Thank you for the opportunity to contribute to the debate on this bill. The financial management of this government leaves much to be desired. Labor’s poor governance has had an adverse impact on hardworking South Australians struggling with a dramatic rise in the cost of living. The truth of the matter is that under Labor, South Australia is headed for financial disaster. There was a time when South Australia was seen as the commonwealth’s most progressive state.
A rising cost of living is a primary issue. Labor’s poor economic management is hurting families. I am sure that most taxpayers would be horrified to know that the state debt has been consistently rising since 2002. It was around $2 billion back then. This was early in the Rann government’s term and, notably, when the Hon. Mr Weatherill entered into parliament, straight into the ministry. State debt had come down under Liberal governments from over $11 billion in 1992‑93, its all-time peak around the time of the State Bank disaster.
Not since the ensuing financial crisis endured by hardworking South Australians has the public debt been as high as it is in 2012. Astoundingly, it is now back past $9 billion and is forecast to get back to $13 billion in 2015-16. It is frustrating to think that all the hard work the Brown, Olsen and Kerin governments did, particularly my colleague the Hon. Rob Lucas, to claw back the debt has now been for nothing.
Additionally, with the AAA credit rating gone—this is according to the Financial Review analysis—our increase in annual interest payments will be over $22 million per year. Just imagine what we could do with $22 million per year in regional communities alone. That is on top of the current $9 billion in debt. The Budget and Finance Committee was recently told that further costs would be incurred next year when a large chunk of the state’s $4.7 billion state debt came up for refinancing.
The Hon. Rob Lucas mentioned in the committee that it was clear that financial markets had lost confidence in the government’s ability to manage its budget and meet its savings targets, and it means that South Australian taxpayers are already paying higher interest rates on refinancing government debt as it falls due. The state paid $290 million of interest in 2008-09; it is now predicted to pay $705 million in the financial year 2014-15.
I wish it ended there, but South Australians will be staggered to know the full extent of the state’s financial concerns. Add the net state debt to unfunded WorkCover and superannuation liabilities, as well as other future capital spends such as the new RAH and Adelaide Oval, and by 2015-16 the total public debt will be around $27 billion. It is a Labor tradition to spend more than it earns. A deficit budget here and there and no-one seems to jump up and down too much, but one day we will wake up and see that the government credit card is maxed out at $27 billion.
In 2009-10 there was a surplus of $187 million. That was the election year. It is interesting that the only surplus the government could deliver in the six-year period happened to coincide with the state election. It is plain to see that this government is untrustworthy.
The Labor government has been blessed with opportunity. It had millions of dollars gifted to it in unbudgeted revenues. In 2002-03 to 2011-12 the government will have collected a massive $5 billion more than expected. Just imagine the mess we would be in if the Labor government had not been saved by unforeseen extraordinary revenues.
The government is directly responsible for the cost of living pressures many South Australians are now under. We are now the highest taxed state in the nation, and you would think that with such a high amount of tax coming in the government would have no problems paying its bills. The reality is that there is a flow-on effect of higher costs to households and families. Let us take a moment to examine some of the extra costs the current government has burdened the taxpayer with:
·$407 million in interest paid in 2011-12 for the superannuation liability, that is $11.9 billion unfunded;
·the extra $2.5 million interest per year due purely to the loss of our AAA credit rating;
·a 316 per cent increase to land tax under Labor governments;
·stamp duty charged at 27 per cent above the Australian average; and
·a trebling of the average water bill since 2002, including a 176 per cent increase since the desal plant was announced.
The list goes on.
I entered this place in 2002 and, from the outset, I stated my belief that small business was very much the engine room that drives the economy. It is the Liberal Party’s pledge to support small business; the same cannot be said about this Labor government. The business world is not immune to the flow-on effects of the high costs inflicted on it by Labor. We have the worst compensation scheme in Australia. WorkCover’s unfunded liability is around $1.15 billion. When the Liberal Party left office it was around $55 million.
More trading on public holidays has significantly increased wage costs for small business, particularly in hospitality. Labor collects about $1 billion in payroll tax per year. Of course it follows that business must recoup these costs, so the poor old consumer cops it again. Therefore, it should come as no surprise that South Australia has the worst real estate figures since 1985, the worst business confidence, the worst retail sales figures and the worst export performance and, to top it off, the world’s highest electricity prices.
When the Liberal Party came to office on 11 December 1993, superannuation for the Public Service was unfunded. The Liberal government designed a scheme to ensure that it would be fully funded by 2034. Under Labor it has now increased by over $8 billion to $11.9 billion. You could not be excused for failing to see the pattern here. Prudent financial management by pragmatic Liberal governments, followed by the excessive spending and failed administration by Labor governments. It seems that this has all caught up with the current government and, as a consequence, the state is suffering.
In the words of the Treasurer, the 2011-12 state budget had the lowest net spending on new initiatives in nearly a decade. Our spending is restrained. This all seems to be a common thread amongst Labor governments. Let us remind ourselves that the Rudd/Gillard government took a very healthy Future Fund of around $100 billion and turned it into a debt of over $200 billion, and it is rising by $100 million a day. Of course there is that unforgivable promise on the eve of the election: ‘There’ll be no carbon tax under a government I lead’.
The Queensland government had an $85 billion debt, a $2.1 billion deficit in one year on top of Ms Bligh’s broken promises. To turn back to South Australia, we are heading to a public debt comparable to the one absorbed by the state in crisis over the collapse of its bank and, sir, you guessed it, broken promises. Around the time of the last election the government pledged $450 million for the Adelaide Oval, and not a penny more. It is now $85 million more as the current taxpayer contribution is $535 million.
There is a trend associated with Labor governments: they run budget deficits, increase public debt and mislead the public. How deep does the rot run? The reality is that, after selling the Lotteries Commission and the forests, debt will continue to increase. Labor is selling assets when they promised they would not. We all remember the Mike Rann pledge card—no more privatisations. Sounds a bit like Anna Bligh’s pledge, and we all saw what happened when the voters got to applaud her government earlier this year.
The government has announced what it calls a combination of administration efficiencies within the South Australian Tourism Commission, where the commission will supposedly save $3.6 million over four years. It is hardly believable this can be achieved, given that it is on the back of the chief executive being removed from his job for budgeting reasons and the commission’s failed attempt to privatise Adelaide’s main travel centre.
The state’s health budget blowout of around $100 million has kept minister Hill very busy of late. After the Liberal government left office in 2002, health took only 25 per cent of the state budget. Now it takes 29 per cent. It is a commendable thing on which to spend money—around $4.6 billion this year—but the harsh reality is that, at the current rate of spending, in just two decades the whole state budget will be needed just to cover health, and it is clearly unsustainable.
Recent developments have shown that minister Hill has little respect for the long-held financial management traditions of the Westminster system. My colleague Liberal opposition leader Isobel Redmond has called on Premier Weatherill to sack health minister Hill. As she said, using public servants to pursue political ends during the caretaker period of government is a blatant breach of the ministerial code of conduct and the caretaker conventions.
Minister Hill was quite happy to admit to doing this. He told parliament the reason he had sought briefings from the Department of Health on the Liberal Party’s Royal Adelaide Hospital project during the caretaker period before the 2010 election was ‘blindingly obvious’: so that we could find out the cost of the propositions the Liberal Party were putting to the public of South Australia (that is from Hansard of 2 May 2012).
Premier Weatherill needs to reassure South Australians that he will not allow the Public Service to be politicised as we approach the 2014 election. Public servants are not an extension of his multimillion dollar army of spin doctors. Government funding of public servants for political purposes during an election campaign is another example of Labor’s scant regard for financial prudence. Honourable and competent governments have public servants operate at an arm’s length from political activity.
The future is grim. Labor’s policy platform needs to be funded. Given the disastrous size of the government’s debt and the announcement by the Treasurer in the Mid-Year Budget Review that the return to surplus would be pushed back until 2014-15, it seems the government needs to increase its revenue. The fact of the matter is that it already has. Unindexed, since the time the Liberal Party vacated the Treasury benches, state taxes have risen by over 85 per cent. Over the last year, every household would have noticed their water and power bills increase.
As an alternative government, we must dispel the falsehoods of this government’s record: that of mismanaged funds, South Australia being the highest taxed state in Australia, and the soaring high cost of living. Reportedly, we have electricity costs that are the third highest in the OECD and higher water costs than ever before.
People are taking more notice of a poor government in tough times. Being in office during an economic boom made this poor government look better than it truly was for most of its tenure. Now it seems that during an economic slowdown, the Labor government’s failings are becoming more and more evident.
When I entered politics, my dream was, and still is, for everyone to aspire to and be able to gain satisfying employment, thereby achieving their potential and living the lifestyle they wish. When the State Bank collapse happened, my first concern, as a small businessperson, was for my future and the future of those who worked with me. As an employer, I have always felt a responsibility towards my employees and I am acutely aware that any future success is only as a result of a team approach. As a businessperson at that time, I was concerned about the economic direction in which the state government was taking us. Interest rates of 18 per cent were a reality and I, like many others, feared for the long-term sustainability of my business. Ten years later, I continue to be deeply concerned.
When the government announced ‘100,000 new jobs for South Australia under Labor over the next six years’ in its election campaign in 2010, I was sceptical of its ability to deliver. This scepticism was well founded, as two years later we can see that fewer South Australians are working full-time. One may assume that this is why the government has felt the need to employ 20,000 additional public servants since the Liberals left office: 13,000 of those are employed outside core areas. Let us not forget that, by its own admission, the Labor government is borrowing to pay public sector wages.
Is the government trying to cushion the blow of its seemingly unattainable job creation target by having an excessively large Public Service? This is not to discount the work of our conscientious public workforce, but economic efficiency is what makes the world go round in modern times and the government should be leading by example in this area. Clearly, it is not.
Perhaps the greatest crime of the current government is that it is letting down future generations. What makes matters worse is that we have a rapidly ageing population. That means that the burden of funding services falls on fewer and fewer people. We have a responsibility to educate our kids. After all, it is our young people who will be charged with the responsibility of maintaining and enhancing a prosperous economy in a time of rapid change and challenge. They will need the skills in their tool bags to contribute to the economy and the community in which they live. Therefore, I propose that this government has let down the next generation on a number of counts.
It is a dark time for the South Australian education system. There is much that my colleague the shadow minister for education, David Pisoni, has said with regard to this matter. Much of this alluded to the government’s inability to use public funds in a way that would allow South Australia to keep up with other states in terms of increasing the funding of educational initiatives.
No-one can argue that a very important progressive tool is education, and therefore even the most conservative of thinkers would agree that good governance includes spending a significant amount of money on this portfolio. Having said that, the question of whether or not the current government is spending efficiently and making prudent decisions in this important area needs to be raised.
Much has been said about the introduction of the new SACE. Much of the ideology behind the implementation of the new SACE is questionable, and in a survey conducted by the private and public sector education unions, 88 per cent of participants did not think the new system was better, educationally, for students.
This is not the time to debate the pros and cons of the new SACE. What is important in this debate is to outline how much this hugely unpopular Labor initiative costs. The government spent about $70 million on the implementation of the new SACE. That is just a start. Other glaringly obvious examples of financial waste include: the Royal Adelaide Hospital blowout. Before the election it was going to cost $1.7 billion. The debt going on the books is now $2.8 billion, and apparently climbing. The project to pump the sand down to the southern beaches was announced as a 22 kilometre long pipe costing $17.6 million. It is now a nine kilometre pipe, costing $26 million. Labor’s initial forecast spend on Shared Services was $60 million. Recently this was reported to have reached $130 million spent on Shared Services, an agency that is shrouded by controversy and incompetence.
No-one can argue the fact that Liberal governments have been well-considered economic managers. The fundamentals of a sound economic system are good governance and decision-making. Basic economics says the benefits must outweigh the costs. We have had a decade of good times and all we seem to get is bad news. Labor does not even seem to know where its own priorities lie. A self-confessed green government, Labor has abolished the $11.7 million renewable energy fund. This carbon tax, the most expensive in the world, without doubt, will apply more pressure on the cost of living.
As current chair of the Select Committee on Department for Correctional Services and former shadow parliamentary secretary for police, I take a particular interest in the management of these portfolios and I do not like what I see. The government has decided in its wisdom that the recruitment of an additional 313 police officers will now be extended over a six-year period instead of a four-year period, saving the government more than $50 million in operating expenses. South Australians who have found themselves on the receiving end of a criminal act will certainly attest that this is money not well saved, whilst criminals will revel in the decreased likelihood that a police officer will be on the beat to catch them. This is not the area of the budget to look for savings.
Neither is the area of correctional services. We are now in the middle of a $5.7 million slashing of the correctional services budget over four years from the 2010 budget. I am sure that those in this place would agree that, once we catch the criminals we need to try, where possible, to provide counselling and rehabilitation, but when this fails the protection of innocent members of society must be paramount. Sadly, the prisons are already full and the government is using bandaid measures, such as shipping containers to create makeshift cells. Whilst I acknowledge that using old shipping containers may act as a good deterrent on potential offenders, it is a stopgap measure in place instead of a new prison facility which the system is in desperate need of.
This government has mismanaged its funds to such a level that it has had to slash spending in critical areas that compromise safety and confidence in the South Australian criminal justice system. There is so much waste in other areas that Labor cannot adequately protect its constituents by providing funding to the crucial departments of correctional services and police. When the government does initiate a promising idea, it does not seem to be done properly.
In the 2009 budget, the $557 million Mobilong prison project was scrapped. It was to include a $315 million, 760-bed men’s prison; a $40 million, 40-bed forensic mental health centre; and a $96 million, 150-bed women’s prison. Furthermore, even though the project did not go ahead, it still cost the government over $10 million in compensation to the three tenderers, even when there was no legal obligation to make the payment. This is a government that flippantly spends from the public’s purse.
In 2009, correctional services minister Koutsantonis announced an $18 million expansion of the Mount Gambier Prison for 116 beds, a sound initiative in light of my previous comments. Mr Koutsantonis has now announced a $23.9 million upgrade of the Mount Gambier Prison for 112 beds—$6 million more for four fewer beds. This further highlights the financial management incompetence of a government that has an announce and defend style.
The government tries to get a cheap headline and then needs to defend it when it cannot deliver. The Hon. Mr Koutsantonis often finds himself in tricky situations. He was caught out announcing more than his government could deliver when saying there will be no forced redundancies under the Holden assistance package. He then had to retract his exaggerated claims. Labor turns good news into bad news. The only ones who should be made redundant are the current Labor ministers.
All members bring with them their own particular background. I am proud to say that I am a Whyalla person. I was born and bred there and lived there for more than 37 years. Coming from a regional area, I feel I have some knowledge of the circumstances of those who live in those regions. Therefore I would like to take the opportunity to speak on some of the issues facing my constituents living outside the Adelaide metropolitan area.
In South Australia we are not surfing the wave of a mining boom. Western Australia is, Queensland is, and to a lesser extent New South Wales is. There is certainly potential for South Australia to go down the same track; however, the Labor government of the past decade has not taken advantage of the opportunities as well as the other states. The Western Australian and Queensland successes have meant that Australia is often referred to as a two-speed economy. The multiplier effect of a healthy mining industry is extensive. It can provide extra tax revenue to put into government services or, indeed, help pay off debt Labor has accumulated.
Of course, the mining boom has not arrived in South Australia. The industry has been growing steadily over the past few years, but its growth could have been much stronger. The South Australian Chamber of Mines and Energy argues that, if Port Bonython had been developed as a bulk commodities port, at least another four iron ore mines could have been operating. It is time for Labor to play its part in helping the state’s mining boom become a reality.
The case can be made for public funding to build a port, rail line, road upgrades or a desalination plant which will support income-producing businesses in regional areas and beyond for decades. Labor, under Rann and Foley, was firmly focused on maintaining its coveted AAA credit rating. They would always remind us of it as soon as they could not afford to do something they had promised to do. Indeed, they had the same excuse for cancelling the new prison in 2009. The government argued it did not have a financial role to play in providing infrastructure for the resources sector. Well, the AAA credit rating is history and we are still a relatively fledgling mining state.
A good government should be conservative in what it funds; however, supporting the resources sector is an obvious direction to take. Wise investment into a burgeoning industry is likely to lead to greater wealth in the public coffers through increased royalties. It makes good economic sense to those of us who aim to be progressive.
Where there is a gap between what is needed and what private business is willing to fund in these turbulent economic times, the government should be forward thinking in its policies with an eye to building infrastructure that can enhance prosperity in South Australia. Instead of being proactive in nurturing a mining boom, Labor has provided little vision in the regional mining sector and the wider South Australian community.
The primary industries sector in regional areas has also felt the brunt of poor fiscal management over the past decade. Several examples include:
·the lack of assistance in areas such as Murray Bridge and Jervois in not providing support to secure 120 regional jobs;
·the high dollar is hurting business, and we have seen the loss of South Australian dairies on the lower Murray swamps when there has been no water and no government support, I might add;
·the lack of control and mismanagement of branched broomrape in regional South Australia. We have seen 10 years of investment into this important program and $45 million: $2.6 million annually from the federal government, $1.9 million annually from the state government and, over that period, we have seen somewhere around $70 million of contributions made by primary producers to help combat this parasite. In the worst case scenario, a whole region of hundreds of thousands of acres in the Murraylands could become affected. This could have a drastic impact on South Australia’s primary agricultural and livestock industries’ viability. The government has announced that, despite this significant investment, the pests cannot be eradicated and is now in a transition to adopt risk management measures;
·$80 million is being taken out of agriculture over four years; and
·we have seen more costs imposed on regional industries such as fisheries and aquaculture and have not received a reasonable explanation of how they are derived.
I am as supportive of the Liberal Party’s plan to restore the South Australian economy as I was the first day I addressed this chamber. Our plan to rebuild jobs, reduce debt, to return to standards of excellence in community services such as health and education and to restore confidence in the institutions of government is as vital to the wellbeing of our state now as it was 10 years ago.
While experiencing the frustrations of opposition for a decade, I have tried to contribute positively to parliamentary debate. Largely, the Labor government have ignored the Liberals’ proposals. On occasion, Labor pilfered our good ideas and then mismanaged their implementation. To take desalination, it was initially a Liberal idea to build a 50-gigalitre desal plant that would supply 25 per cent of Adelaide’s water supply. The government fervently opposed it at the time, when we could have built it for about $400 million. By the time the drought took hold, they realised it was a popular policy, yet the same system would now cost $1.4 billion. The Labor government went from saying we did not need a desal plant at all to saying we needed one twice the size of the system we initially proposed.
Given our current position, a $400 million, 50-gigalitre water insurance policy by the Liberal Party holds up pretty well against a $2.2 billion project the government oversaw. It cost Labor more than five times the cost of the Liberal plan—and then it rained. One thing is for sure and that is that water ratepayers in South Australia will be the ones paying the total cost of the desal plant through a tripling of water prices.
The Hon. Mike Rann presided over the poor governance I have alluded to in this speech. Premier Weatherill gave former premier Rann a golden handshake of around $200,000, including a car, staff and a furnished office as well as an annual pension worth three-quarters of his former salary. Was this a sound financial decision? I think not. It seems we have a new Premier that will reward the old premier for his many failings. It seems this government may have gone from bad to worse.
The cost of living is something that affects us all. The financial pressures on our state’s community are growing and it is notably harder for its members to make ends meet. Whether it is in households or in the business sector, in regional areas or in metropolitan cities and suburbs, the cost of living is the most demanding challenge facing us today. State governments must aim to set the benchmark in undertaking prudent and effective financial management.
I have outlined a number of failings of this Labor government in providing sound financial management to all stakeholders in South Australia. Labor deficits, Labor debt and Labor’s broken promises have led to Labor’s failure to deliver the best platform possible on which all South Australians can prosper.