Mathias Cormann demands states spend more to boost post-COVID economy and singles out WA

Finance Minister Mathias Cormann is pushing states to spend more on infrastructure and play their part in boosting the economic recovery.

‘I would say states around Australia, including my home state of Western Australia, could do more to support Australians, to support business, to support jobs’: Finance Minister Mathias Cormann. Picture: Getty Images

Finance Minister Mathias Cormann has pushed the states to spend more on infrastructure and play their part in boosting the economic recovery, singling out Western Australia amid expectations it will deliver a modest budget surplus on Thursday.

The states have been under pressure from Scott Morrison and Reserve Bank governor Philip Lowe to spend as much as $40bn on infrastructure and job creating projects but the states have so far resisted committing to that level of spending.

With WA Labor having touted a rare post-pandemic surplus in this week’s budget, Senator Cormann said on Sunday that Western Australia and other jurisdictions needed to do more to support jobs.

“I’m reading that the state government in Western Australia is planning to deliver a surplus budget later this week,” he told Sky News. “I would say states around Australia, including my home state of Western Australia, could do more to support Australians, to support business, to support jobs.

“And to ensure that we pull ­together and maximise the strength of the economic and jobs recovery.”

Senator Cormann, who has ­accused Premier Mark McGowan of retreating to economic protectionism, also reaffirmed his concern that Western Australia’s border restrictions could be in breach of the Constitution.

West Australian Treasurer Ben Wyatt told The Australian on Sunday that his government had spent billions on infrastructure, planned to spend more in Thursday’s budget, and was pulling its weight in helping West Australians recover from the pandemic’s economic hit. “As part of our significant infrastructure spend, the McGowan government is bringing forward works on 11 major road projects worth an estimated $2.37bn These projects are ­expected to create approximately 13,000 jobs,” he said.

“Building road and rail infrastructure will deliver a pipeline of work for local businesses and local workers as the state continues to recover from the COVID-19 pandemic, with more than $260m anticipated to be spent on transport portfolio works monthly, building to $280m a month the following ­financial year.”

West Australian Treasurer Ben Wyatt at Dumas House, Perth. Picture: Colin Murty

In a briefing to national cabinet in August, Dr Lowe told the states to effectively double their stimulus spending and said they could absorb the debt required to fund the ­additional $40bn in spending.

Dr Lowe’s push for more public spending would force NSW to almost double the $55bn it had planned to spend on major projects over the next two years.

Leading economist Saul Eslake said on Sunday that Dr Lowe and the Morrison government were right to pursue the states over their infrastructure records, and called on those governments to focus on more small projects to boost jobs.

“The states should absolutely be spending more on infrastructure … they appear to be more ­focused on credit ratings than creating jobs,” he said.

“And it is better to spend on lots of small projects, rather than focus on a small number of big projects. The big motorways and tunnels may make for better ribbon-cutting opportunities for politicians, but the small projects will add more to the recovery.”

Speaking on Sky News, Senator Cormann argued that Mr McGowan was “intent on keeping Western Australians locked into WA on economic grounds, rather than on health grounds,” and this appeared “inconsistent with ­explicit provisions in the Constitution”.

“He was suggesting that the reason Western Australians were prevented from going to South Australia or the Northern Territory was so that they wouldn’t … spend their money there,” he said.