A ratings agency has upgraded its outlook for Western Australia’s finances, based on higher Commonwealth grants, expected revenue growth and tight spending control.
S&P Global Ratings revised WA’s outlook to stable, from negative, and affirmed the state’s AA+ credit rating on Thursday.
It said WA’s economy had started to recover from a downturn caused by the end of a decade-long mining construction boom and applauded the state’s strong financial management, which included cutting thousands of public sector jobs.
S&P said it would be challenging, but feasible, for WA to maintain low rates of expense growth over the next few years.
Own-source revenues are looking up, including higher payroll tax receipts supported by an improving labour market, and a seven per cent surcharge on foreign buyers of residential properties, which recently passed parliament.
The promised GST “floor” is a major factor behind WA’s more buoyant fiscal outlook.
Before heading to Canberra for a national drought summit and a Senate hearing where he will make the case for GST reform, Premier Mark McGowan said he would put his arguments “forcefully”.
“The existing arrangement is not fair on our state, it’s not fair on the country, it’s not good for the economy, it’s not good for delivering good services in Western Australia,” Mr McGowan told reporters.
“I want to see that legislation passed as soon as possible so we get a fairer share of the GST.”
WA Treasurer Ben Wyatt last month announced the state’s 2017-18 deficit was much lower than forecast at $618 million – down from a May estimate of $1.3 billion.
Mr Wyatt said the ratings improvement would save tens of millions of dollars in lower interest payments.
“This is money which can then be spent actually repaying the Liberal-National debt or delivering essential services to Western Australians,” he said.
The revised outlook stops the run of negative credit ratings assessments stretching from October 2012, when the Barnett government lost the state’s AAA credit rating.
S&P had WA on AA+ negative outlook since July 2015.
“The job is not done,” Mr Wyatt said.
“The McGowan Labor government will continue to take a responsible approach to the state’s finances to fix the mess we inherited.”