WESTERN AUSTRALIA STATE BUDGET 2020-21 BUDGET PAPER NO. 3 Economic and Fiscal Outlook 2020-21 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 2020-21 Budget Statements (available electronically from www.ourstatebudget.wa.gov.au) 2020-21 B U D G E T ECONOMIC AND FISCAL OUTLOOK Budget Paper No. 3 PRESENTED TO THE LEGISLATIVE ASSEMBLY ON 8 OCTOBER 2020 2020-21 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, present and emerging. 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For further information please contact: Department of Treasury Locked Bag 11 Cloisters Square WA 6850 Telephone: +61 8 6551 2777 Facsimile: +61 8 6551 2500 Email: [email protected] Website: http://www.ourstatebudget.wa.gov.au Published October 2020 ISSN 1448–2630 2020-21 BUDGET ECONOMIC AND FISCAL OUTLOOK TABLE OF CONTENTS Page UNDER TREASURER’S CERTIFICATION ................................................................. i CHAPTER 1: OVERVIEW ............................................................................................ 1 Economic and Fiscal Outlook .................................................................................... 2 WA Recovery Plan ...................................................................................................... 4 Feature Box: Bell Group Settlement - Supporting Western Australia’s Recovery .... 5 CHAPTER 2: COVID-19 IMPACT AND RECOVERY .................................................. 7 Impact on Western Australia’s Economy ................................................................. 8 Key Economic Forecasting Assumptions ................................................................. 9 Gross State Product .................................................................................................. 10 Global Outlook and Commodity Markets ................................................................. 16 WA Recovery Plan ...................................................................................................... 19 CHAPTER 3: FISCAL OUTLOOK AND STRATEGY .................................................. 29 Fiscal Outlook ............................................................................................................. 30 General Government Sector ..................................................................................... 30 Summary ................................................................................................................. 30 Operating Statement ............................................................................................... 31 Balance Sheet ......................................................................................................... 36 Cashflow Statement ................................................................................................ 37 Total Public Sector .................................................................................................... 39 Operating Statement ............................................................................................... 39 Capital Investment .................................................................................................... 43 Balance Sheet ......................................................................................................... 46 Cashflow Statement ................................................................................................ 46 Net Debt .................................................................................................................... 46 Government Financial Strategy Statement .............................................................. 49 Financial Targets ...................................................................................................... 49 Statement of Risks ...................................................................................................... 54 Forecasting Uncertainties ......................................................................................... 54 Feature Box: Economic Impact of a Second Wave of COVID-19 in Western Australia .................................................................................................... 54 Revenue Estimates ................................................................................................... 55 Spending Risks ......................................................................................................... 59 CHAPTER 4: GENERAL GOVERNMENT REVENUE ................................................ 63 Introduction ................................................................................................................. 64 Revenue Measures ..................................................................................................... 65 Taxation Revenue ....................................................................................................... 66 Summary ................................................................................................................... 66 Detail ......................................................................................................................... 67 Commonwealth Grants ............................................................................................... 72 GST Revenue ........................................................................................................... 73 Forecast of GST Shares ........................................................................................... 74 North West Shelf Grants ........................................................................................... 75 Tied Grants ............................................................................................................... 76 Royalty Income ........................................................................................................... 78 Summary ................................................................................................................... 78 Iron Ore Royalty Income ........................................................................................... 79 Other Royalty Income ............................................................................................... 79 Other Revenue ............................................................................................................ 81 Sales of Goods and Services ................................................................................... 81 Interest Income ......................................................................................................... 81 Revenue from Public Corporations ........................................................................... 82 Other Income ............................................................................................................ 82 CHAPTER 5: GENERAL GOVERNMENT EXPENSES ............................................. 83 Introduction ................................................................................................................. 84 Supporting the Recovery .......................................................................................... 84 Delivering Quality Education, Health and Community Services ............................... 85 Investing in Community Safety ................................................................................. 85 Feature Box: Keeping Communities Safer Together ................................................ 86 Major Expense Changes ............................................................................................ 87 Summary ................................................................................................................... 87 Parliament ................................................................................................................. 88 Government Administration ...................................................................................... 89 Financial Administration ............................................................................................ 92 Jobs and Economic Development ............................................................................ 94 Health ........................................................................................................................ 100 Education and Training ............................................................................................. 104 Community Safety ..................................................................................................... 106 Community Services ................................................................................................. 112 Transport ................................................................................................................... 118 Environment .............................................................................................................. 122 Planning and Land Use ...........................................................................................