Senate debates

Wednesday, 22 August 2018

Statements by Senators

Western Australia: State Budget

12:45 pm

Photo of Dean SmithDean Smith (WA, Liberal Party) Share this | | Hansard source

I rise this afternoon to talk about a matter of great importance to the electors of Western Australia. It's clear that Western Australians are feeling the pinch of cost-of-living pressures. Cost-of-living challenges are now top of mind for WA families and businesses. A recent survey by the Chamber of Commerce and Industry of Western Australia found that 64 per cent of respondents cited the cost of living—spending associated with groceries, utilities and transport—as a major day-to-day issue. The coalition government's personal income tax cuts are good news for Western Australians and will assist with tackling those cost-of-living pressures by putting more money back in the pockets of struggling families. And there's no doubt that the $530 tax offset will help ease the burden on low- and middle-income families.

However, as Western Australians get to keep more of their income with the coalition's tax cuts they are again faced with increased fees and charges from Western Australia's state Labor government. WA Labor's 2018-19 state budget landed a further attack on Western Australian families. Failing to recognise the pressure that Western Australians are facing, the Western Australian state government—the WA state Labor government—has budgeted an increase to household charges of 4.8 per cent. This follows from a 7.7 per cent increase the previous year. Compounded, that's an increase of 12.9 per cent since Labor came to power, far outstripping WA's consumer price index rises and, most importantly for WA families, the growth in average weekly earnings.

Breaking down those increases in household charges highlights significant issues of policy. For electricity prices, Labor's first budget imposed a 95 per cent increase on the supply charge. The supply charge is a daily rate that is imposed for supplying electricity to a household. It doesn't change with the amount of power used. Prior to increasing the supply charge, the government was advised that the increase would disproportionately affect fixed-income, single-pensioner households. These households paid nearly 30 per cent more for their power in 2017-18, while households using more than the average amount of electricity paid proportionately less. With power prices set to increase another seven per cent from 1 July, fixed-income, single-pensioner households will be paying a compound increase of nearly 40 per cent. Meanwhile, the average household is paying a compounded increase of over 18 per cent. That's something Labor senators should contemplate.

For water charges, the story is worse. WA Labor is misusing Western Australia's Water Corporation as a cash cow. Let me explain how. Last year the independent Economic Regulation Authority looked at the charges imposed on families by the Water Corporation and found:

The total revenue expected to be collected by the Water Corporation in 2018-19 from metropolitan customers … plus revenues received through State Government subsidies to cover concessions … exceeds the ERA’s estimated efficient cost of supply by $338.4 million. This is 26 per cent more than the efficient cost of supply in the Perth area, which is $1,326.9 million.

Let me make that crystal clear. The WA state government charges households 26 per cent more than the cost of efficient supply in the Perth metropolitan area. The ERA went on to say:

This overall outcome masks considerable revenue variation in the three supply sectors:

        The report advised that a reset of the charges could achieve levels of efficient cost of supply by an increase in water charges of just five per cent, a decrease in wastewater charges of 42 per cent and a decrease in drainage charges of six per cent. Importantly, the report also highlighted that the decrease in wastewater and drainage charges would more than offset the increase in water charges. With reset charges, a typical Perth customer connected to both water and sewerage would be better off by about $400 per year in 2018-19.

        Let me be clear: if the WA Labor government wanted to stop gouging Western Australians for water and sewerage, they could drop the cost to the average Perth customer by $400 per year in 2018-19. That's $400 per year in benefit to Perth customers, directly addressing cost-of-living pressures. However, WA Labor's answer to this is to overcharge. That's right: they will charge Western Australian families and businesses more. From July this year, WA's Water Corporation, under the WA Labor government's stewardship, will charge the average household 4.5 per cent more. And, if you're unlucky enough to have a big family and use more than 500 kilolitres of water in a year, your marginal cost above 500 kilolitres will be $4.44, up from $3.17. To put it into context, the ERA report found the marginal cost of water production to be just $2.41. As a result of this overcharging of Western Australian families, WA Labor expects to bank $4.4 billion in dividends from the Water Corporation over the forward estimates.

        But WA Labor's harshness in budget matters is second only to its budget trickery. WA's latest budget also exposes a unique form of accounting. Thanks to the federal coalition government's record infrastructure program, WA is set to benefit from billions of dollars in upgrades to road and rail infrastructure. Indeed, the 2019 federal budget invests a record $9.8 billion in productive infrastructure projects for Western Australia. For the federal electorate of Cowan, located in Perth's northern suburbs, the infrastructure spend includes major transformational projects, such as funding for the completion of NorthLink WA and improvements to Wanneroo road traffic flow and a substantial contribution to the Morley and Ellenbrook railway.

        Once completed, NorthLink WA will provide a traffic-light-free transport route between Morley and Muchea. It will improve journey times and transport productivity, improve road safety by eliminating four of WA's most dangerous intersections and provide 65 kilometres of a four-metre-wide shared bike and pedestrian path from Guildford Road to Ellenbrook. Residents of Beechboro and Bennett Springs can see the transformation NorthLink WA will have on a daily basis, and we're already experiencing traffic flow improvements delivered by the new interchange at the Collier Road, Morley Drive and Benara Road flyovers. The new Reid Highway-Tonkin Highway interchange will add to these traffic improvements, and construction is on track for a mid-2019 completion of the $1 billion project, which includes $821 million in Australian government funding. Bennett Springs will also benefit from the federal government's $500 million contribution to the Morley to Ellenbrook railway line, with new train stations proposed for Morley, Noranda, Malaga, Bennett Springs, Whiteman and Ellenbrook. The $500 million investment in the Ellenbrook line is part of the federal government's total $1.84 billion commitment to METRONET, which neatly brings me to the creative accounting by the WA Labor state government.

        The WA opposition has identified matched funding for METRONET that is not in the state budget. While the state counts the federal contribution as revenue, it fails to allocate sufficient funding for the state contribution of this project. As the shadow Treasurer in Western Australia, the Hon. Dean Nalder, has pointed out in state parliament, the government is artificially inflating the effect on the current account position of the state and is artificially deflating the net impact on state debt because it's not putting subsequent state funding into the projects. Given the significant money on the table from the federal government, these projects are not in doubt. They will proceed. But the failure of WA Labor to include the WA state government's contribution in the forward estimates is poor accounting at best. This fanciful accounting treatment understates the WA government's net debt in the forward estimates and can only be described as economic mismanagement on a grand scale.

        Before I conclude my remarks, I must comment on the major breach of trust by Labor with WA voters. Prior to the election, WA Labor claimed they were better placed to improve WA health and education outcomes. While overall health and education spending is increasing due to significant increases in funding from the coalition government federally, WA Labor is taking— (Time expired)