure reviews have already identified $137 million in savings over four years from the departments of the Attorney General, Commerce, Agriculture and Food, Training and Workforce Development, and Fisheries, Parks and Wildlife. The WA government pledges to find even more by applying the same efficiency blowtorch to Culture and the Arts and the Department of Finance.
Nahan described the efficiency drive as “best practice reform” rather than a “slash and burn” approach and said public service wages would continue to be pegged to the consumer price index:
“We have a reform process underway in most areas including health, mental health, police, education, electricity, water, and disability services to name just a few.
“All elements of state expenditure will be reviewed as we remain steadfast in ensuring annual expense growth is limited to 2.5% on average over the forward estimates. Our CPI wages policy will continue as will workplace reform.
“Since coming to office, the government has undertaken five rounds of voluntary separation schemes, which are expected to see a total of 3,750 staff exit the public sector by 30 June 2015.”
The extent to which IT budgets will be cut in the search for savings which don’t have a clear and direct impact on the public and business owners has also become clear. In the coming four years, $110 million is expected to come from 16 agencies with the Department of Education expected to scrounge up $38 million of that. Another $25 million or so is demanded from the police, over $14 million from the Public Transport Authority, $8.7 million from the Attorney-General’s team, $7.3 million from the Commissioner for Main Roads and just under $5 million from the Department of Finance.
The government hopes to get a lot more bang for its IT buck in future, and is reinvesting $25 million of that in a fund for “renewal and reform” of ICT systems, which will also fund the WA’s first government chief information officer, who is expected to start in July.
Among a raft of big-ticket asset sales, the Barnett government is also looking at what savings might come from selling some of the homes where regional government employees live, as well as some government-owned office buildings and vehicles, which it would have to replace through leasing arrangements.
The biggest funding increases from last year in percentage terms were in education, public transport, main roads, mental health and disability services. The latest recurrent funding allocations and expenses for all of WA’s key agencies is available in a handy fact sheet from the WA Treasury.