A stunning surge in the iron ore price has propelled Western Australia’s budget further into surplus, with the government promising it will use the proceeds to fund the construction of a long-awaited new maternity hospital.
A surplus of $2.2 billion this financial year will be forecast in the mid-year economic review to be released in the coming fortnight.
It is an increase of $1 billion from what was projected in October’s state budget and a stark contrast to the deficits forecast in every other state.
Premier Mark McGowan on Sunday announced the government will use the surplus proceeds to fund the construction of a new $1.8 billion women and babies hospital to replace the century-old King Edward Memorial Hospital in Subiaco.
Construction will start in 2023 at the QEII medical precinct in Nedlands and is expected to take five to six years to complete.
“What we’re doing is we’re not wasting our good fortune,” McGowan told reporters.
“We’re not frittering it away. We’re putting it towards something that is so meaningful and so important for the future.”
The hospital will be fully funded out of a special purposes account, with the project expected to create about 1400 jobs.
WA’s budget strength is being heavily driven by the remarkable resurgence of the iron ore price, which hit $US136 a tonne earlier this week.
The steelmaking commodity has been tracking around $US120 per tonne for several months, well above the conservative modelling that underpins WA’s budget.
It comes as both major parties swing into campaign mode ahead of the March election, with the Labor government predicted to comfortably win a second term.
Newly elevated opposition leader Zak Kirkup suffered a blow over the weekend with former leadership rival Dean Nalder declining a request to stay on as the party’s treasury spokesman before retiring at the March election.
Kirkup is yet to reveal his new-look shadow cabinet.
“Clearly the Liberal Party isn’t ready for government and they’re a risk,” McGowan said.
“The time is not right to change government.”
The Liberals had also promised to build a new maternity hospital at a cost of $500 million prior to Liza Harvey stepping down as opposition leader.
Health Minister Roger Cook said the opposition had “hopelessly under costed” the task of building a new tertiary hospital, noting that both the Fiona Stanley and Perth Children’s hospitals had cost the state more than $2 billion.
Cook said the name of the new hospital, which will host obstetric and birthing suites and a range of specialist services, was yet to be chosen.
By Michael Ramsey in Perth