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This is expected to be followed by another $3.3b surplus currently forecast for 2023-24.
Despite the impacts of inflation and regular interest rate hikes, windfall mining royalties, combined with low unemployment, have put WA it in an enviable position to address living costs for residents.
The Premier outlined $715m for cost-of-living support in the budget, which will see at least $400 shaved off the electricity bills of every household in the state. Also announced were significant investments in housing, climate change, infrastructure, and a record $2.7b investment in health and mental health.
Unemployment is at 3.4 per cent and expected to remain low, with the state’s inflation forecast to ease to 3.5 per cent by the end of 2023-24 and economic growth at 4.25 per cent, the highest rate of growth in nine years. Net debt is expected to decline for a fourth consecutive year to $27.9b by the end of 2022-23.
After growing by an estimated 3.5 per cent in 2022-23, general revenue is forecast to be relatively flat (0.3 per cent growth) in 2023-24 to $43.2b. A further decline of 6.1 per cent is forecast for 2024-25.
Revenue estimates for the period 2023-24 to 2025-26 have been revised up by $4.3b mainly due to expected increases in mining royalties from lithium and iron ore and general tax revenue.
In a bid to ease cost-of-living pressures, the Western Australian Government has announced an extension to the transfer duty rebate for purchases of off-the-plan apartments. This measure was due to expire in October 2023, but will now be extended to 30 June 2025. In addition, to account for recent growth in Western Australian house prices, the 100 per cent transfer duty concession is now available for off-the-plan apartments with a price of up to $650,000 (previously $500,000), phasing down to a 50 per cent concession for off-the-plan apartments with a price of up to $750,000 (previously $600,000). The rebate will also be converted to a legislated duty concession.
The 2023-24 State Budget also commented on the foreign purchaser duty surcharge, which attracted considerable attention in February this year due to the New South Wales Government’s statement that the imposition of the surcharge was inconsistent with the non-discrimination provisions of international tax treaties entered into by the Commonwealth Government with New Zealand, Finland, Germany and South Africa. While the New South Wales Government offered refunds of the duty surcharge to eligible foreign purchasers, the Western Australian Government has simply stated that it will continue to ‘monitor developments’ regarding the matter in other jurisdictions.
Taxation revenue is anticipated to decline by $238m (or 2 per cent) in 2023-24. This is largely due to an expected easing in property market conditions and a decline in vehicle licence duty reflecting an unwinding in demand for motor vehicles. The forecast decline in revenue from property and vehicle transfers is partially offset by a lift in land tax collections and an increase in revenue from annual vehicle registrations.
Over the three years to 2026-27, taxation revenue is forecast to grow by an average of 2.4 per cent per annum, broadly in line with domestic economic conditions.
If you wish to discuss the Western Australia Budget announcements, please reach out to a Grant Thornton Partner today.
