2005–06 BUDGET ECONOMIC AND FISCAL OUTLOOK PRESENTED TO THE LEGISLATIVE ASSEMBLY ON 26 MAY 2005 Budget Paper No. 3 2005–06 Economic and Fiscal Outlook © Government of Western Australia Excerpts from this publication may be reproduced, with appropriate acknowledgement, as permitted under the Copyright Act. For further information please contact: Department of Treasury and Finance 197 St George’s Terrace Perth WA 6000 Telephone:+61 8 9222 9222 Facsimile: +61 8 9222 9117 Website: http://ourstatebudget.wa.gov.au Published May 2005 John A. Strijk, Government Printer ISSN 1448–2630 2005-06 BUDGET ECONOMIC AND FISCAL OUTLOOK TABLE OF CONTENTS UNDER TREASURER’S CERTIFICATION i CHAPTER 1: ECONOMIC AND FISCAL OUTLOOK – OVERVIEW 1 Fiscal Outlook .................................................................................................................... 1 Key Areas of Expenditure ................................................................................................ 3 Capital Works Program............................................................... ..................................... 5 Economic Outlook.......................................................................................................... ... 6 CHAPTER 2: FISCAL STRATEGY AND FINANCIAL PROJECTIONS 9 Overview............................................................................................................................. 9 Fiscal Strategy .................................................................................................................. 10 Financial Targets........................................................................................................... 10 Summary of Financial Projections ............................................................................... 17 General Government Sector........................................................................................ 20 Summary...................................................................................................................................20 Operating Statement.................................................................................................................21 Revenue ................................................................................................................................................ 23 Expenses ............................................................................................................................................... 24 Balance Sheet.............................................................................................................................28 Cash Flow Statement.................................................................................................................29 Total Public Sector........................................................................................................ 30 Summary...................................................................................................................................30 Public Non-Financial Corporations ..........................................................................................31 Public Financial Corporations...................................................................................................31 Capital Investment ....................................................................................................... 31 Net Debt......................................................................................................................... 33 Total Public Sector ....................................................................................................................34 General Government .................................................................................................................35 Public Non-Financial Corporations ..........................................................................................36 Public Financial Corporations...................................................................................................36 Statement of Risks........................................................................................................... 37 Estimating Assumptions ........................................................................................... ..37 Revenue Estimates ..................................................................................................... ..37 Expenses ....................................................................................................................... .41 Capital Works .............................................................................................................. .42 Contingent Liabilities.................................................................................................. .42 Australian equivalents to International Financial Reporting Standards.............. 43 CHAPTER 3: ELECTION COMMITMENTS AND OTHER EXPENDITURE INITIATIVES 45 Overview.......................................................................................................................... .45 Premier; Minister for Public Sector Management; Water Resources; Federal Affairs ........................................................................................................ 46 Deputy Premier; Treasurer; Minister for Government Enterprises; Minister Assisting the Minister for Public Sector Management....................... 49 Minister for Agriculture and Forestry; the Mid-West and Wheatbelt.................. 50 Minister for Education and Training......................................................................... 54 Minister for Consumer and Employment Protection; Indigenous Affairs; Minister Assisting the Minister for Water Resources........................................ 61 Attorney General; Minister for Health; Electoral Affairs ....................................... 65 Minister for the Environment; Science ...................................................................... 70 Minister for Police and Emergency Services; Community Safety......................... 72 Minister for Planning and Infrastructure.................................................................. 76 Minister for State Development; Energy................................................................... 82 Minister for Community Development; Culture and the Arts; Women’s Interests .................................................................................................. 87 Minister for Disability Services; Sport and Recreation; Citizenship and Multicultural Interests; Seniors ............................................... 89 Minister for Tourism; Racing and Gaming; Youth; Peel and the South West ............................................................................................... 91 Minister for Housing and Works; Heritage; Minister Assisting the Minister for Planning and Infrastructure; .................................................... 94 Minister for Local Government and Regional Development; Land Information; Goldfields-Esperance and Great Southern........................ 95 Minister for Justice; Small Business ........................................................................... 97 Minister for Fisheries; the Kimberley, Pilbara and Gascoyne................................ 99 CHAPTER 4: FINANCIAL PROJECTIONS – REVENUE 101 Overview......................................................................................................................... 101 Operating Revenue Projections.................................................................................. 102 Summary ..................................................................................................................... 102 Revenue Relief Measures .......................................................................................... 104 Taxation Revenue Estimates..................................................................................... 110 Other Revenue ............................................................................................................ 113 CHAPTER 5: THE WESTERN AUSTRALIAN ECONOMY 121 Overview......................................................................................................................... 121 2004-05.......................................................................................................................... 121 Outlook ........................................................................................................................ 123 State Final Demand....................................................................................................... 126 Household Consumption.......................................................................................... 126 Business Investment................................................................................................... 126 Dwelling Investment.................................................................................................. 127 Public Activity ............................................................................................................ 129 Net Exports...................................................................................................................... 129 Exports ......................................................................................................................... 130 Imports........................................................................................................................