The 2022-23 Western Australia State Budget was delivered on Thursday 12 May 2022.
The Budget showcases the strong fiscal position of Western Australia. It announces a range of critical investments in infrastructure and construction projects (including in roads, rail, hospitals, schools, ports and community-based infrastructure) through a $33.9 billion “Asset Investment Program”.
The proposed spending by the WA Government is largely underpinned by the strong labour and housing markets in Western Australia, as well as higher expected royalty receipts from the increasingly strong commodity sector. The Government has also introduced a number of measures to reduce the tax burden and simplify tax administration in WA. These changes - which include amendments to payroll tax and transfer duty - are welcome and should be monitored closely as the reforms are implemented.
The WA Government has announced a record $33.9 billion (over 4 years) for an “Asset Investment Program”. The program aims to invest in critical infrastructure projects in transport, ports, electricity utilities, water, health and education in WA.
A significant portion of the Asset Investment Program has been allocated by the WA Government to transport and port infrastructure. This is highlighted by:
- $9 billion in major road projects and upgrades, including $5.6 billion for regional road infrastructure;
- $6 billion across 13 METRONET projects within the Perth and Peel regions, including 2 new projects; and
- $1.7 billion for port projects, including $332 million to increase capacity at Geraldton Port, $78 million towards Lumsden Point at the Port of Port Hedland and $52 million for a dedicated Marine Services Hub in Broome.
The total Asset Investment Program allocation for 2022-23 is $8.9 billion, with 50% of that figure allocated to road, rail and transport infrastructure. The focus on transport projects is consistent with the Federal and Victorian Budgets, which similarly emphasise connecting regional and rural areas as a key platform for the immediate future.
In addition to infrastructure spending, the WA Budget announces a $652 million investment in projects to respond to climate change. This includes an additional $500 million for the Climate Action Fund – which increases the total investment in that Fund to $1.25 billion – as well as the following key low-carbon initiatives:
- $62 million to power Rottnest Island with 75% renewables and upgrade water assets. The scope of works includes network upgrades, replacement of the existing wind turbine generator, installation of a utility-scale battery and additional solar generation;
- $22.6 million for new charging infrastructure to expand WA’s electric vehicle recharging network. This includes a grants program that provides up to 50% of the cost of installing electric vehicle recharging infrastructure in workplaces, the installation of a further eight electric vehicle fast recharging stations across four locations between Norseman and Eucla, and the trial installation of electric vehicle recharging infrastructure at four metropolitan train station carparks; and
- $36.5 million to provide rebates to Western Australians who buy a new electric or hydrogen fuel cell vehicle up to a value of $70,000.
These initiatives demonstrate the continuing opportunities presented by the low-carbon industries across various sectors including energy, infrastructure and automotive.
State tax measures
The WA Government has outlined a number of new tax measures announced as part of, or in the lead up to, the WA Budget. A range of welcome amendments have also been announced to existing tariffs, fees and charges. The key measures are:
- Payroll tax waiver: Hospitality businesses with annual wages between $4 million and $20 million that have experienced at least a 40% drop in turnover for any 4-week period between 1 January 2022 and 30 April 2022 (relative to a comparable period in 2021) may be eligible for a 3-month payroll tax waiver in Western Australia. This reform is expected to reduce payroll tax revenue in WA by $2.8 million in 2021-22, and is expected to operate in a similar way to other payroll tax concessions announced by various State Governments as part of COVID-19 relief packages;
- Future road user charge: A distance-based road user charge for all zero or low emission vehicles will apply from 1 July 2027. Based on current prices, a rate of 2.5 cents per km will apply for battery electric vehicles and hydrogen vehicles and a rate of 2 cents per km will apply to plug-in hybrid electric vehicles. The rates will be indexed to CPI.
- Land tax relief for build-to-rent developments: A 50% land tax concession for new eligible build-to-rent developments will commence in WA from 1 July 2023. This announcement is expected to incentivise developers to increase the supply of properties available to rent in the State. Similar concessions have already been announced in New South Wales, South Australia and Victoria.
- Tax simplification package: The following measures will be introduced from 1 July 2022 to reduce the tax burden on taxpayers in WA and simplify overall State tax administration:
- reducing the general rate of transfer duty to be equivalent to the rate of duty for residential transactions;
- duty on prospecting licenses and derivative mining rights in relation to prospecting licences will be removed (unless transferred with other dutiable property); and
- the quarterly payroll tax return lodgement threshold will increase from $100,000 to $150,000. This means that businesses with an annual payroll tax liability in WA of up to $150,000 will have the option to pay quarterly (rather than monthly). This measure will provide cashflow benefits and reduce administrative processes on businesses.