From The West Australian:
The State Government will seek 1500 voluntary redundancies as it looks to deal with mounting debt and the day-to-day costs of running Government.
Premier Colin Barnett said there was no option but to make “harsh and fundamental” spending cuts.
…”The combined effect of a fall in the iron ore price and cuts in the GST to WA means that while the broader WA economy is generally strong, state government revenue is bearing the burden,” he said.
“It is important that the Government respond to these financial constraints by cutting spending in the public sector.”
Treasurer Mike Nahan said the fall in the iron ore price – down 35 per cent from Treasury’s 2014/15 budget assumption – had wiped about $2 billion off the State’s expected revenue for the period.
The State Government said a revenue deterioration of that magnitude in less than six months was unprecedented and would significantly reduce its capacity to deliver a budget surplus this financial year.
The savings measures will include a 15 per cent cut in non-essential spending from 2015-2016, a 15 per cent cut for “non-essential” road maintenance for three years and a further 5 per cent cut across the board to the capital works budget.
There will also be an additional one per cent efficiency dividend across all government except schools.
And from 7:
Western Australia’s Premier has taken a swipe at two of the world’s biggest miners over what he describes as their “flawed strategy” to lower the iron ore price.
Colin Barnett said the actions of BHP Billiton and Rio Tinto in “flooding the market” to push down prices in a bid to gain more market share was causing significant pain for the state.
The drop in the iron ore price to levels far below what the WA Government had forecast has forced it to implement a raft of spending cuts.
Mr Barnett said mining companies had a social responsibility to the people of WA.
“I think it is flawed in terms of trying to manage the world price of a commodity,” he said.
“When anyone has tried that, whether it be minerals or agriculture or anything else, it usually ends in tears and right now there are tears within the West Australian Government.
“This seeming strategy of the two major producers to flood the market and force the price down, I mean, remember who your landlord is. That’s hurting Western Australia.
What a wanker! These firms may or may not be doing the right thing. But it’s certainly no surprise. MB laughed out loud when Mr Barnett announced his Budget forecasts. The iron ore ore assumptions were ridiculous and the Premier deserves complete opprobrium for the result. What he should have done instead was use realistic forecasts and begin to bolster the budget against the very obvious coming revenue hit.
Now he looks like a dill, has shaken punter’s faith in government, and is going to pile austerity onto the WA economy’s growing list of economic woes. There will be no surplus as the negative feedback loop of falling terms of trade, capex cliff and austerity accelerates. House prices are the next domino.
This is an episode of poor politics, poor economics, poor end-result and poor blame-shifting. Barnett Fail.
