CAMPAIGNCAPITAL STRATEGY EXECUTION RESULTS

CAPITALREPORT MAY 2012 WA BUDGET EDITION Barnett can’t hide the boom in his budget

A clear majority of voters in marginal State Government electorates believe State Government revenue has increased, since Colin Barnett became Premier in 2008.

A Western Australian Opinion Both Colin Barnett and his Polls (WAOP) poll of 400 voters in Treasurer appear to be attempting and is projected to fall to $1.5billion the marginal seats of Swan Hills, to distract attention from this Riverton, Wanneroo and Mount strong revenue growth, by Lawley in the fortnight leading up highlighting the declining share By highlighting this issue, the to last week’s State Budget, found of WA’s GST revenue redistributed Barnett Government is seeking 50.7 per cent of voters believed to the WA Government by the to create a perception within revenue had increased. Only 9.8 the community that the State per cent of respondents believed this has fallen 30 per cent, from Government is short of cash. revenue had decreased, with 10.6 per cent indicating it had stayed about the same and 28.9 per cent Q: Since the election of the Barnett Government in 2008, do you think the total revenue that the State Government receives from taxation, mining royalties, the Commonwealth unsure. Government and other sources has increased, decreased, or stayed the same?

The results indicated public Total Increased opinion is aligned with the reality of the Barnett Government’s revenue Stayed the same performance since it was elected. In the Carpenter Government’s Total decreased State Government received a total of $19.3billion in revenue. In Unsure 40 50 60 is expected to receive $25.5billion, 0 10 20 30 Q: Why do you say that? an increase of 32 per cent. After

Christian Porter is currently Mining boom, royalties increased presiding over a budget 14.7 per cent bigger, in real terms, than Eric Supported by the facts and media reports Ripper presided over during his last full year as Treasurer. Utilities, taxes and costs gone up

An examination of the forward Money they are throwing around; building projects estimates indicates the State

Government expects this growth GST share gone down, Federal Government taking more to continue. By 2015-16, total State Government revenue is projected Media, my opinion to be $30.2billion, an increase of

Financial downturn, other cent, in real terms). 0 5 10 15 20 25 30 35

www.campaigncapital.com.au CAPITALREPORT

Mr Barnett is well aware of the 35,000 Total Revenue Total WA Government Revenue increased expectations the Total Revenue (2007/08 Dollars) community had of the Gallop 30,000 and Carpenter Governments, when then Treasurer Ripper was 25,000 delivering large surpluses. In an election year, Mr Barnett would 20,000 much prefer voters to blame the

Commonwealth for its unmet $million 15,000 expectations, than to question the Premier’s priorities in spending the 10,000 record revenue at his disposal. 5,000 The WAOP poll indicates the community is not buying the 0 Barnett line, however. While 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 many Western Australians are WA Government Revenue likely to be sympathetic to Mr 8,000 GST from Commonwealth GST & Mining Royalties Barnett’s argument on the GST, a Mining Royalties majority of voters recognise that 7,000 State Government revenue has 6,000 increased, despite the decline in 5,000 its GST share. 4,000

When asked why they thought $million State Government revenue had 3,000 increased under Mr Barnett, 62 2,000 per cent of these respondents (31 per cent of total sample) said 1,000 it was due to increased royalties 0 during the mining boom. A further 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 14 per cent of these respondents (7 per cent of total sample) expected to go to $2.1billion in water bills, as well as other taxes projected to go to $6.6billion in taxation has increased 20 per and charges, levied by the Barnett Government. the Water Corp, Synergy, Verve These results are again aligned and other public corporations expected to go to $10.1billion in with reality. Mining royalty income has increased 44 per cent, received by the State Government While 58 per cent of respondents has already increased 190 per who said total revenue received by the State Government had decreased during Mr Barnett’s WA Government Debt 25,000 time as Premier, attributed the decrease to WA’s declining GST 20,000 share, this only represents 5.7 per cent of the total sample. Despite a 15,000 concerted effort by Mr Barnett and his Treasurer to blame the GST $million 10,000 decline for spending cuts and cancelled initiatives, the WAOP 5,000 poll indicates only one person in 20 is currently accepting their 0 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 argument.

www.campaigncapital.com.au AUGUST 2011

This issue is set to be an active battleground throughout the rest Fattening the pigs for sale? of this election year. Both Mr Barnett and Treasurer Porter are Long-time observers of Western Australian politics know that Colin likely to use every opportunity Barnett supports privatisation. they can to talk about the decline As Energy Minister in the Court entities (Verve, Horizon, Synergy in WA’s GST revenue. The Labor Government, Mr Barnett privatised and Verve) would be far more Opposition will put a lot of effort AlintaGas and was working towards the sale of the then Western Power, having far less value on their own, in a competitive environment. The at the Barnett Government’s 2001. As Opposition Leader sale of a monopolistic utility would disposal, both through increased during the Gallop Government, revenue and through increased he proposed the privatisation of So, could a second-term agenda borrowings. WA Government individual power stations and, as to privatise ’s debt has increased 411 per Premier, Mr Barnett is overseeing power assets be behind the the privatisation of services in WA’s Premier’s determination to re- new hospitals and prisons. is projected to be $22.9billion in merge Synergy and Verve? Many believe the true motivation behind Mr Barnett’s opposition to Western Australia’s business When voters walk into the ballot Labor’s disaggregation of Western community, as well as the State box on 9th March, 2013, Mr Power was that the disaggregated Government’s own Economic Barnett will want them to be blaming for the things WA Household Electricity Price Increases they don’t have, and voting for a courageous WA Premier 120 Cumulative increase Price increase of the GST. Opposition Leader 100 Mark McGowan will want voters thinking of a Barnett Government, 80 rolling in increased revenue and borrowings, and questioning 60 whether the community is

40 % price increase The WAOP poll indicates that Mr 20 Barnett is currently struggling to lower the expectations of voters 0 and that both he and his Treasurer April 09 July 09 April 10 July 10 July 11 July 12 July 13 July 14 July 15 have a lot of work to do, if they are to overcome the view that their government is doing well, Revenue from Public Corporations should not lead to complacency 2,500 TOTAL REVENUE in Labor. With 39.5 per cent of respondents either unsure or 2,000 believing revenue has stayed about the same, Labor will need to 1,500 continue to highlight the realities of the budget to ensure these voters $million 1,000 are not won over by a sustained campaign by the Premier, 500 delivered with all the resources of government and a cashed-up 0 Liberal Party election machine. 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

www.campaigncapital.com.au Regulatory Authority, are strongly like Synergy and Verve have keen to make our energy utilities against the policy, arguing that the creation of a new super-utility of increased power prices, which quickly as possible. would be anti-competitive and have gone up 62 per cent since If the Premier has a plan to would drive up energy prices. But, Mr Barnett was elected and are privatise a re-merged Synergy perhaps this is the point. Higher set to be more than twice the price and Verve in his second term, it would explain why he doesn’t Premier’s determination to reach appear too concerned by State higher sale price. Debt, which has soared under his An examination of this year’s against advice that this could be budget papers reveal that the more equitably achieved over a longer period, indicates he is expected to rise to $23.2billion.

Canberra’s shrinking presence in WA

was becoming “negligible” was dramatic, but not without grounding.

While Western Australia’s declining from the incoming Goods and share of GST revenue raised by per cent and is projected to drop Services Tax. Under the principle the Commonwealth has been somewhat offset by increases in the Commonwealth adjusts the This decline in the Commonwealth’s other Commonwealth Grants, the GST payable to each State on the relative contribution to the proportion of the WA State Budget basis of the State’s ability to raise WA Government’s budget is funded by the Commonwealth is predicated on terms agreed its own revenue. This process is steadily declining. between the designed to redistribute income and the Court Government in 1999, from States with greater ability to Commonwealth Grants made up as a part of the Intergovernmental generate revenue to those with a 42 per cent of the State Budget. By Agreement to carve up revenue smaller economic base.

WA Government Revenue 25,000 Commonwealth Versus State Contributions State-Based Revenue

Revenue from Commonwealth

20,000

15,000 $million

10,000

5,000

0 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

www.campaigncapital.com.au In 1999, WA had a very different factored in either of these, he may Budget increasingly dependent on economy than we do now. For have struck a different deal. royalty income, the Premier needs many years, WA had been a net That said, the WA Government to be careful what he wishes for. is hardly destitute as a result of Demand for WA’s natural resources Commonwealth revenue. When the Agreement struck. Mining may decline in the future, either signing the Agreement with John royalty income has increased through the deterioration in the Howard and Peter Costello, then economic conditions of our Premier probably of GST revenue has declined and trading partners, or through the didn’t envisage the huge growth in total State Government revenue emergence of more competitive mining royalty income that would has increased by 30 per cent suppliers. In this event, future occur over the next two decades since Mr Barnett was elected. WA Governments will be highly and the impact this would have on the State’s share of GST revenue. In arguing for a new model of exposed if any new method for Mr Court presumably didn’t notice calculating the distribution of calculating the distribution of the that poker machine revenue the GST, Mr Barnett is focused GST doesn’t build in a mechanism raised by other State’s wouldn’t on improving his budget bottom to support WA when we are no affect their GST share. If he had line now. However, with the State longer booming.

WA STATE BUDGET REVENUE ($MILLIONS) GROWTH GROWTH 5 YEAR % 8 YEAR %

REVENUE FROM COMMONWEALTH

GST $3,984 $3,529 $3,590 $3,158 $3,454 $2,792 -$1,192 -29.9% $1,520 -$2,464 -61.8%

Commonwealth Grants $3,412 $3,882 $5,143 $4,900 $4,940 $5,057 $1,645 48.2% $5,488 $2,076 60.8%

Special Purpose Payments Through State $839 $1,089 $1,473 $1,281 $1,090 $1,163 $324 38.6% $1,461 $622 74.1%

SUB-TOTAL $8,235 $8,500 $10,206 $9,339 $9,484 $9,012 $777 9.4% $8,469 $234 2.8%

STATE-RAISED REVENUE

Taxation $6,447 $5,706 $6,324 $6,763 $6,956 $7,739 $1,292 20.0% $10,085 $3,638 56.4%

Sales of Goods & Services $1,407 $1,410 $1,635 $1,754 $1,841 $1,933 $526 37.4% $2,238 $831 59.1%

Interest Income $332 $285 $227 $321 $302 $268 -$64 -19.3% $349 $17 5.1%

Revenue from Public Corporations $880 $821 $920 $1,066 $1,134 $1,267 $387 44.0% $2,125 $1,245 141.5%

Royalties $1,680 $2,348 $2,324 $4,213 $4,493 $4,871 $3,191 189.9% $6,563 $4,883 290.7%

Other $364 $364 $405 $454 $539 $388 $24 6.6% $408 $44 12.1%

SUB-TOTAL $11,110 $10,934 $11,835 $14,571 $15,265 $16,466 $5,356 48.2% $21,768 $10,658 95.9%

ALL REVENUE

Revenue from Commonwealth $8,235 $8,500 $10,206 $9,339 $9,484 $9,012 $777 9.4% $8,469 $234 2.8%

C’wealth % of Total Revenue 42.57% 43.74% 46.30% 39.06% 38.32% 35.37% 28.01%

State-Raised Revenue $11,110 $10,934 $11,835 $14,571 $15,265 $16,466 $5,356 48.2% $21,768 $10,658 95.9%

TOTAL REVENUE $19,345 $19,434 $22,041 $23,910 $24,749 $25,478 $6,133 31.7% $30,237 $10,892 56.3%

$19,345 $18,822 $20,725 $21,935 $22,086 $22,182 $2,837 14.7% $27,726 $8,381 43.3%

NET STATE DEBT $3,634 $6,688 $9,896 $12,026 $15,169 $18,594 $14,960 411.7% $22,866 $19,232 529.2%

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