2021-22 Budget. Economic and Fiscal Outlook. Budget Paper No. 3
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WA State Budget 2021-22 WA Budget Paper No. 3 – Economic and Fiscal Outlook Western Australia State Budget 2021-22 Budget Paper No. 3 2021-22 Economic and Fiscal Outlook 2021-22_BP3_Cover – 18mm spine 438 x 297.indd 1 31/08/2021 1:11:56 PM 2021-22 Budget Paper set includes: Budget Paper No. 1 – Treasurer’s Speech Budget Paper No. 2 – Budget Statements (Volumes 1–2) Budget Paper No. 3 – Economic and Fiscal Outlook Reader’s Guide to the 2021-22 Budget Statements (available electronically from www.ourstatebudget.wa.gov.au) 2021-22_BP2_Cover_Vol 2 – 24mm spine 444 x 297.indd 2 31/08/2021 1:07:14 PM 2021-22 B U D G E T ECONOMIC AND FISCAL OUTLOOK Budget Paper No. 3 PRESENTED TO THE LEGISLATIVE ASSEMBLY ON 9 SEPTEMBER 2021 2021-22 Economic and Fiscal Outlook (Budget Paper No. 3) © Government of Western Australia Acknowledgement of Country The Government of Western Australia acknowledges the traditional custodians throughout Western Australia and their continuing connection to the land, waters and community. We pay our respects to all members of Aboriginal communities and their cultures; and to Elders past and present. Cover images courtesy of Department of Biodiversity, Conservation and Attractions, WA Health, Department of the Premier and Cabinet, Department of Training and Workforce Development, Pilbara Ports Authority and METRONET. Excerpts from this publication may be reproduced, with appropriate acknowledgement, as permitted under the Copyright Act 1968. For further information please contact: Department of Treasury Locked Bag 11 Cloisters Square WA 6850 Telephone: +61 8 6551 2777 Email: [email protected] Website: www.ourstatebudget.wa.gov.au Published September 2021 ISSN 1448–2630 2021-22 BUDGET ECONOMIC AND FISCAL OUTLOOK TABLE OF CONTENTS Page UNDER TREASURER’S CERTIFICATION .................................................................. i CHAPTER 1: OVERVIEW ............................................................................................. 1 Economic and Fiscal Outlook ..................................................................................... 2 Feature Box: Application of Higher Operating Surpluses .......................................... 4 Budget Objectives ....................................................................................................... 6 CHAPTER 2: ECONOMIC OUTLOOK ......................................................................... 11 Western Australia ........................................................................................................ 12 Gross State Product ................................................................................................... 12 Feature Box: Skills Shortages ................................................................................... 20 Global Outlook ............................................................................................................. 23 Advanced Economies ................................................................................................ 24 China .......................................................................................................................... 24 Global Risks ............................................................................................................... 25 Commodity Markets ................................................................................................... 26 CHAPTER 3: FISCAL OUTLOOK AND STRATEGY ................................................... 31 Fiscal Outlook .............................................................................................................. 32 General Government Sector ...................................................................................... 32 Summary .................................................................................................................. 32 Operating Statement ................................................................................................ 33 Balance Sheet .......................................................................................................... 37 Cashflow Statement ................................................................................................. 38 Total Public Sector ..................................................................................................... 39 Operating Statement ................................................................................................ 39 Capital Investment ..................................................................................................... 41 Balance Sheet .......................................................................................................... 43 Cashflow Statement ................................................................................................. 43 Net Debt ..................................................................................................................... 43 Government Financial Strategy Statement ............................................................... 46 Financial Targets ....................................................................................................... 46 Statement of Risks ....................................................................................................... 51 Revenue Estimates .................................................................................................... 51 Spending Risks .......................................................................................................... 55 Contingent Assets and Liabilities ............................................................................... 57 CHAPTER 4: GENERAL GOVERNMENT REVENUE ................................................. 59 Introduction .................................................................................................................. 60 Revenue Measures ...................................................................................................... 61 Taxation Revenue ........................................................................................................ 61 Summary .................................................................................................................... 61 Detail .......................................................................................................................... 62 Commonwealth Grants ................................................................................................ 66 GST Revenue ............................................................................................................ 67 Forecast of GST Shares ............................................................................................ 68 Feature Box: GST Distribution Reforms .................................................................... 70 North West Shelf Grants ............................................................................................ 73 Tied Grants ................................................................................................................ 73 Royalty Income ............................................................................................................ 75 Summary .................................................................................................................... 75 Iron Ore Royalty Income ............................................................................................ 76 Other Royalty Income ................................................................................................ 77 Other Revenue.............................................................................................................. 79 Sales of Goods and Services .................................................................................... 79 Interest Income .......................................................................................................... 80 Revenue from Public Corporations ............................................................................ 80 Other Income ............................................................................................................. 81 CHAPTER 5: GENERAL GOVERNMENT EXPENSES .............................................. 83 Introduction .................................................................................................................. 84 Election Commitments ............................................................................................... 84 Delivering Quality Education, Health and Community Services ................................ 85 Feature Box: Investing in Our Health and Mental Health System ............................. 86 Major Expense Changes ............................................................................................. 89 Summary .................................................................................................................... 89 Parliament .................................................................................................................. 90 Government Administration ....................................................................................... 91 Financial Administration ............................................................................................. 95 Jobs and Economic Development ............................................................................. 99 Health ........................................................................................................................