3 key takeaways from the WA budget
The recent Western Australia state budget didn’t deliver any major surprises, however there were 3 key takeaways that property investors should know.
The May 12 budget was never going to be a controversial one for the WA Liberal government, because:
– Major new spending initiatives were all but ruled out given the government’s tight fiscal situation
– Colin Barnett had previously ruled out any tax hikes
– The budget is the last before next year’s state election meaning the government would want to avoid contentious issues
While the budget was a safe play, here are 3 key takeaways that property investors should know.
1. Continued focus on infrastructure investment
The WA government has allocated $7.7 billion to infrastructure projects over the next four years. This includes:
- $2 billion for Forrestfield-Airport Link
- $1.5 billion for Perth Freight Link
- $427 million for MAX Light Rail
- $378 million for Perth Museum
These projects will create more than 20,000 new jobs and are scheduled to be completed over the next 3-6 years. As well as the huge economic benefit that these projects create, the infrastructure will also help to accommodate Perth’s growing population as it increases to 3.5 million residents.
2. No changes in property taxes
After making a number of changes to property taxes in recent years, the government did not modify land tax, stamp duty exemptions or first home owner grants. Premier Collin Barnett has hinted at changing how land tax is calculated, though, which would benefit investors with multiple properties. This issue is likely to appear in next year’s budget, provided the Liberals win the upcoming election.
3. Assets sales to power debt reduction
The state has reiterated its focus on asset sales to reduce its debt bill and pay for future infrastructure. The list of divestments could raise about $20 billion after the government said it would take the sale of Western Power to the next election. The sale items include:
- Western Power
- Utah Point
- Perth Market Authority
- Horizon Power
- Fremantle Port
- Keystart loan book
The state government said it would allocate $5 billion from sale proceeds to future infrastructure projects while the rest would be used to repay debt.