Paul Murray: Someone must be held to account for hiding State's debt sentence

West Australian

27-06-2025

At the start of this year's State election campaign, just four weeks out from polling day, the Cook Labor Government released a statement that is required by law announcing a boost in the forecast Budget surplus to $3.2 billion.
A government rolling in cash is obviously news to be politically exploited — especially just before voters go to the polls.
The statement, certified by the Under-Treasurer, is an obligation under the Government Financial Responsibility Act and is intended to alert the public to the true state of the books under the administration seeking re-election.
But it hasn't turned out like that — the surplus instead went down considerably — making that law in this Government's hands a bit of an ass.
The $3.2b is now said to be $2.5b, according to last week's Budget. How that was done reflects Labor's real attitude to transparency.
And for Budget watchers who have puzzled why the State's debt is growing strongly while Treasurer Rita Saffioti predicts surpluses to the end of the decade, read on.
Instead of paying down debt in a boom, rivers of cash are being diverted into hollow logs.
A deep dive into the Budget papers this week reveals that before some extraordinary juggling, next year's surplus was going to be much smaller than Saffioti's predecessors had been able to achieve.
Was that a look a very ambitious politician didn't find attractive?
So a big chunk of this year's enforced dividends from state-operated power and water monopolies was quietly shifted into next year to avoid what would likely have been the lowest surplus since 2019 – and a potential sign that WA's finances are on the turn.
To discover that, you need to go to the fine print underneath two tables at the very back of the Budget papers where the accounting switches are listed as notes.
Not very transparent.
Some people might find it strange that state-owned utilities are not solely used to provide reliable power and water at the lowest possible cost, but as a cash cow for the government to spend elsewhere. That's another story.
The pre-election figure of an increased surplus was big news: 'A fresh snapshot of the State's finances shows the Budget bottom line has improved,' The West reported on February 7.
And Treasurer Rita Saffioti was preening in her newspaper column a few days later: 'If you're looking for a good read, pick yourself up the WA Treasury Pre-election Financial Projections Statement,' she wrote. 'Debt under control and strong surpluses.'
But the truth that voters weren't told turns out to be rising debt and weaker surpluses.
The euphoria continued until the week before the Budget: 'An iron ore royalty windfall is due to boost WA's surplus to as high $3.5 billion this year, sparking calls for power credits rebate to continue, as the Government mulls the future of cost-of-living support,' The West reported.
There's the rub. Voters had been told in February there was another whopping surplus on the way which might have made many think that more handouts were affordable.
Here's Labor's surplus record achieved on the back of the Federal coalition's 2018 GST deal and an iron ore boom: 2018–19: $553 million; 2019–20: $1.7 billion; 2020–21: $5.6b; 2021–22: $5.7b; 2022–23: $5.1b; 2023–24: $4.5b.
Ben Wyatt produced the first three, Mark McGowan the next two before Saffioti arrived and over-spending started to bite.
Strangely enough, Saffioti's second Budget, delivered last week, recorded the denuded $2.5b surplus, $659m lower than voters had been told in early February despite booming revenues. So what happened in such a short period?
The pre-election statement (PFPS) didn't only mislead voters about the surplus. 'Total public sector net debt at June 30, 2028, is now expected to be $2b lower than forecast in the Mid-year Review, at $37.6b,' it said.
But last week's Budget had debt in 2028 at $42.5b. That's a $5b blowout in just five months.
When Saffioti took over as Treasurer just two years ago, State debt was $28b — 50 per cent less — so she's clearly got a spending problem.
What's the point of legislated pre-election transparency when it is not reflecting the truth of the government's financial performance?
Here's the trail in its own words.
'The cut-off date for information and the finalisation of assumptions for inclusion in this PFPS was February 1. 2025, three days after the Legislative Assembly was dissolved,' now-departed under-treasurer Michael Barnes said in his certification of the pre-election statement.
'This PFPS is based upon all relevant decisions that I was aware of or that were made available to me by the Treasurer and other official sources, together with other relevant information known to Treasury, on or before the PFPS cut-off date.'
Last week's Budget listed eight reasons for the lower surplus of which only three are relevant because the other five listed increases in revenues which can hardly explain a lower surplus.
The main one was: 'Lower revenue from public corporations (down $981m), largely from the Water Corporation and Western Power reflecting the later timing of 2024-25 dividend payments, partly offset by movements across other agencies.'
Later timing? What does that mean?
It means someone decided to shift the dividends into the next year. But isn't explicitly saying so. Or when.
Did the under-treasurer know before the election the date when the two corporations would hand over their dividends, due by June in normal circumstances?
The pre-election statement also said this: 'Operating surpluses ranging between $2.8b and $3.5b are now forecast in the outyears.'
That suggests Treasury knew on February 1 that the dividend payments would be shifted into the next financial year. If not, the PFPS' estimated surplus for 2025-26 (the $2.8b figure) would have been much lower because even with the boost from the shifted dividends it's now only estimated at $2.4b, rising slightly in later years.
Like the pre-election statement, the Budget papers serve one purpose — to let taxpayers know what is happening with their money.
That bit about public corporation revenues this year being $981m lower was on page 39 of Budget paper 3. On page 41, it says this: 'Relative to the PFPS, general government revenue has been revised up by a total of $4.6b over the period 2025-26 to 2027-28.
'This is mainly due to higher public corporations dividend revenue (up $977m), mainly from later receipt of 2024-25 dividends from the Water Corporation and Western Power.'
Later receipt? The reader needs to turn to page 775 of Budget paper 2 in the fine print of the Western Power accounts: 'The interim dividend for 202425 will be paid as a final dividend for 2024-25 in December 2025.'
And on page 796 for Water Corporation's accounts: 'The 2024-25 dividend payment will be paid in full in 2025-26.'
The avid reader would have passed the accounts of basket case Synergy — which hasn't paid a dividend for years — to discover that taxpayers forked out a subsidy of $1.26b to the power generator and retailer this year after only $831m was budgeted. Never announced.
And that was on top of Synergy's debt increase from a budgeted $182m to $562m this year and an estimated $726m in 25-26. That comes after then energy minister Reece Whitby's plea to Cabinet for an extra $1b bailout was rejected, according to the ABC. Synergy was told to borrow.
'No income tax is projected to be payable over the forward estimates period as Synergy is not expected to return taxable profits' the fine print says.
A private business like that would be wound up. None of these costs of the 'renewables transition' is ever announced by the government.
I sent acting Under-Treasurer Michael Court on Monday and Saffioti on Wednesday a total of 14 questions about the dividend switch.
The questions specifically probed when the decision to shift the Water Corporation and Western Power dividends was made, who made it and whether the Under-Treasurer was aware of it when the PFPS was certified.
Only one question was directly answered. Court denied his predecessor knew of the dividend shift when certifying the PFPS.
'The decision for Western Power and Water Corporation to pay their interim dividends together with their final dividends was made as part of the 2025-26 Budget process and was transparently reported in the Budget papers,' Saffioti's office said.
(As you've seen, it wasn't transparent. Still isn't.)
'Movements in revenue and expenses that impact the net operating balance relative to the PFPS are also reported in the Budget papers.
'Government decision making in the Budget process is informed by Treasury advice. Adjustments to dividend timing and quantum is nothing new, and is influenced by a number of factors, including infrastructure investment requirements, managing cashflows and achieving Government's objectives.'
Keeping the public — especially those about to vote — properly informed is obviously not one of those objectives.