SUPPLY BILL 2008

Second Reading

Adjourned debate on second reading.

(Continued from 1 April 2008. Page 2400.)

Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (12:49): I indicate from the outset that I will be speaking first as leader and shadow treasurer, but the lead speaker will be the shadow minister for finance who will follow me, so I am happy to be timed. This Supply Bill is before the house at a very important juncture in this state's economic development. It comes to the house after six of the best years this state has ever seen.

Revenues clearly demonstrate that the budget has grown from the vicinity of $8 billion a year to approaching $13 billion—soon more. It has been an extraordinary period of growth in revenues for this Labor government, built, of course, on the back of tough decisions made by the former Liberal government that had to sweep up the mess created by the current Premier and the Bannon government as a result of the State Bank collapse and the $11.5 billion of debt the state inherited in 1993-94. It was eight hard years, during which, frankly, some tough decisions had to be made. I have noted this government ripping itself to pieces over what to do in respect of WorkCover's unfunded liability.

It is probably having now a bit of an insight into the tough decisions we had to make when we were in government, trying to get rid of that $11.5 billion worth of debt—tough decisions about the sale of assets (such as ETSA) and tough decisions about the reform of the public sector, all necessary to ensure that, when we handed them over, the accounts were in good order in early 2002. In fact, they were in outstanding order. The budget papers clearly show that essentially this government inherited no debt to speak of and buoyant revenues. Frankly, it has been a breeze! As I have said before, I think that two gorillas in a VW could have run this Treasury and this economy over the past six years. You did not need to be Einstein. Billy the goose could have been the Treasurer—in fact, some might argue that Billy the goose has been!

To crow about balancing budgets in the past six years of buoyant times is almost laughable. It has been a breeze. Let me just take members through some of the main issues. Revenue collections have been simply extraordinary, with state finances continuing to benefit from the GST deal, which the Treasurer and the Premier opposed, which Labor did not want but which, of course, now, according to Standard and Poor's, along with the ETSA privatisation, has proven to be one of the greatest benefits to the state's balance sheet in its history. The Rann government is the highest-taxing government in the state's history. Taxes combined with GST payments and grants from the commonwealth make this the wealthiest government South Australia has ever had.

My friend, the shadow minister for finance, will go into more detail, but it is simply a striking amount of revenue, estimated to be close to $14 billion by 2011. Of course, the Treasurer will enjoy a cumulative $29 billion of additional revenue over and above what the Liberals had in the 2001-02 budget.

The Hon. K.O. Foley interjecting:

Mr HAMILTON-SMITH: It has been a great time to be Treasurer, that is my point. It could not have been easier. All the Treasurer had to do, in fact, was to keep his expenses under control over the past six years and watch the revenue grow. One could have built sound surpluses for structural reform.

The Hon. K.O. Foley interjecting:

Mr HAMILTON-SMITH: You have got disgraceful surpluses, Treasurer. A demonstration of how to do it properly was provided by Howard and Peter Costello where, with buoyant revenues, they kept their expenses under control and invested in funds for the future, thereby eliminating debt ($96 billion of it) and providing structural form options for the future, including tax reform and infrastructure. Had it kept its expenses under control over these past six years, the government would have now had a windfall surplus it could have used for tax reform, infrastructure, public sector reform and a range of other structural changes.

It has left itself without that flexibility by spending everything that came in. As the Auditor-General confirmed in his most recent report, it is a government with a budget where expenses are out of control, rescued by what he called (and I think I am quoting directly) 'windfall revenue gains'—windfall, unexpected gains, have saved the budget year after year. The surplus about which the Treasurer crows has been delivered by unexpected windfall gains. He knows that, and he is trying to present himself to the business community as a sound economic manager, which is a little like someone who has won lotto crowing about the fact that they will make the rent payment this month and meet the car instalment! They have won $1 million in Lotto, but they are going to pay their $300 a week rent. Aren't they great; aren't they fantastic! This is what we are dealing with.

I regret to say that some of the media have taken this line, accepted it and swallowed it. I say to them: look closely at the buoyant revenues this government has enjoyed and look at what could have been. Instead of having surpluses to deal with, instead of having a gap in cash between expenses and windfall, the Treasurer is now having to go out—

The Hon. K.O. Foley: What does a gap between cash and windfall mean?

Mr HAMILTON-SMITH: I will explain in a minute; just listen. The Treasurer is in deficit in two out of three budget measures—everyone knows that—and he has fiddled the books according to the Financial Review (I will mention that in a moment); but, instead of having money to play with for infrastructure, he is now having to go out and finance infrastructure for public-private partnerships in what will be shown to be complicated financing arrangements—which one very senior banker described to me as car financing deals—and we will finish up paying billions and billions more than the construction price for things like the Marjorie Jackson-Nelson Hospital over time as we pay it off until 2046.

The Hon. K.O. Foley: Why don't you get a briefing on it, mate: you don't know what you are talking about.

Mr HAMILTON-SMITH: It is funny you should mention that, because we have had a couple of briefings on it, and, do you know what your officers have done? Contradicted you.

The Hon. K.O. Foley interjecting:

Mr HAMILTON-SMITH: Yes, they have, as you will hear later. They have contradicted you, and they have exposed your lack of knowledge not only of PPPs but of how funding works. My colleague the shadow minister for finance (the lead speaker) will go into more detail on tax revenue and on revenue raising effort ratios where, as the Commonwealth Grants Commission has shown, we are levying our tax base more severely than any other state. It is a fact: we are levying our tax base more heavily than any other state. Look at the Commonwealth Grants Commission's own table. It is provided in our tax reform paper. Of course, in regard to payroll—

Members interjecting:

Mr HAMILTON-SMITH: Madam Deputy Speaker, can we just control the interjections so that we can hear what is going on?

The DEPUTY SPEAKER: Order! No interjections from either my right or my left.

Mr HAMILTON-SMITH: In regard to payroll tax, from 2001-02 to 2007-08 revenue was simply increased by 45 per cent. The Treasurer says that he has cut payroll tax; the facts seem to say something else. Over 9,000 South Australian businesses were liable to payroll tax in 2006-07; only 7,200 when he took over government. He talks about cutting taxes; of course, the facts tell otherwise. Look at property tax regimes and revenue. Look at the increase—96 per cent increase on taxes on property; 45 per cent on payroll tax; gambling taxes up 31 per cent; and taxes on insurance up 33 per cent. Wow! What a great time to be Treasurer. He needs to go and talk to Stephen Baker if he wants to know what it is like to be a Treasurer with true grit at a time—

The Hon. K.O. Foley interjecting:

Mr HAMILTON-SMITH: Well, the worst of it was straight after your $11.5 billion chaos. In fact, he could also go and talk to Rob Lucas. He might learn something from both of them. He would learn what it is like to be a treasurer when times are tough, when revenues are declining, when the previous government has handed you wreckage—that is what he would learn. He has had an easy job—the easiest job of any treasurer in this state's history. He has not been challenged, but he is being challenged now, because the forward projections are clearly indicating declining property revenues.

He is clearly in trouble. He has an infrastructure bill that he has to meet. He has revenues that are under challenge, not only from declining property revenues going forward but through shakeouts in the sharemarket, reduced returns on investment funds, and he has a range of other challenges which he is facing, not the least of which is reduced growth across the nation, the chance of the economy in other leading economies such as the US going into recession, and uncertain times ahead. Of course, all this in the two budgets leading up to the next state election.

What a shame for the people of South Australia that he did not have the foresight to provide more fully in the first six budgets when times were good. What a shame that we have now been left short. He may now have to increase taxes and administer cuts to spending that he might have been able to avoid if he had been a better Treasurer over the past six years when he had the buoyant revenues. It is very clear that, if these revenues contract he has got a problem; he is going to have a deficit.

I will not go on. I will leave that to my colleague the shadow minister for finance, who can go into the detail. I will say that we enter this Supply Bill debate in poor shape for the future, having been in good shape for six years, through no good work of this government; it simply inherited it all. It has not made the tough decisions and it has now left South Australians caught short.

As others on this side of the house will explain during the course of this supply debate, it could have been avoided. We could have more to show for the buoyant six years that we have just had. We could have more surety for the future, given the uncertainties we now face. This Supply Bill comes before the house at a time of uncertainty, and it is one that should focus the attention of all members.

Debate adjourned on motion of Mrs Geraghty.

[Sitting suspended from 13:01 to 14:00]