2016-17 West Australian Budget

12 May 2016

Treasurer Mike Nahan’s third and the Barnett Government’s eighth budget makes for grim reading as the State records the worst set of financial figures in WA’s history. It’s the Government’s last budget before next March’s State Election.

Dr Nahan revised down the Budget deficit forecast for this year from $3.1billion to $2 billion. However the deficit will balloon to a record $3.9billion in 2016-17 as the State’s decline in revenue and weak GST receipts bite hard into the State’s financial position.

The Budget forecasts five successive deficits (since 2014) totalling more than $6.6 billion before a return to surplus in 2019-20. State debt is expected to exceed $40 billion by 2019-20 with the State’s debt to revenue ratio now expected to peak at 95.3 per cent. Non-commercial or general Government sector debt is expected to reach $25.4 billion by 2020.

WA’s Gross State Product will grow by just 1.25 per cent next year, but State Final Demand (which excludes exports) will shrink by 3.75 per cent, reflecting declining business investment at the end of the resources boom.

Crucially for the Government’s re-election chances, unemployment is forecast to peak at 6.75 per cent in the election year.

Revenue estimates have been written down by a total of $14.7 billion or 12 per cent (over the period 2014-15 to 2017-18) since the 2014-15 Budget. Revenue is expected to be $810 million or 3.1 per cent lower in 2016-17 than in 2015-16 – the third consecutive year of declining revenue.

Dr Nahan declared that the Turnbull Government would suffer at the Federal election in WA as voters reacted to Canberra’s failure to fix the GST distribution system and boost payments in the one-time boom State. The Treasurer said WA’s GST grant would be equal to just 30.3 per cent of its population share in 2016-17.

Household charges will rise by 4.8 per cent or $257 per year for the average household. Water will increase by 4 per cent, while electricity charges will increase by 3 per cent. The 4.8 per cent rise in household fees and charges is more than two and a half times the forecast 1.75 per cent CPI rate.

Despite rising debt and deficit, the Government will not increase taxes and the State’s public sector hiring freeze has come to an end. The Government will invest very modestly in tourism, agriculture, innovation and shipbuilding as it seeks to diversify the WA economy following the collapse in iron ore mining receipts.


The Government will take the argument for privatisation to the next election as it seeks a path to debt reduction over the medium-term.

Key features of the privatisation program include:

  • The sale of Western Power – which the Government projects will raise $12billion.
  • Sale of Horizon Power’s Pilbara poles and wire assets valued at $800million.
  • Disposal of Utah Point Bulk Handling facility.
  • Long-term lease of Fremantle Port.
  • Land Asset Sales Program.
  • Sale of the TAB.

Additional assets for consideration, include:

  • Securitisation of part of KeyStart’s loan book;
  • The State’s vehicle fleet, via a sale and leaseback arrangement; and
  • Sale of Insurance Commission of Western Australia’s property portfolio.

No revenue has yet been booked by the Government, and proceeds of any sales will not be reflected until they are completed.

The priority for the State will be debt reduction rather than new investments.

Dr Nahan said $11billion out of the expected $16billion in proceeds from the sale assets would be used to pay down debt from construction of the Perth Airport Link, the new stadium, hospitals and schools. The other $5billion would go towards a new infrastructure fund.

However, the Fremantle Port sale is going nowhere after the Nationals made their opposition clear and there is no certainty Western Power will be an easy sell either.

The Nationals are yet to decide if they will support it and Labor and the unions will make it a central theme of the State election campaign.


  • Record $3.9billion deficit forecast for 2016-17, following revenue write-downs of $14.7billion since the 2014-15 Budget.
  • State debt will reach $33billion next year and grow to more than $40billion by 2019-20.
  • Budget will not return to surplus until 2019-20.
  • State Final Demand (the WA domestic economy) is forecast to contract by 3.75 per cent in 2016-17 following a 4.25 per cent decline this year and 3.6 per cent decline in 2014-15.
  • Government will take asset sales program to the next election with the aim of raising $16billion, including proceeds from the sale of Western Power and Horizon’s Pilbara assets.

See GRA Everingham’s 2016-17 WA State Budget Overview for more detail.


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