Government Whip in the Legislative Council

Liberal Member in the Parliament of South Australia




Appropriation Bill

Tuesday 22 September, 2015

 I rise to speak to the Appropriation Bill 2015, more commonly known as the budget that the Treasurer handed down on 18 June in another place with much fanfare and self-praise. The Treasurer talked a lot about the government's so-called tax reform, saying that it will create jobs. A tax reform cannot create jobs: business creates jobs and should be assisted in doing so by government. This is one thing Labor does not understand. The references the Treasurer made to the commonwealth failing to invest in our automotive industry suggests a fundamental misunderstanding of the role of government and a lack of wise management of public finances. The declaration that a few exemptions and a tinkering around the edges of Labor's business tax regime is the most comprehensive tax reform in this state's history is typical hyperbole and hubris from this Treasurer. To go on to say that the reform 'will build the enterprises that create careers' is simply embarrassing. How can levying taxes build an enterprise? Don't entrepreneurs build enterprises? The Treasurer goes on further to say that the government's tax reform stands our state out as a beacon for business investment. The bill has not even passed yet. The language is bizarre to say the least, but we would expect no less from this Treasurer. That result remains to be seen, and we will see whether this so-called tax reform makes any impact on our economy. I am perhaps being a touch unfair because any reduction in taxes is a move in the right direction, but I am here to say that the changes do not go far enough. Like the Treasurer, I would also like to see an efficient tax system; however, it seems that he is out of ideas on efficiency and ours are vastly different. I would like to see regressive business taxes such as payroll tax completely abolished. I would also like to see arbitrary taxes such as stamp duty completely abolished. These are manifestly harmful taxes on productivity and on aspirational economic activity. Where is the incentive to invest when the Labor government slugs you for taking a risk and parting with your hard earned cash? This is why I am extremely disappointed with the limitation on the government stamp duty exemptions solely to business transactions—but what about mums and dads? At a time when housing prices are at the highest they have ever been, why are we punishing working people further for doing the right thing by their family and purchasing or building a new home? The South Australian housing market and building industry is completely stagnant. Why are we not encouraging working South Australians and spurring on the economy in this way? The Treasurer and his friends who sit opposite may ask, 'Well, how do we afford it?' The answer is in the spending. We have seen insane increases in public sector spending, partly on wages but largely in unbudgeted spending, and budget blowouts on capital works projects. We learnt last week that the new Royal Adelaide Hospital has been further delayed by six months, costing the government a further $34.5 million on top of the $622 million blowout of the original budgeted figure. I agree with the Treasurer when he says that South Australia faces serious challenges. However, if the state's economic conditions are in the control of the government, the impact of currency exchange rates, commodity prices and commonwealth funding would be far less than what they have been. The government and the Treasurer have been far too quick to point the finger elsewhere for South Australia's economic woes when the blame lies squarely on the Labor Party. The economic mismanagement is plain to see in an example in the Treasurer's speech, when he refers to a surplus being delivered in next year's budget. How is this possible? We have just heard that the cost of the new hospital has blown out, we know that there has been no dramatic reduction in Public Service numbers, there has been increasing capital spending, and public debt is at the highest it has ever been. The answer is fudged accounting. If the numbers are moved around it is easy to invent an operating surplus, but the reality is that any surplus is servicing mounds of debt anyway, so there are no net benefits whatsoever to the South Australian taxpayer—which, in this state, is largely business and entrepreneurs, the very people government is meant to be assisting in this budget. The lack of credibility is palpable. Further regarding the government's proposals, it is interesting to see the Liberal Party's election commitment to abolish the Save the River Murray levy being adopted by the Treasurer. We commend him for that. As I mentioned earlier in this contribution, we on this side welcome all the reductions and exemptions from the burden of taxation for South Australians, but more can and should be done. The Treasurer talked about no tolls being an achievement for the Weatherill government. Is this an achievement or is it just short-sighted politics? I find it quite bizarre that the government would not seek to recover some of the capital outlay for massive infrastructure spends on the north-south corridor and port access when the logistics industry itself has said it is happy to pay for better infrastructure so long as it is built immediately. It seems a no-brainer. This is a win-win, as a toll would not affect passenger traffic. As the Treasurer mentioned, the opposition has worked with the government to implement real reform in the area of WorkCover, and I commend the Hon. Mr Lucas for his work on the bill. I agree with the Treasurer when he said that we can no longer rely on the commonwealth or others to sustain our industries, whether they be automotive or otherwise; in fact, we never should have in the first place. Inevitably, subsidies will run out, and the old business model will become unsustainable. Government subsidies create complacency in the industry. There is no doubt that government, whether state or commonwealth, should be supporting local manufacturers and producers wherever possible, and I would be the first to support a directive to preference purchasing of local goods and services for government contracts and needs. However, crude subsidies are simplistic and ultimately harmful to the economic prosperity of the businesses immediately affected and also the wider community. It is for this reason that I find it concerning the government is spending $15 million on the attraction of new business and the development of key industries. How about reducing the tax burden by a further $15 million? The government should be concerned only with the economic environment and not with individual businesses. If the economic environment in South Australia is so attractive for business already, why are there not hundreds of head offices of national and international companies here? Why would the government have to spend money on targeted assistance in order to attract those companies here? In today's global market, where companies can choose to base their head offices in jurisdictions which offer the best tax arrangements and lowest business costs yet continue to operate globally, why are we bothering with this? It is quite pathetic. It is akin to paying the kid next door to play with your son or daughter even though you know you do not have the best toys. Eventually the kid from next door will get bored; similarly, those interstate and international companies will find a better deal elsewhere once the money dries up. It is a very short-sighted economic policy. To me, this sort of policy only serves certain ministers, such as the Hon. Martin Hamilton-Smith and the Hon. Mr Bignell, allowing them to go on junkets under the guise of attracting foreign investment. I welcome the increase to the government's bid fund. This is something within the purview of the government and something that is important for the state's reputation on the world stage. I would like to see more international events being hosted here in Adelaide; however, I do not believe that the Minister for Recreation and Sport's Frankfurt stopover or his $100 bottle of Argentinian malbec got us any closer to this goal. According to the Treasurer, the government does not believe infrastructure investment is a false economy, as it leverages private sector spending. However, if the government is using public funded infrastructure projects as an example of job creation that is, indeed, misleading. These are not long-term jobs and, quite obviously, if a vast majority of construction in this state is as a result of public funding, this is artificially propping up the industry. Essentially it is a life support system. Publicfunded infrastructure spending is absolutely necessary, but should be kept within strict guidelines on a needs basis. Cost-benefit analyses are a must. This leads us to the commitment by this government of $1.3 billion to 'create jobs'. We understand, on this side, that it is indeed the private sector that creates real, sustainable long-term jobs. Over the forward estimates the government has committed $3.3 billion in health, which includes the new Royal Adelaide Hospital (although one wonders if it includes the blowout as well), $1.4 billion on road projects, $353 million on public transport, and $1.7 billion on water infrastructure. What is obvious is that, if public money was spent more wisely and efficiently, and if efforts were made in cost recovery, such as with selective tolls on roads to assist the industry in adhering to the findings of cost-benefit analysis, particularly with large projects such as the desalination plant, the state and its taxpayers will get much more bang for their buck. There is far too much wastage when it comes to public spending. As a bookend, if there is so much of an increase in spending for health, why can the Repat not be kept open, given the savings from the closure are reportedly only $14.2 million. To me it is totally mean-spirited. Finally, I criticise the government for spruiking its supposed increase in spending for justice of $85.1 million, while simultaneously closing suburban and regional magistrates courts, putting even more pressure on the Adelaide Magistrates Court, which is quite obviously counterproductive. To summarise, there are some steps in the right direction, but they are nowhere near far enough to have the economic jolt that South Australia desperately needs. However, as is convention, I commend the bill to the council.

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