The State Election looms this weekend, and I expect everyone is sick of being told who to vote for, so I won’t. However, I’d like to focus on a crucial State issue that’s had little media – Our State debt.
There are several ways to quantify government debt, the industry uses, and considers NFPS as the best indicator.1 By end of year our State’s debt is predicted to be $36.6 billion, increasing to over $40 billion in Forward Estimates – driven by repeated Annual Deficit Budgets. WA’s downgrading from AAA to AA in 2013 compounded the State debt problem through higher interest rate payments.
Party politics aside, the incumbent State Government must accept responsibility for the State’s dire financial position, through irresponsible spending of community money.
How bad is it? When the current government came to power 9 years ago State debt was under $5 billion. From $5 billion to $40 billion in 10 years is staggering fiscal incompetence. State debt to revenue ratio is currently 82.3% – described as a fiscal emergency. The Treasurer predicts a budget deficit for 2016-17 of $3.39 billion. By comparison the City of Fremantle has a debt ratio at <10% and a predicted balanced budget for the same period. (To add insult to injury the State government has advised Councils they should bring in a 10% surplus budget.)
Recently physicist Brian Cox told TV viewers that the known universe is calculated to be 40 billion light years across. I could not grasp what 40 billion light years is, until I realised – it is the same as State debt at $40 billion!
To put it into perspective if every person in the State (including children) handed over $10,000 to the State Government it wouldn’t be enough to clear the debt – our debt.
No party can fix this in the short term, this debt will take a lot of hard work over years to pay down, but first we have to get the Annual Budget back under control. There will be some very hard decisions to make and we will need a strong State Government to see this through – so populist candidates need not apply!
Non Financial Public Sector