More of the same from McGowan Mark II

Two weeks out from the state election, the 2021 campaign has become increasingly like no other.

Opposition leader Zak Kirkup has conceded he will not win and urged voters to not give Labor absolute control.

Any doubts about the outcome were erased by the latest Newspoll, showing Mark McGowan had a record 83 per cent approval rating and Labor had a two-party preferred lead of 68 per cent to the Liberals’ 32 per cent.

Mr McGowan’s handling of COVID-19 has won huge plaudits, adding lustre to his government’s stable and effective track record.

His government’s standing has been aided by a buoyant economy, driven by the iron ore boom, lots of infrastructure projects, and more recently the big pick-up in residential housing construction.

Against this backdrop, it is timely to reflect on Labor’s performance over the past four years and look at what we can expect from a second-term McGowan government.

The short answer is, more of the same. Mr McGowan makes a virtue of stability.

But new governments always bring change, especially when Labor is losing one of its most highly regarded ministers, Treasurer Ben Wyatt.

Many observers also recall the fate of former premier Colin Barnett, whose career peaked when his government was re-elected in 2013 with an increased majority. The next four years were all downhill.

Western Australia’s heavy reliance on iron ore presents as a significant risk – after all, every boom comes to an end.

The Chamber of Commerce and Industry of WA highlighted this in its latest economic review.

It found WA’s economy had been sheltered by extraordinary commodity prices and $17 billion in support from the federal government, in combination with looser COVID-19 restrictions within WA.

“It would be a mistake for WA to complacently ride the back of our mining sector,” CCI chief economist Aaron Morey said.

Mr Morey urged the next government to pursue reforms to strengthen and diversify WA’s economy, including payroll tax cuts and lower regulation.

Diversification

While conceding the mining sector still dominated in WA, the premier told Business News his government would continue to boost diversification of the economy.

“We’ve made huge efforts to diversify and had a lot of success, but we are still very heavily reliant on the mining industry and that will continue to be the case for a long time to come,” Mr McGowan said.

He points to sectors as varied as renewable energy, manufacturing, tourism, agriculture, aquaculture, IT and education as areas he has targeted.

When asked if the government should do more, he points to limited capacity.

“We don’t have unlimited money,” Mr McGowan said.

“We can’t meet everyone’s demands so we try to do things that are targeted and make a difference.”

He has also sought to shift the debate over diversification, saying the government is aiming to maximise the flow-on benefits from mining.

“We’ve been a very strong friend of the mining industry, but we have tried to maximise the benefits,” the premier said.

A surprising example he cites is the decision to widen the ambit of the Construction Training Fund so that companies developing big mining projects need to contribute.

“Training is a big one that is often overlooked,” Mr McGowan said.

The mining industry fought hard against this change, but is now the largest contributor to the fund, more than commercial, residential or engineering construction.

It meant the fund had record revenue in 2019-20 of $39.2 million.

A second example the premier cites is also surprising.

“We also largely closed down interstate FIFO, that’s actually a diversification measure, because it means the major companies are employing more people locally,” Mr McGowan said.

“At the height of COVID, the mining industry asked for a travel bubble to the east, and we said ‘no’.

“There are literally thousands of families that have moved here as a consequence.”

Local content

Another key goal for Labor was to help local manufacturers and other businesses win more work on big mining, LNG and defence projects.

“We’ve put huge efforts into all those areas,” the premier said.

Australian Steel Institute state manager James England said there had been some positive steps, citing the WA Industry Participation Strategy as an example.

He also commended the government’s investment in training and skills development.

“But there is always room for improvement,” Mr England added.

Mr England said the creation of a state supply advocate could boost opportunities for local manufacturers.

He also observed that the bulk of fabricated steel used on big projects still came from overseas, with the miners opting for cheap prices over quality.

Asked if local manufacturers had enough opportunities on big projects, the premier said: “Well they do, a lot do.

“I get a lot of positive feedback from the manufacturers.

“Obviously we don’t mandate but we do a lot of work around promoting, encouraging, assisting.”

He believes the big miners understand their obligation to help local suppliers.

“The industry itself these days is far more attuned to that, especially after the Nationals’ campaign in the last election [to increase royalties], that they need to do more.”

The government has pursued some big initiatives in areas it controls.

The WA Jobs Act prioritises local companies to deliver state government infrastructure and services.

The government has also backed the construction of a new railcar assembly hall in Bellevue after mandating that 50 per cent of the content of WA’s new passenger rail cars needs to be from WA.

The premier is hoping local manufacturers will start producing components for the thousands of iron ore railcar wagons used by the big miners.

His government has also established a taskforce to pursue the construction of wind turbine components.

Mr McGowan emphasises that he wants to work constructively with the big miners and other industry groups, rather than impose change.

“There has been a lot of disruption over time, but we are not going to do that,” he said.

However, he isn’t shy about chasing money from big miners to help with his own projects.

“Yesterday we announced an Aboriginal Cultural Centre,” Mr McGowan said.

“There are opportunities there for the big companies to contribute.

“Don’t worry, I raise these issues every time I speak to them, whether it’s buying their boots from Steel Blue or buying heavy equipment from WA suppliers or employing more people.

“All those things make a huge difference to how they are perceived.”

Project delivery

A major focus during the past four years has been delivery of Labor’s infrastructure vision for WA.

A big part of this has been its signature Metronet rail network, which was a key part of the 2017 election campaign.

Labor says works are currently progressing on nine separate Metronet projects across Perth, including the Morley Ellenbrook line.

This is the single biggest rail project in Perth since the Mandurah line was built in 2007.

The nine projects include the Airport rail line, which was initiated by the former Barnett government but delivered under Labor.

“These are big projects employing thousands of people,” Mr McGowan said.

“They are quite visionary.

“We’re trying to plan properly for the future.”

In addition to rail projects, there has been a continued big investment in roads projects. Working with the federal government, the WA government has fast tracked several big roads projects during the past year.

This has been good news for construction and engineering contractors, which have benefitted from a strong pipeline of work.

For all its progress, however, Labor is very sensitive to any criticism of its achievements. A review of Metronet projects by Business News suggests Labor is ‘gilding the lily’ when it spruiks its progress.

Take the Byford rail line extension as an example. Labor includes this in its list of nine projects under way, after awarding a $52 million contract in November for the removal of the Thomas Road level crossing in Byford and construction of a new bridge.

Work has started on this package, which is described as stage one of the rail line extension. Yet the government has not finalised the scope of the main contract.

It is still assessing the merits of building an elevated rail line through Armadale and says a final decision is subject to cost and funding availability.

Nor has the government selected a contractor for the rail line extension, let alone awarded a contract. That’s due to happen later this year.

The Bayswater train station project is another example.

In February last year, Transport Minister Rita Saffioti said work had started at Bayswater station.

Rita Saffioti.

Technically she was correct, though the only works to that point were the removal of a big tree and other vegetation and unspecified underground service works.

It was another two months before Coleman Rail was selected as the contractor for the Bayswater station upgrade.

Another sensitive topic is the cost of delivering Metronet projects.

Shadow transport minister Libby Mettam claims the overall cost of the Metronet rail program has increased to $5.7 billion, almost double its original budget.

Labor rejects this, saying the Liberals are deliberately comparing apples with oranges.

An analysis of the Morley Ellenbrook line shows that costing is not a ‘black and white’ issue.

Before the last election, Labor submitted its plans to the WA Treasury, which estimated the project would cost $863 million.

When the main contract was signed in October last year, it was valued at $753 million. After adding contingency, escalation and ancillary costs, the government said the total project budget for the main contract was estimated to be $1.1 billion.

That’s the figure Labor uses now. But in October, the government also disclosed a further $233 million would be spent on enabling works for the Morley Ellenbrook line.

This cost has been included in two related projects: the Bayswater station upgrade and the Tonkin Gap project.

Add that in and the overall cost comes to more than $1.3 billion.

CGM Communications executive director Daniel Smith, who ran Labor’s 2017 campaign, said two other infrastructure projects would attract more attention: the Westport proposal for a new harbour at Kwinana, and an advanced manufacturing hub in the South West.

“I expect both of these to gather momentum in the government’s second term and, along with the completion of Metronet projects, form a big part of their 2025 re-election pitch,” he said.

Mr Smith added Labor needed a continued focus on delivering local jobs.

“If Labor isn’t seen as having rolled up its sleeves and done everything it can to diversify the economy, boost local content and ensure local workers have the skills needed for the jobs that are available, they will be vulnerable,” he said.

Privatisation in reverse

The McGowan government has started reversing the long-term trend toward privatisation of government service delivery, and there is a good chance of more to follow.

This was an election promise four years ago, which Labor said would be delivered on when it was responsible to do so.

The biggest change was at Fiona Stanley Hospital, where three major contracts held by Serco were terminated, resulting in 650 workers moving into the public sector.

“[Appointing] Serco was clearly a mistake in the first place,” Mr McGowan said.

He cited a Public Accounts Committee report, drawing on Treasury advice, which concluded the awarding of contracts to Serco by the Barnett government was rushed, not transparent, and had some problems.

However, the change will cost an additional $8 million a year, on top of a one-off transition cost of $12.9 million, with Mr Kirkup describing it as a pro-union deal. Another change announced late last year was the transfer of Peel Health Campus back into government hands.

The premier said this would not add to costs, and that the differential between public and private hospitals was virtually non-existent.

He also said it would lead to operational improvements, as Peel was a feeder hospital.

“It does create a more efficient system if all the hospitals are under government control,” Mr McGowan said.

The Water Corporation, under the oversight of Water Minister Dave Kelly, a former union boss, has also reversed privatisation of services.

Three different contracts, provided by Programmed, Suez, and Broadspectrum have been scrapped, resulting in 450 workers moving in-house.

Asked if more private contracts could be withdrawn, the premier indicated that was a distinct possibility.

“If its economically responsible to do so,” Mr McGowan said.

“I think they all made sense.” One of the contributors to Labor’s election success in 2017 was its scare campaign against the Liberals’ proposed privatisation of Western Power.

In recent weeks it has sought to revive that campaign, despite Mr Kirkup stating categorically that he had no plans to privatise Western Power.

Labor has no qualms about this campaign, even though it privatised Synergy’s renewables portfolio and Landgate’s titles register, and tried to sell the TAB.

The premier claims all these are different, even the Landgate deal, which netted the government $1.4 billion.

“We didn’t outsource anyone’s job at Landgate, we commercialised the automated land titling system, which is basically a computer program,” Mr McGowan said.

In regard to the TAB, he said it was a betting agency and more appropriately in the hands of the big national operators so it could properly compete.

At Synergy, the government sold the Albany Grasmere wind farm and the Greenough River solar farm into a joint venture that also had the right to develop new renewables projects.

Once again, the premier claims this is different.

“We didn’t privatise anything, it’s not the same as Western Power,” he said.

“We’re happy to have the argument with the opposition.”

Budget management

The retirement of Treasurer Ben Wyatt presents another challenge for Labor.

Mr Wyatt has overseen repair of the state budget, which is considered one of the government’s big successes.

This task will get more challenging as the labour market tightens and public sector unions push harder for an end to wages restraint.

Mr McGowan insists his ministerial team will continue delivering.

“Ben has been terrific, he’s one of my closest friends and I’ve appreciated working with him,” the premier said.

“But good budget management is something the entire cabinet has put in place. Mr McGowan highlighted the work of the expenditure review committee, saying the government had proper processes to keep a tight control on spending.

“The evidence is there for all to see, so we will continue to have good budget management,” he said.

When pressed on the impact of losing a strong treasurer, Mr McGowan talked up his own contribution to the government’s fiscal achievements.

“He’s been great, but I’ve been pretty keen on it myself and I’m the premier,” he said.

He noted that Labor has submitted more than 430 election promises to WA Treasury for costing.

“We submit all of our election commitments to Treasury for costing,” the premier told Business News.

“The total cost is less than $2 billion.”

In contrast, the Liberals and Nationals have not submitted their commitments to Treasury and remain coy on how they will verify costings.

That has left the field open to Labor, which claims the Liberals’ and Nationals’ commitments will cost about $10 billion.

That’s not counting the Liberals’ ambitious Mid West renewable energy proposal.

“They are very risky, and very inexperienced and very dangerous for the state’s future,” Mr McGowan said.

Ministerial changes

There will be at least four new faces sitting around the cabinet table if Labor is re-elected.

As well as Mr Wyatt, Emergency Services Minister Fran Logan and Sports Minister Mick Murray are retiring at the election.

In addition, there will be a new speaker in the Legislative Assembly, with Local Government Minister David Templeman or Police Minister Michelle Roberts likely to take on the role.

The premier has refused to be drawn on speculation about who will fill the ministerial vacancies, saying it would be arrogant to consider this before the election result is known.

He has even refused to rule out the possibility he may take on the treasurer’s job, a highly unusual move in modern politics, given the demands of each job.

The more likely candidates are Deputy Premier and Health Minister Roger Cook, who may be up for a new challenge after his success dealing with COVID-19, or Planning Minister Rita Saffioti, who has extensive experience in economic policy.

Whichever minister takes over as treasurer, another big hole will need to be filled. Mr Smith believes Labor has enough talent to cope with the departures.

“The loss of Ben Wyatt is significant but in my engagement over the last four years, I have found that the government bats pretty deep, both in terms of its talent in cabinet and on the backbench,” Mr Smith said.

The new entrants to the ministry will include Morley MP Amber-Jade Sanderson (see table).

Amber-Jade Sanderson with Roger Cook and Mark McGowan after the Voluntary Assisted Dying legislation passed through parliament.

She has served the last four years as a parliamentary secretary to the premier, and cabinet secretary.

The latter role was revived by the premier four years ago, making Ms Sanderson arguably the most senior Labor MP outside the ministry.

Another new entrant to the ministry is expected to be Bunbury MP Don Punch.

The 64 year old brings a diverse background to the role, including a period as chief executive of the South West Development Commission.

Most importantly, he is backed by the Australian Manufacturing Workers’ Union, which is part of Labor’s dominant ‘broad left’ faction.

Don Punch. Photo: David Henry

Both Fran Logan and Mick Murray are also aligned with the ‘metalworkers’, so they are assured of getting at least one new minister.

A third new entrant is likely to be former TV reporter and media adviser Reece Whitby.

He is considered close to the premier, and Business News understands he will be the next sports minister.

Contenders for the fourth vacancy in the ministry include Perth MP John Carey, who has been a parliamentary secretary to both the premier and the minister for transport and planning.

East Metro MP Alanna Clohesy, who is aligned to the metalworkers, is another possibility, as is Armadale MP Tony Buti.