Western Australia infrastructure given extra $490m spend by Federal Government

The Federal Government has announced an additional investment of $490 million into Western Australian infrastructure in 2016-17 as part of the state's share of the goods and services tax (GST).  Treasurer Scott Morrison confirmed that the federal government was committed to ensuring the investment assisted Western Australia to successfully transition from resource investment driven growth to a stronger, more diversified and innovative economy. 

“Western Australia has been the leading engine room of national growth for most of the past decade, attracting record investment into major resource projects of national significance.

“Today Western Australia is on the frontline of our economic transition from resource investment and construction driven growth to broader drivers of growth.”

Plant hire suppliers in WA can testify to this, and we've seen first hand the number of companies diversify from traditional mining and crosshiring contracts, to a more direct approach to the construction market. 

Western Australia's GST affected by historically high iron-ore prices

The region continues to receive the lowest share of GST revenue, as a proportion of population share, of any state or territory. Asked how the announcement squared with his argument that the May budget would not contain "a fistful of dollars", Mr Turnbull defended the decision, saying, "you have to remember that Western Australia's mining boom did result in a very big increase in state revenues, and that is one of the reasons why the GST formula has resulted in the state receiving such a low share of the GST as a percentage.

The investment recognises this and will help to ensure Western Australia’s share of the GST is effectively maintained at its 2014-15 levels, effectively stopping the drop in Western Australia's share of the GST. Mr Morrison noted that: 

 "Specifically, historically high iron ore prices continue to affect Western Australia’s GST relativity despite the recent fall in those prices. These lower commodity prices in more recent times have yet to be captured by the GST sharing arrangement formula. 

"The decision to make this additional investment this year, follows a similar decision last year and fulfils a commitment to Western Australia then! , to re-visit the impact of GST sharing arrangements on Western Australia, once the Commonwealth Grants Commission determination for 2016-17 had been made.

WA Premier Colin Barnett welcomed the money but said it did not correct the "gross imbalance" in the current carve-up, claiming "it's a Band-Aid solution and it is not sustainable." 

Infrastructure projects identified to receive $490 million in funding

Mr Turnbull said Canberra would work with the state government "to identify the most appropriate infrastructure project(s) for this additional federal investment".

However, a spokeswoman for Mr Barnett told the AFR that two immediate priorities would be the Forrestfield Airport link, estimated to cost $2 billion, and an extension of the Roe Highway – known as Roe 8 – costed at $1.5 billion.

The federal government confirmed an interest in projects which "ensure that [their] investment helps to reduce congestion, improve safety and strengthen growth and job creation".