Iron ore fuels deficit rethink, GST shrinks

State Treasurer Troy Buswell giving a press conference at Parliament House today. Picture: Richard Polden Source: PerthNow

PESSIMISTIC forecasts for Western Australia's share of GST distributions have underestimated the dire outlook for the boom state.

In a pre-election financial update that will no doubt give Premier Colin Barnett more ammunition to attack the federal government, new figures provided by Treasury today show WA's slice of the GST pie is now projected to fall to 27 per cent of population share by 2015/16, down from 35 per cent in the mid-year review provided in December.

The revelation will no doubt incense the fiesty Liberal leader, who in launching the party's state election campaign yesterday, vowed to keep fighting the federal government on the issue.

And he warned voters that state opposition leader Mark McGowan would not stand up to Canberra like he has.

Mr Barnett was highly disappointed by November's GST review panel report, labelling it a missed opportunity.

The Liberal leader has long maintained that the resources-rich state is being ripped off, but the federal government argues that WA has - until recent years - been carried by the other states.

Excluding the boom years, WA had been a net beneficiary of Commonwealth benefits for many decades, a spokesman for federal treasurer Wayne Swan said in March last year when Mr Barnett was still hopeful of major reform in the GST distribution method.

Mr Barnett conceded yesterday that he'd made little traction in pushing for change, but would not give up.

The report did provide some welcome news, however, with the 2012/13 budget surplus now expected to be $241 million, up from $140 million in the mid-year review.

Better still, a forecast deficit of $187 million in the mid-year review could turn around to a $390 million surplus in 2013/14 - provided iron ore prices stay strong.

The iron ore price was about $US155 per tonne today, although analysts expect a long term price of around $US100 per tonne.

Treasury said the improved outlook for the state's finances - mainly reflecting the impact of an iron ore price rebound over the past two months - may or may not be sustained.

WA Treasurer Troy Buswell said the report showed 'a good set of numbers'.

""WA continues to lead the nation with economic growth remaining strong at 6 per cent. Latest ABS figures also show WA's unemployment rate falling to 4 per cent," he said.

"We've had to make some tough decisions, during the past four years in Government, if we had not made those decisions, we would never have delivered today's solid figures."

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