The bid to reduce general government sector spending in Western Australia is off to a bad start, rising 3.9 per cent in the September quarter compared to the same period in 2011.
Treasurer Troy Buswell has released the state's financial results for the three months to September 30, showing general government sector expenses had increased to $6.32 billion.
The Colin Barnett-led government announced cost cutting within its 2011/12 annual report in September in a desperate bid to keep the budget in surplus amid a sharp fall in iron ore royalties and a strong Australian dollar.
The belt-tightening included limiting the number of employees in the general government sector, capping public-sector leave liabilities and ordering a 1.5 per cent cut in agencies' budgets for non-essential goods and services in 2012/13.
Mr Buswell kept a brave face on Thursday, labelling the near four per cent increase "a good start to recurrent spending outcomes for this year", although he conceded the state government would need to remain vigilant with its spending policy amid threats to its revenue.
He said the recent volatility in iron ore prices was yet to flow through to the state's bottom line.
Revenue for the September quarter totalled $6.39 billion, down $19 million or 0.3 per cent, compared to the previous corresponding period.
The fall was mainly attributed to lower federal government GST grants, with WA's population share of GST collections down to 55 per cent, from 72 per cent in 2011/12.
"These outcomes were partially offset by the strength of the state economy, reflected in higher tax collections in the September quarter, particularly payroll tax growth," Mr Buswell said.
The general government operating surplus of $70 million was sharply down from $325 million for the September quarter last year when iron ore prices were above $US170 a tonne, compared to an average of about $US110/t for the same period in 2012.