An unprecedented flow of resource riches have helped the West Australian Government achieve a record $2.3 billion budget surplus for the 2006-07 financial year.
The surplus significantly exceeds the $1.85 million predicted in the state’s May budget, largely thanks to an unexpected boom in revenue from stamp duty and mining royalties.
But WA Treasurer Eric Ripper says this year’s bumper surplus is likely to be a high point in the state’s economic fortunes. “I think we’ve passed the years of extremely high revenue growth,” Ripper told the Australian Financial Review.
The result comes as ANZ chief economist Saul Eslake warns that poor decisions by Australian Governments when it comes to spending the nation’s resources bounty could have drastic economic consequences.
In a speech to the Australia-Britain Chamber of Commerce in Melbourne, reprinted in The Age, Eslake says rather than spending away the benefits of the resources boom, the Federal Government should have reserved the gains to be spent when the economic cycle comes off its current high point.
The consequence of not doing so, Eslake says, is upward pressure on inflation and interest rates, leaving the economy in a poor position than it might have been and risking sustainable growth.