WA State Budget 2024: Treasurer Rita Saffioti announces WA’s sixth surplus in a row, Metronet blowout

WA Treasurer Rita Saffioti expects to bank a $3.2 billion operating surplus this year – WA’s sixth in a row – but has revealed another significant blowout to Labor’s flagship Metronet project.

Promised cost of living relief has been delivered in the form of a $400 power credit for both households and small businesses, while home ownership is slightly more attainable for young couples through a boost to first buyer stamp duty concessions.

Reprising one of Mark McGowan’s favourite lines, Ms Saffioti said the State’s bulging balance sheet and rapid economic growth – double the rest of the country – would make “Western Australia the envy of the nation today”.

She was less keen to talk up the latest $706m overrun to the sprawling rail program she has steered since Labor won office in 2017.

What began as a $4.8 billion promise ahead of that election has now bloated in both cost and scale to $12.6 billion.

Elevated labour and material costs have been blamed for increases to the delivery cost of three of the four new lines currently under construction: Yanchep is up $288 million, Thornlie-Cockburn by $228 million and the Armadale Line upgrade and Byford extension by $190m.

The Commonwealth Government is expected to cover $450 million of the latest blowout, taking Canberra’s total contribution to Metronet over the past seven years to $5.5 billion.

The budget reveals the value of WA’s four-year infrastructure pipeline swelling to a record $42.4 billion, although Metronet accounts for just $4.8 billion.

Ms Saffioti said Metronet – now nearing completion – was not expected to balloon much further and the focus was now shifting to utilities, including a new desalination plant in Alkimos, batteries, transmission lines and wind farms.

“Our feedback already in areas such as reinforced steel, concrete – some of the key services for transport infrastructure – is that they are now tailing off,” she said.

The centrepiece cost-of-living spend is a fourth round of electricity credits valued at $400, which will be handed to more than 1.1 million households and 90,000 small businesses at a total cost of $492 million.

As with the last round of credits, the rebates will be delivered in a pair of $200 instalments: first in July/August and then in December/January.

The $3.2 billion surplus now expected in 2023-24 is $500 million below what was forecast in December, largely the result of a delay in receiving $1.4 billion in promised Federal grants for transport projects, including Metronet.

Exemplifying the volatility of the commodity market, lithium royalties crashed from just over a $1 billion last year to just $422 million, blowing a $260 million hole in the mid-year forecasts.

But that was offset by iron ore royalties, the State’s perennial budget superstar, which is now tipped to contribute $879 million more than expected just five months ago.

At $9.9 billion, iron ore royalties accounts for more than a fifth of the Government’s entire revenue base.

There was another major windfall in the shape of stamp duty, which came in $478 million above expectations as a result of a migration-driven run on property that shows no sign of easing.

WA’s population swelled by a record 94,000 in the year to September – the equivalent of all the people in Bunbury and Karratha – and is on track to eclipse 3 million next year.

“I recall people saying (during the pandemic) no one would come back to WA and the opposite has happened,” MS Saffioti said.

“A strong population supports the economy, brings a workforce and keeps consumption strong. But the challenge is housing and the cost of services.”

Housing was one of five “key pillars” of the budget identified by Premier Roger Cook, alongside cost of living support, health, infrastructure and economic growth.

In addition to the previously announced $1.1 billion in new spending on social housing and homelessness, the budget unveiled the first change to stamp duty threshold for first homebuyers in a decade.

In an $82 million measure expected to benefit around 5000 first buyers, homes purchased for up to $450,000 – up from $430,000 – will attract no stamp duty at all.

A concessional rate will apply for sales up to $600,000, translating to a saving of around $7200 for a property that transacts for $530,000.

A healthy surplus of $2.6 billion is expected next year, followed by another trio totalling $7.7 billion in the outyears.

Bucking a recent trend, net debt came in $1.5 billion worse than expected in the mid-year review at $28.6 billion.

It is forecast to rise to $40.9 billion by the end of 2028, although Ms Saffioti was at pains to highlight even if it reaches that level it would remain below 10 per cent of gross state product – a far superior ratio to every other State.

WA’s domestic economy grew a nation-leading is on track to grow a nation-leading 5.25 per cent in the current financial year while business investment growth of 13.25 per cent – much of it resources driven – was the best in a decade.

“What was the nation’s weakest domestic economy seven years ago is now the strongest,” Ms Saffioti said.

“What was the nation’s highest debt burden is now the lowest.”

Adopting the same theme, Mr Cook said the budget illustrated “how far our State has come since WA Labor was elected in 2017”.

While 300,000 jobs have been added since then and unemployment remains historically low, Mr Cook acknowledged “everyday costs are impacting many families”.

“The good news is global inflation is easing and wages are going up,” he said.

“Even in the midst of global uncertainty WA is heading in the right direction.”