WA royalties surge a win for public service workers

The West Australian Labor government will use a multi-billion royalties windfall to fund $2.8bn in pay rises for public servants.

WA Premier Roger Cook. Picture: NCA NewsWire / Kelly Barnes

The West Australian Labor government will use a multi-billion royalties windfall to fund $2.8bn in pay rises for public servants.

The Cook government’s mid-year economic outlook confirmed on Tuesday that WA’s economy was experiencing its strongest growth for nine years. With a growth rate of 3.5 per cent, the economy is growing faster than that of any other state or territory. The state’s operating surplus for 2023-24 was on Tuesday forecast at $3.7bn, driven by elevated iron ore prices.

Mining royalties are now predicted to deliver $2.7bn more into state coffers than was predicted in the budget presented to state parliament in May. The $3.7bn net operating surplus is an increase of $400m on the May budget prediction. The Cook government will spend biggest on public servants’ wage increases and a desalination plant on Perth’s outskirts.

The $2.8bn Alkimos Seawater Desalination Plant will be WA’s third. For the past five years, more than half of Perth’s fresh water has been drawn from the ocean and desalinated.

The money put aside for the public servants ends a blanket wages policy that proved deeply unpopular with unions but helped the Labor government stabilise the state’s finances.

Former premier Mark McGowan introduced strict pay rise limits across the board when Labor came to power in 2017. This was a direct response to what he described as unsustainable spending and reckless decision-making by the former Liberal-Nationals government. Initially, no public servant could receive a rise of more than $1000 a year. This eased in 2021, when state debt had been significantly reduced, but until this week all public servants were restricted to rises of no more than 3 per cent.

Premier Roger Cook said this week that the new wages policy provided flexibility.

“It will deliver fair but financially sustainable wage increases and conditions of employment that are reasonable in the context of each negotiation,” Mr Cook said. “We are keen to deliver fair wage outcomes and appropriate conditions to the important workforces in our public sector, and have been able to back this up with significant funding allocated to future negotiations, thanks to my government’s ongoing responsible management of the state’s finances.”

Treasurer Rita Saffioti said Tuesday’s mid-year economic review predicted total public sector net debt in WA would be $27.2bn on June 30, 2024. This was $2.2bn lower than forecast at the May budget despite record infrastructure spending. Ms Saffioti said that was the fifth consecutive annual decline in net debt for WA.

“The Cook Labor government continues to deliver strong and sustainable financial results, with an outlook for unbroken operating surpluses and record investment in infrastructure for the state’s future, while continuing to pay down debt,” Ms Saffioti said.

“The mid-year review also highlights the continued strength of the WA economy despite volatility in the global economy, with a record number of Western Australians employed, strong business investment and resilient household consumption.”

The WA Chamber of Commerce said the Cook government’s budget update reinforced its continued commitment to fiscal discipline, but businesses struggling with a cost crisis would be left disappointed that no payroll tax relief has been provided.

Forecast payroll tax revenue alone increased by $493m since May and was projected to increase by almost a billion dollars by 2026-27 compared with last ­financial year.