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State Budget 2021-22 Overview

The 2021-22 Budget contained little by way of direct funding for Local Governments, with the majority of spending focussed on election commitments and big-ticket programs.

The Premier has framed the Government’s fifth budget – the first of its second term – as a budget that sets Western Australia up for the future, built on the back of its success in keeping Western Australians safe and the WA economy strong during the COVID-19 pandemic.
 
A larger than expected surplus of $5.6 billion in 2020-21- largely due to record high iron ore prices - and forecast surpluses over the forward estimates have provided the capacity for the Government to embark on major new spending programs. The headline new announcements in the Budget were:
  • $1.9 billion in new funding to help address the unprecedented demand on WA’s health and mental health system;
  • $1.8 billion for the construction of a new Women and Babies hospital;
  • $ 1 billion for additional support to respond to COVID-19 (taking the State’s total investment in COVID-19 response and recovery to $9 billion);
  • A new $750 million social housing investment fund;
  • Establishment of a $750 million Climate Action Fund; and
  • $400 for the new Westport Project.
The Budget also includes a record $30.7 billion asset investment program, with $9.1 billion of this allocated to projects in regional areas.
 
Reflecting limited capacity in the civil and building construction industries, $2.6 billion in project spending from 2020-21 and 2021-22 has been deferred into later years.  This may ease some pressures in the industry and enable Local Governments to deliver projects, particularly time-bound Commonwealth funded projects. 

While the Government is to be commended for focussing spending to areas of need, WALGA considers that the State’s strong financial position offered an opportunity to go further in areas that address important community priorities, deliver positive outcomes in terms of creating new jobs, make WA’s environment more liveable, transform our infrastructure, and support local communities.

WALGA’s Immediate Priorities for Government policy platform sets out nine areas where further spending is needed to deliver on these objectives. Of these, the Budget only contained modest funding for the management of coastal erosion hot spots. These are initiatives that WALGA will continue to pursue with Government during this term.
 

Economic and Fiscal Outlook

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The strength of the WA economy and the State’s financial position formed a central part of the Government’s Budget narrative

The 2021-22 Budget painted a positive picture for both the WA economy and the State’s financial position - at odds with other States and countries. The positive outcomes were put down to the Government’s sound management of the COVID-19 pandemic, which allowed our key industries to continue operating.
 
The Budget was headlined by a $5.6 billion operating surplus in 2020-21, which far exceeds any surplus previously reported in WA.

To read more, click here.

 

Infrastructure

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Asset Investment Program

A record $30.7 billion is included in the Budget to be spent over the next four years.  Of this an estimated $8 billion will be spent in 2021-22.

Reflecting limited capacity in the civil and building construction industries, $2.6 billion in project spending from 2020-21 and 2021-22 has been deferred into later years.  This may ease some pressures in the industry and enable Local Governments to deliver projects, particularly time-bound Commonwealth funded projects.  The level of investment in developing industry capacity seems small relative to the magnitude of the constraints to deliver cost effective building and construction works.

Government Trading Enterprises (Water Corporation, Western Power and Horizon Power) will be allowed to retain $2.4 billion in dividend payments in 2021-22 to fund future infrastructure investments, including a new desalination plant with renewable energy supply, subject to future business case approvals.

To read more, click here.

 

Action on Climate Change

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$750 million Climate Action Fund announced

The 2021-22 Budget contains a significant investment in initiatives to address climate change, reflecting the Premier’s comments in his Budget speech that climate change is the biggest global threat over the next century and beyond.  

To read more, click here.

 

Social and Affordable Housing

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Welcome investment to address social and affordable housing shortages

Investment in social and affordable housing was a centrepiece of the 2021-22 State Budget. A record $2.1 billion was committed, which will deliver funding for around 3,300 homes. This includes $884 million in additional funding for social housing and homelessness.

To read more, click here.

 

Health

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An unprecedented boost to hospital, health and mental health services in the 2021-22 State Budget illustrates a significant commitment from the State Government to improve the State’s stretched health system

WALGA welcomes the significant funding announcement for health in the 2021-22 Budget. WALGA has long advocated for adequate resourcing of health services, particularly in regional areas, and supports improving health outcomes for Western Australians, recognising the important role that Local Government plays in improving, promoting and protecting the health of communities.

To read more, click here.

 

Communities

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The 2021-22 State Budget includes significant funding for housing and homelessness measures, initiatives to prevent family and domestic violence, and a focus on justice services to enhance community safety

Community safety and crime prevention, including support for vulnerable people, is a key focus of the 2021/22 State Budget. As reflected through their Strategic Community Plans, Local Governments know that community safety is one of the most important issues for local communities.  WALGA welcomes this focus on social housing, homelessness and family and domestic violence as this will lead to additional support being provided to some of the most vulnerable members of our community.

To read more, click here.

 

Regional WA

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The 2021-22 Budget contained a mixed bag of spending across a range of programs and initiatives in regional WA

The headline figures included $4.2 billion in spending under the Royalties for Regions program, and a record $9.1 billion investment in regional infrastructure (a portion of which will be funded through Royalties for Regions).

The focus was on delivering election commitments and creating jobs in the regions, with many
of the announcements related to priority areas such as health, transport, economic development
and education.  
 
The investment in regional mental health services and infrastructure is welcome news, given
that access to these services has been difficult for many regional communities.

To read more, click here.

 

Forest Industry Transition

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Logging of South-West native forests to end from 2024 with $350 million for new softwood plantations and a $50 million Just Transition Plan

The 2021-22 State Budget includes a $350 million investment over 10 years in new softwood plantations across the South-West, coming at the same time as the announcement that logging of South-West native forests will be protected from 2024.

To read more, click here.

 

Waste

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The Budget confirmed a commitment of $14 million from Financial Years 2021–22 to 2024-25.

The 2021-22 Budget confirmed the Government’s election commitment of $14 million over the 2021–22 to 2024‑25 financial years to implement the ban on electronic waste to landfill. This includes a grant funding program of $10.1 million. 

To read more, click here.

 

Planning Reform and Funding for Regulatory Approvals

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$120m investment in additional frontline officers and funding commitment to planning reform

The State Government as part of the 2021-22 State Budget has announced a considerable investment in additional officers tasked with regulatory approval roles across a range of portfolios. In total an additional 150 new frontline roles will be created.

To read more, click here.

 

Local Government Sector Support

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No funding for IR transition

It is disappointing to note that there is no funding in the 2021-22 State Budget to assist Local Governments with the cost of transitioning to the State Industrial Relations System, without imposing an additional financial burden on ratepayers.

The State Government is seeking to have all Local Governments operate in the State Industrial Relations System based on recommendations made in the 2019 Ministerial Review of the State Industrial Relations System. If legislation to mandate the transition is reintroduced into Parliament, it will be critical for Local Governments to secure State Government funding, resourcing and assistance to ensure the transition is smooth and positive for Local Government employees, and to minimise the financial impact on ratepayers.

To read more, click here.


For more information, please contact WALGA Manager, Strategic Projects and Economics, Dana Mason.