SOUTH AUSTRALIAN ECONOMY

Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (15:50): My question is to the Treasurer, given his answer to an earlier question. By how much will South Australia's GST revenue fall in 2008-09 and over each year of the forward estimates since the forecast made in the South Australian Mid-Year Budget Review? Yesterday the federal Treasurer said that falls in commonwealth revenue included a $10 billion fall in GST receipts over the forward estimates since the commonwealth Mid-Year Economic and Fiscal Outlook last November.

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (15:51): We noted that statement by the federal Treasurer, and we are discussing with the commonwealth and other states what the effect would be. We have roughly 8 per cent of the population share, so it is not difficult to work out what that number is.

The advice of my Treasury office about the volatility in consumer behaviour at present and the effect of the stimulatory packages that the commonwealth is putting into place mean that a month-by-month approach to this is not something in which I have a lot of confidence. For example, today we have heard that the Prime Minister has announced major stimulatory measures, including the provision of $950 to a large range of commonwealth card recipients, with whatever resulting consumer behaviour that might entice, together with the large stimulatory measures.

My understanding is that Treasurer Swan made the very obvious statement yesterday that finances, both in payroll tax receipts and general revenue received by the commonwealth, including GST, are substantially down on what they had themselves forecast in their mid-year review, which was the basis of our numbers. I can say that it is a significant further deterioration in GST receipts to this state, in the many tens of millions, and we will be maintaining very close contact with all state governments and the national government as we track that deterioration in terms of what it means to our budget bottom line.

It would also be wise to acknowledge that, as we see increases in unemployment, we will also see deterioration in payroll tax receipts and a deterioration in other receipts. Commodity prices are down. Western Australia, which shares up to 70 per cent (if not more) of its royalty revenue with the other states of the commonwealth, has forecast a very sharp decline in commodity-related royalties, and that will have an effect.

So, our state is under serious financial siege, in a sense, from what is occurring both domestically and globally. There is nothing the state government can do to insulate ourselves from the effects of a global economic and financial meltdown. I have been saying that to the parliament since the middle of last year, and I was criticised by many for alerting people to what is occurring but, as the leader himself saw, when he was in the same briefings and forums as me in New York, this is arguably the most significant financial meltdown that the world has ever seen.

I will share something from a meeting I had with the Deputy Governor of the Bank of England just last week. He is head of monetary policy; that is that Deputy Governor's portfolio. He said that senior officers of the Bank of England had been war-gaming or presenting for their internal analysis Armageddon approaches to what may occur in the British financial system. He said to us that no-one in their Armageddon scenario had predicted anything close to what is occurring and unfolding at present in Europe and the United Kingdom. These are the most extraordinary of times, and being able to give precise numbers on what we are losing in revenue at this stage is too difficult an exercise. Obviously, with the budget coming up in a few months' time we will make the best forecast possible.