Treasurer’s Advance Authorisation Bill 2026
5 May 2026
Hon Dr Steve Thomas (4:18 pm) : Thank you, Acting President.
Hon Dan Caddy : Finally some sense.
Hon Dr Steve Thomas : Sorry, I missed that, but we will see where we get to with this debate on the Treasurer's Advance Authorisation Bill.
I thought I might just outline to members of the house, particularly new members who have not had a lot of experience with the budget process, exactly what a Treasurer's advance authorisation is and does, and I think that is pretty important. We see generally Treasurer's advance bills when the government wants to spend more money than is appropriated in the budget bills. The first thing to know is that all expenditure of government is supposed to have an appropriations bill that authorises it. That is part of the Financial Management Act. It is part of how the state works. When we have expenditure of the state, it should be authorised by an appropriations bill of some sort.
Obviously, the big appropriations bill is the budget bill, but, on occasions, particularly when governments have more money than they thought, they will add in additional expenditure towards the end of a financial year. Obviously, the more money it has to spend, the more cash is floating around and the bigger the Treasurer's advance bill. That is what a Treasurer's advance bill is all about. It allows the government to expend money that was not covered in the budget appropriations. That is the first thing to realise.
Just for everybody's record, the previous Liberal government also had Treasurer's advance authorisation bills. I remember that Troy Buswell put through at least a couple, probably back in the days prior to 2013 when the fiscal economy started to tank, but certainly around at that particular point.
How have we had a series of Treasurer's advance bills over the last few years? Quite simply, it looks like this. The state government has worked out that if it puts a very low figure on its revenues and brings in revenues far more than it budgeted for, at the end of each financial year it has billions of dollars extra to spend. It obviously then has two options. The government can hold it over to the next financial year and put it in a budget process. The problem with doing that is that its budget surplus in the next financial year will look very high. I like to refer to this government as "Lucky Phil". This government has had massive amounts of revenue. It has had the longest boom in my memory. This financial boom started in February 2019. It is now May 2026. It is a seven-year boom. A boom traditionally lasts four or five years, unless something gets in the way, but this is a seven-year boom. Obviously, the government has had an enormous amount of revenue. It comes in two forms. The additional revenue comes in particular from iron ore, which used to be $6 billion a year. It is now at least $10 billion a year and during the peak it was about $11-point-something billion a year. That is a massive increase in iron ore royalties.
The government has also had a significant increase in revenue from the federal government. Interestingly, that is not just from the GST, although that has been a multibillion-dollar boom for the government as well. It is more difficult for the government to hide that one, but that has also been in there, and then there are other payments. The federal government puts payments into major projects. For example, let us look at Metronet, which is a $15 billion project. The federal government has, in many cases, put in 50%. It has done it project by project, so it is not exactly 50%, but let us round it up. Roughly 50% of Metronet has been paid for by the federal government. As a part of that process the revenues that have come in are part of the state's revenues, and so the additional revenue comes in as a part of the budget and the budget surplus. It is therefore reasonably accurate to say that about half of the surpluses of the boom to date, which has been $29 billion—that is with a bit of a guess as this financial year is not complete yet—and includes those additional payments from the Commonwealth, has gone to Metronet. It is a massive project—an enormous project. Those are harder to disguise. GST comes out with forward projections from the federal government, and the federal government lets us know when it gets input. It becomes a part of the budget process. It is a bit tricky to hide. Payments for transport projects and other projects also come out as a part of that process. It goes into the budget process and is in the books, so that is a bit hard to hide as well.
How does the government hide things? Classically, there are a couple of interesting ways to hide things. The first, and we will see whether this happens in a couple of days time, is the government can ask its government trading enterprises—particularly Water Corporation, which ostensibly makes $1 billion-plus a year in profit although we would not think so, given it has had to have money out of Treasury to upgrade its ageing pipe infrastructure just recently—to defer the payments it would normally make. A bit over $1 billion will come off the bottom line and sit in the budgets of the GTEs. It is ultimately in the budget, but it is in the GTE section and the total government section, not the bit that everybody reads, which is the general government section of the budget. That is the bit the media will put down for budget surpluses. It has that bit of general government expenditure, and then it has GTEs and we total up the two. GTEs get a bit hidden when it just does general government revenue, which is the bit that everybody talks about.
The best and most surreptitious way that the government can hide its revenue is simply by putting in a low estimate for iron ore royalties. Bear in mind that iron ore is 90%-plus of the royalties that come in. Lithium was briefly $1 billion in a year. That has fallen away again. Gold makes a contribution and there are a couple of others. Coal makes no contribution anymore; it once did—never a lot of money, but there you go. Classically, in each of its budgets, the government puts iron ore down at somewhere between US$72 to US$76 a tonne. The years vary but for every additional dollar the price averages above that, let us say that it gets $95 million additional revenue. In the year to date, the year when the 2025–26 budget had US$76 as its estimated price—bear in mind we are in May now—the average price for the year has been US$103-and-a-bit an ounce. That is not quite $30 more. If it were $30 more it would be a bit higher, but let us do a nice round figure and say it was $30 more. If it were US$106 instead of US$103 and we multiplied that by $30, there would be almost $3 billion of additional revenue that the government did not record in its books through the budget estimates process. Its actual budget surplus is nearly $3 billion higher than the number that sits in the previous year's budget, which was the number that it is expected to get. It is a very clever little manipulation because that $3 billion is then effectively free money, because it has come in and it is not accounted for in the budget, so there has not been an appropriation for this additional money that has come in. It is not recorded anywhere in the budget. If members want to look for it, they need to look in the midyear review, which comes out in December, and the quarterly financial statements that Treasury puts out. The quarterly financial statements will tell us the additional royalties that the government expects to get. What do we normally find? For example, in the 2025–26 financial year, the year we are currently in, the budget prediction for a surplus was $2.4 billion and halfway through the year the midyear projection had it at $2.5 billion. Halfway through the year, the projected surplus is already bigger than the surplus the government put in place. The government knows this. This is a complete furphy; it is an economic manipulation that allows the government to have billions of dollars extra in the budget at the end of the financial year.
From that point, it has two options. It can hold that money. The Annual Report on State Finances is the other document members should read if they are an economics nerd, Hon Anthony Spagnolo. I am sure he reads these books already. The Annual Report on State Finances will give members an accurate figure. If the government does not spend that $3 billion extra, it sits there in the Annual Report on State Finances and shows that the government had $3 billion more revenue than it thought it was going to get and its surplus is $3 billion higher than it actually projected. That is one way to deal with that particular issue.
The other way, as everybody who has run any budget including a household one knows, is that if they have extra cash in the piggy bank, if they have a money bin and they are rolling in it like Scrooge McDuck—
Several members interjected.
Hon Dr Steve Thomas : There we go! Thank you, everybody.
If they are rolling in it like Scrooge McDuck and they are "Lucky Phil" as well and they have more money than they can spend, their other option is to go on a massive spending spree. They have to get that money out before the end of the financial year, which means that in this financial year, for a Treasurer's advance, the government has to make a bunch of announcements. Gee, what have we been watching for the last week or so? It is a bunch of announcements on spending multiple billions of dollars. The government will try to apportion as much as it can out of the budget before the end of the financial year to keep that budget surplus to a minimum. It has to balance this because, of course, it also has additional revenues going forward in next year's budget. It has to get this money out the door. To get the money out of the door, it has to have a Treasurer's advance bill to authorise the spending of the money. That is exactly what we are dealing with today.
Hon Dr Steve Thomas (5:03 pm) : I will resist the urge to recap the last 15 minutes of my contribution. We have been through the basic processes of the budget and those who were listening would now understand that a Treasurer's advance bill is effectively what the government has in place to spend money in a financial year, with a part of it being able to hide money away during the process. The amount is in the billions. If members look at last year's budget and the statement of risks on page 62 of budget paper No 3—some of these numbers were mentioned earlier in Hon Neil Thomson’s address—they will see that the iron ore royalties variation is plus or minus $94 million for every United States dollar variation. We can multiply $94 million by nearly the $30 that it is. Remember, the government suggested that it would be relatively low at US$77.6 a tonne for 2025–26 and in the forward estimates it was US$72 a tonne, so $30 at $102.00 a tonne at $95 million is $2.8 billion extra revenue.
That is effectively what the government is dealing with, and it obviously has to try to spend that because otherwise it will sit on its budget surplus.
That is what the government is effectively doing with the Treasurer's Advance Authorisation Bill. It is trying to reduce the amount of its budget surplus for the 2025–26 financial year because it has managed to squirrel away $3 billion more in revenue than it put in its estimates at the beginning of the year. Obviously, there is an issue here. If the government goes high with its estimates of iron ore prices and they crash, suddenly its budget can be billions of dollars in deficit at the end of the day. During her second reading response, the parliamentary secretary will say that the government is taking a conservative approach. I understand that; it is a conservative approach. However, it is also a manipulation that allows billions of dollars of extra expenditure, in this case, in the lead-up to the next budget.
As we are discussing the projections for the budget for 2026–27, which will start on 1 July this year, the government has billions of dollars of additional announcements coming in because it already has billions of dollars more that it can play with. The government knows that that is part of the process. That is what we are going to deal with here—billions of dollars. This is the money bin overflowing once again. As I said, the money bin has been overflowing for the last seven years and Scrooge McDuck has been swimming in it and having a huge time.
The question that we would face generally in speeches like this is: What is the government spending this additional revenue on, this revenue that it effectively knew it was going to get, but made sure that it was above the budget so that it was free for spending towards the end of the year? What is the government spending it on? I am happy to let people go through their various personal and special interests in relation to that.
I want to make a couple of points before I conclude. The first is that obviously we have seen significant investment in a number of areas, and one of those is energy. I have to say that I am pleased to see some investment in energy. I think we would all agree that we had an excellent debate about energy in this house a couple of months ago. I did enjoy the lower house Speaker having to read out a statement from the Legislative Council in the Legislative Assembly telling the Legislative Assembly that the Legislative Council thought that the government to date had done a terrible job in the energy portfolio. That has been the highlight of my year so far. That was very enjoyable. It is true that the government has now started to invest.
The switch and backflip on energy in the last few months has been astounding. I am very much enjoying that particularly because of a number of things that I have said. I know people will say that I have said this in this chamber before—I suspect I will say it a few more times in the next few years—but in reality I have enjoyed seeing the government say, "Obviously, if we don't have enough alternative energy in the system, we will extend coal." That is something I have said and put in policy documents that I have written. Tick. I did enjoy The Sunday Times article by that very good journalist, Mr Joe Spagnolo, which said that the government will build 300 megawatts of additional gas generation. I think I said at the time that 300 megawatts will not be the end of it; it will be more than that. I very much enjoyed seeing the government backflip on that. Well done on that. The next thing was one of my questions today. I very much enjoyed that because we have talked many times about the government not taking offtake agreements or power purchase agreements from the renewable sector, and it had not.
The minister has actually given an order, according to the answer given to me by the Leader of the House today. Well done on that; it had to get them moving. I mean, they probably needed—I think I can say it without being unparliamentary—a kick in the pants. They were pushed in that direction, which is good, so that is another tick.
Hon Dr Brad Pettitt will be a bit sad that the government has not really started building much in the way of its own wind energy yet, but maybe there is a flicker or a pulse there. I am giving you that tick, Hon Dr Brad Pettitt. I have given myself four ticks so far and I am giving him one. We are going to share the love with this one; it has been very good. The last bit of this, the missing piece of the puzzle, very much to date—I am sure the member would agree with me—has been transmission, distribution, powerlines and poles. The government announced that it will put over a billion dollars into the Clean Energy Link–East. I do not think that will build the entirety of the dogleg of Clean Energy Link–East, but it will put some money towards that, and other upgrades are also occurring in that area. It will pick up wind proposals in that area of Boyup Brook and the Shire of West Arthur. There are some reasonable ones there. The Shire of West Arthur in particular is not violently opposed to all renewable energy; it is prepared to have a sensible argument. It wants some benefits for the shire, which I think is perfectly reasonable.
In the last budget, the government announced some $1.2 billion for Clean Energy Link–North. In my view, that is a fraction of what it will actually have to spend to get additional transmission in that area. I mean, effectively you have a 330-kilovolt line and a 132-kilovolt line going up there already and some substations will be added in to pick up some more generation and then shift the 132kV line to a second 330kV line. Effectively, for the most part it will upgrade one of the lines. I actually think to deliver the amount of energy being talked about in Clean Energy Link North, the line will have to be duplicated and probably taken further east. If that is the government's plan for gigawatts worth of generation in the Mid West, then upgrading one of the two lines from 132kV to 330kV is not going to cut it, even with the upgrades to the various substations et cetera. If that is the government's plan, it is steps in the right direction, but, at this point, I still do not think it will be delivered by the end of 2029. I still do not think all the state-owned coal-fired generators will be closed by the end of 2029, and I am actually okay with it. I am on the record. It is a policy I wrote—extend it where we need to. It would be pretty hard for the government to argue, so I think it will be extended.
I think we will see private-sector generation coming in, but only where we have power purchase or offtake agreements. Some of those will be reasonable. Some others—interestingly, I do not think anybody in Parliament is supportive of the offshore wind proposals out in Geographe Bay because they are completely uneconomic; they are a furphy. If you cannot find land in Western Australia to build onshore wind turbines, which are a third of the price per electron, there is something wrong with you. But anyway, that is a criticism of a federal minister by the name of Hon Chris Bowen, who is obviously operating on a low-wattage battery! It just does not work, but there will be generation. The private sector will save the government's day, but I do not know that it will get it in in time. Additional gas generation will save the government's bacon, but I do not know that it will get the level that it needs. I think it will struggle. By the closure of the coal fleet at the end of 2029, we will probably get another 220 megawatts of gas. A couple of years after that, I expect to see somewhere in the area of 700 megawatts of peak gas supply put into the system, but it will not be by the end of 2029.
Some of this money should be going to that process, and the difficulty the government faces is that it cannot get the money out the door on the timeframes that it proposes. I think it took a total of seven and a bit years to spend $15 billion on Metronet.
Ultimately, to spend a similar amount of money on a transition for energy will take at least that sort of time as well. At the moment, in 2026, that process, even if we take the government's agenda, not necessarily mine, is going to take until 2033 to get anywhere close to the level of energy supply and the level of distribution and transmission that is required for its own plans. What is missing here is a breakdown of exactly where that funding needs to go to deliver those particular outcomes. I still think that there is an issue with getting there. The government has taken steps in the right direction in actually progressing things that had not progressed for five years. It is the biggest issue the government faces.
This transition was announced in 2022 and then nothing happened for four years. It is supposed to finish in 2029, so we are effectively four years into a seven-year process and nothing happened in the first four years, so it is still behind and it is going to take a massive investment. Even if the iron ore price stays at US$103 a tonne, which it is at the moment, and the government projects US$72 in coming years, so it is US$31 higher, at $94 million for every dollar, we still get that extra $3 billion, but getting expenditure out the door is the difficult part. Ultimately, in my view, the problem with the Treasurer's advance bill is that the government is running additional expenditure at the end of the financial year and getting it out the door is the tricky part. What we see all the time is that the government announces additional funds for something and tries to transfer it from the general revenue account into a specific fund somewhere else, but it is still on the books.
The Treasurer's Advance Authorisation Bill does not tell us a lot. The budget that will come in two days time will tell us a little bit more. The budget estimates will tell us a little bit more again. I suspect we will have to wait until September or October for the Annual Report on State Finances to actually find out what the government is doing, what games it is playing with the fiscal fortunes of the state of Western Australia and how much it is able to take off the top of the Scrooge McDuck money bin so that we do not notice that it is bulging and the coins are spilling out onto the ground. That is the process that we need to watch over the next few months, and I would urge everybody to watch it pretty carefully.
