The WA Premier and Treasurer Mark McGowan faces an interesting challenge when he releases the State’s Budget – how to support a community facing the largest cost of living pressures in the country while delivering a responsible budget that does not stoke inflation further.
Perth recorded the highest CPI inflation rate in the country in the year to March – at 7.6%. This level of inflation has not been seen since the 1990s. Petrol prices and housing – both the price of new builds and rent costs - have underpinned these results.
While WA remains one of the most affordable states to buy and rent in the nation, it may not stay that way for long, especially as rental vacancy rates sit at around one per cent.
With wages failing to keep pace with prices, cost of living is starting to bite for many WA residents. With a large surplus expected on the back of the continued strength of iron ore, many in the community will expect some form of relief in this Budget.
The challenge is how to do this without piling onto the inflationary bandwagon as other governments have been accused of in recent months?
In delivering a responsible budget, the best thing the Premier can do to offset cost of living concerns is to lock in the accessibility and reliability of critical services such as health and aged care to ensure our state’s needs can be met in a sustainable way.
These pressures are clearly highlighted in the aged care sector. One of the key issues facing this sector is that older Australians are often forced to rely on extended hospital stays because of the lack of aged care beds.
It is therefore welcome news that the WA government has announced in its upcoming Budget a $252 million health splash designed to improve emergency care. Included in this number is $55.8 million to have registered nurses continually in emergency department waiting rooms and $59.5 million for 120 aged care beds to transition older patients out of hospital.
However, the question remains where these registered nurses and aged care staff required to service these extra beds will come from?
WA like the rest of the nation is suffering from acute skills shortages. With a low unemployment rate and high workforce participation there is limited capacity in the labour market. The budget announcements so far make no mention how the government plans to attract staff – particularly to the health and care sectors which are chronically understaffed.
The Budget should include measures to attract workers from both interstate and working with the Commonwealth overseas to WA to address shorter term workforce challenges. However, a renewed focus on migration does not mean we can forget about training and development of local workers - WA needs to ensure it continues to train its workforce with a long-term focus.
The government can also improve the accessibility of critical services by investing in digitisation of government services. Last year’s Budget allocated some funding through the new Digital Capability Fund but more could be done on service provision. WA is behind other states on this and improving the accessibility of services would benefit the community.
Economic diversification needs to remain a focus of this government and the upcoming Budget. Despite talk about diversification for the past few years, WA has become even more reliant on the mining industry to drive growth and government revenue. Diversification of both industries and export markets is key. Trade agreements and diplomatic relationships are important to opening new markets and must be a continued focus for this government. We also need to attract back international students and tourists and provide foundational support for new industries to scale up in WA. This will go some way to providing a broader economic base for the state.
This Budget has the potential to set the state up for long-term success – to insulate the economy against global volatility and current inflationary pressures- but needs to invest wisely.
This article originally appeared in The West Australian on 9th May, 2022.