Download Western Australia - Department of Treasury WA

Department of Treasury and Finance
Government of Western Australia
Infrastructure and Fiscal Federalism
CEDA Infrastructure Series
Wednesday 21 September 2005
Timothy Marney
Under Treasurer
Overview

Economic and fiscal outlook

Public sector capital investment

Public Private Partnerships (PPP) Policy

Dealing with the Commonwealth
– Poor deal for WA
– Disincentives for development
– Regulatory issues
Department of Treasury and Finance
Government of Western
Australia
Characteristics of the State Economy

Mining sector – 18.0% of State economy vs 4.5%
nationally

Population Growth – 1.6% vs 1.2% nationally

Economic Growth – higher than national average
4.4% vs 3.9% over last ten years

Per capita GDP 15% above national average

Contributes 30% of Australia’s merchandise
exports
Department of Treasury and Finance
Government of Western
Australia
Economic Outlook for WA
2002-03 2003-04
2004-05
2005-06
Actual
Actual
Estimated Budget
Actual
Estimate
Economic Growth (%)
4.8
7.5
5.25
4.5
Employment Growth (%)
2.5
1.7
4.2 (a)
2.0
Unemployment Rate (%)
6.0
5.7
4.7 (a)
4.75
Wages Growth (%)
3.7
3.2
4.3 (a)
3.75
CPI Growth (%)
2.7
2.1
3.2 (a)
2.5
Figures sourced from the 2005-06 Budget Papers, ‘Economic and Fiscal Outlook’
Department of Treasury and Finance
Government of Western
Australia
(a) Outcomes
Economic Growth Rates by Jurisdiction
2003-04 Actual
8
2004-05 Estimate
2005-06 Estimate
7
Economic Growth (%)
6
5
4
3
2
1
0
NSW
VIC
Department of Treasury and Finance
Government of Western
Australia
QLD
SA
WA
TAS
NT
ACT
AUS
Business Investment
Current and Prospective Investment Projects
June 2005
$104
Western Australia
$79
New South Wales
$69
Queensland
$49
Victoria
$21
South Australia
$14
Northern Territory
$8
Tasmania
$4
Australian Capital Territory
0
20
40
60
$billion
Department of Treasury and Finance
Government of Western
Australia
80
100
120
Net Operating Balance
General Government
1,400
$ Million
Forecast
1,200
1,000
800
600
400
200
0
-200
-400
-600
1993-94
1996-97
Department of Treasury and Finance
Government of Western
Australia
1999-00
2002-03
2005-06
2008-09
Operating Revenue Growth
General Government
12
Percent
Forecast
10
8
6
4
2
0
-2
1994-95
1996-97
Department of Treasury and Finance
Government of Western
Australia
1998-99
2000-01
2002-03
2004-05
2006-07
2008-09
WA Capital Works Program
5
4.75
Actual Expenditure ($m)
4.14
4
3.11
3
2.88
3.28
2.98
2.89
2001-02
2002-03
2
1
0
1999-00
2000-01
Year
Department of Treasury and Finance
Government of Western
Australia
2003-04
2004-05
Preliminary
Outcome
2005-06
Budget
Estimate
2005-06 Capital Works Program
Western Power
13%
Public Transport
Authority of Western
Commissioner of
Australia
Main Roads
11%
6%
Law and Order
5%
Education and
Training
5%
Health
5%
Water Corporation
15%
State Housing
Commission/ Housing
and Works
21%
Department of Treasury and Finance
Government of Western
Australia
Other
16%
Western Australian
Land Authority
3%
Department of Treasury and Finance
Government of Western
Australia
Department of Treasury and Finance
Government of Western
Australia
Capital Spend by Jurisdiction
COMPARISON BETWEEN JURISDICTIONS
Capital
expenditure
per capita
1998-99
Capital
expenditure
per capita
2003-04
$
$
1,005
709
626
1,540
482
678
1,270
954
697
1,095
556
1,267
Western Australia
New South Wales
Victoria
Queensland
South Australia
Tasmania
Department of Treasury and Finance
Government of Western
Australia
Capital
Population Real economic
spending
annual average annual average
annual average growth since growth since
growth since
1998-99
1998-99
1998-99
%
%
%
6.2
7.2
3.4
-4.7
3.4
13.7
1.4
1.0
1.2
2.1
0.5
0.4
Data sourced from Australian Bureau of Statistics (catalogue 5512.0)
3.8
2.8
3.3
4.8
3.0
1.4
What Capacity Do We Have to Fund
Infrastructure

Financial Targets:
 Net Debt to Revenue
 Operating Surpluses

Priorities arise during and outside the normal
budget process.

Around $2 billion in proposals in the pipeline and
will need to be considered in the near future.
Department of Treasury and Finance
Government of Western
Australia
Partnerships for Growth
Public Private Partnerships (PPP)
Policy

Policy launch in December 2002

Document available on the Department of Treasury
and Finance website at : www.dtf.wa.gov.au

The policy position is broadly consistent with other
jurisdictions

This topic was covered at the last CEDA lunch
forum
Department of Treasury and Finance
Government of Western
Australia
The Funding Task

The infrastructure development funding task is
relatively larger in Western Australia than
nationally

As the demand on State funds increases for
large infrastructure projects, the Government
will continue to explore PPPs as a procurement
delivery option

Commonwealth funding is also important
Department of Treasury and Finance
Government of Western
Australia
Dealing with the Commonwealth

Problems with structure of Federation

Poor deal for WA on infrastructure

Wrong type of C'wth project assistance

Other disincentives for development – the
Grants Commission

Regulation Issues
Department of Treasury and Finance
Government of Western
Australia
Fundamental Elements of Efficient Federalism

Subsidiarity – authority exercised at the lowest level that
produces efficient results

Governments accountable to their electors

Co-operation on national interests

Clear roles for each level of government

Financial independence

Central government assistance that preserves State
government motivations to perform
Department of Treasury and Finance
Government of Western
Australia
WA’s Contribution to the National Economy
Goods and Services Exports
2003-04
NT
$2.6b
QLD
$27.9b
WA
$39.3b
SA
$9.6b
NSW
$38.8b
VIC
$20.8b
TAS
Department of Treasury and Finance
Government of Western
Australia
$2.3b
WA’s Contribution to the Federal Budget
Net Fiscal Subsidy
2003-04
NT
-$2,274m
WA
$2,916m
Department of Treasury and Finance
Government of Western
Australia
SA
-$2,045m
QLD
-$3,067m
NSW
$4,831m
VIC
$2,572m
TAS
-$2,934m
Poor Deal for WA
$ per capita
Total Spending on Infrastructure
2003-04 (per capita)
2000
1500
1000
500
0
WA
Department of Treasury and Finance
Government of Western
Australia
Cwth on WA
Cwth on Rest of Australia
Poor Deal for WA
The Federal Government contribution to
infrastructure funding is poor, particularly in
regard to export related infrastructure
where significant benefits from exports
accrue to the Commonwealth.
The State Government is looking for a more
mature partnership with the Federal Government
in this regard and is pursuing a more cooperative
approach.
Engineers Australia, 2005, Western Australian Infrastructure Report Card
Department of Treasury and Finance
Government of Western
Australia
AUSLINK
10% of population
30% of exports
25% of National Hwys
8% of AUSLINK funding
Department of Treasury and Finance
Government of Western
Australia
Poor quality in regional areas
Department of Treasury and Finance
Government of Western
Australia
WA having to contribute to C’wth
responsibility
Department of Treasury and Finance
Government of Western
Australia
WA dam inflow fallen
from 338 GL to
120GL
Department of Treasury and Finance
Government of Western
Australia
NWI mainly relevant to
Eastern States
water rights issues
$m
North West Shelf Royalties (2003-04 - $563 million)
250
200
150
100
50
0
C'w th
NSW
Department of Treasury and Finance
Government of Western
Australia
VIC
QLD
WA
SA
TAS
ACT
NT
CGC Does not recognise our
spending on Burrup
Department of Treasury and Finance
Government of Western
Australia
Who Benefits From Projects?
Net Benefits of Burrup Project
2003-04
NT
$4.87m
WA
-$60.81m
QLD
$97.25m
SA
$37.47m
VIC
$122.64m
Department of Treasury and Finance
Government of Western
Australia
NSW
$165.72m
ACT
$7.90m
TAS
$11.88m
Cwth
586.43m
Who Benefits From Projects?
Net Benefits of Gorgon Project
2003-04
$b
12
$11b
9
6
3
$300m
0
Commonwealth
Department of Treasury and Finance
Government of Western
Australia
WA
Wrong Type of Assistance
Syntroleum
GTL Resources
Methanex
Department of Treasury and Finance
Government of Western
Australia
Right Type of Assistance
Company B
Company C
Company A
Common User
Water Supply
Access Roads
Company E
Department of Treasury and Finance
Government of Western
Australia
Company D
Disincentives for Development
Commonwealth Grants Commission

CGC aims to equalise States’ fiscal
capacity, having regard to:
– expenditure requirements; and
– revenue raising capacity
Department of Treasury and Finance
Government of Western
Australia
Access Regulation
Centralised
Light handed
Decentralised
Heavy handed
Address in NCP review
Department of Treasury and Finance
Government of Western
Australia
Way Forward

Need for Commonwealth to better
understand WA needs

Need for Commonwealth to better
understand its interest in supporting WA

Public debate to put pressure on
Commonwealth

Dialogue with Commonwealth
Department of Treasury and Finance
Government of Western
Australia
Conclusion

Massive development in WA

WA major contributor to nation

WA government doing all it can to provide
necessary infrastructure

Commonwealth must provide greater
support

Federal structures such as CGC must be
reformed
Department of Treasury and Finance
Government of Western
Australia