The Shadow Treasurer Dr Steve Thomas says that the release of new state economic data on Friday shows that the Government is expecting an even bigger budget surplus than they indicated in the budget papers released only three weeks ago.
“The May 12th state budget predicted a $5.676 billion surplus for the current financial year (2021-22), but the latest numbers show that the surplus for the first nine months alone was $5.539 billion” Dr Thomas said.
“That means despite the iron ore price remaining high, the McGowan Government is suggesting that they will only add another $137 million to the surplus in the final quarter.”
Dr Thomas says that his extensive analysis shows that unless the Government starts throwing money around like confetti the surplus is likely to be at least a billion dollars higher than the budget prediction.
“The numbers that the Government has presented suggest that revenue will stay high in the final quarter, but that a massive increase in expenditure will cut the surplus down.”
“Quarterly General Government expenditure has been between $7.2 billion and $9.3 billion throughout the current mining boom, with an average of $8.2 billion.”
“To keep the proposed general government surplus down this year and make the budget add up however the Government will have to spend $10.8 billion in the current quarter alone.”
“In effect, to keep the budget surplus low to match the budget document released three weeks ago the Premier and Treasurer will have to shovel money out the door at a rate never before achieved, even at the height of the pandemic.”
Dr Thomas said that the capacity to ramp up spending was limited, thanks to labour and material shortages.
“The Government can’t deliver its’ ambitious infrastructure program on time or on budget thanks to these shortages, and it can’t rapidly expand its workforce numbers, so to suggest it will be able to spend $2 billion above normal before the end of June seems ridiculous.”
“And hiding the extra in special purpose accounts as the Government is doing won’t help drop the surplus until the money is spent.”
“We won’t get an accurate answer on the true size of the surplus from Mark McGowan until the Annual Report on State Finances is released in September, but stand by for another record budget surplus on the back of record iron ore royalties, record tax revenue and record federal grants.”