APPROPRIATION BILL 2012

Second Reading

Adjourned debate on second reading.

(Continued from 31 May 2012.)

Mrs REDMOND (Heysen—Leader of the Opposition) (11:02): I indicate that I will be the lead speaker for the opposition in relation to this bill, which I recall when I moved the adjournment I described as an 'appalling budget' and, indeed, that was an accurate description.

On 31 May, Labor delivered its 11^th budget, belting South Australians around the ears for the 11^th time, only this time it is going to hurt a lot more with a history-making triple whammy—the state's highest ever debt, the state's highest ever deficit and the downgrading of the state's AAA credit rating.

The Hon. J.J. Snelling: You said you weren't too concerned about that.

Mrs REDMOND: Listen to what I say about that, Treasurer.

The SPEAKER: Order!

Mrs REDMOND: Labor's ability to break financial records is breathtaking. Its ability to sound like a broken record is also extraordinary, as it blames everyone and everything instead of taking a good hard look at itself. What a brilliant legacy Labor will leave! What a magnificent hook to hang your hat on, Premier Weatherill, and his amateur boxer of a Treasurer. What a great distraction that was on budget morning—let's go to the boxing ring. They are dragging this state to the edge of economic oblivion. Indeed, we may even go over the edge of that abyss before they are through.

This budget is a lesson in crash and burn economics, pure and simple. It has taught us what a spectacular failure looks like when a government refuses to grasp even the most basic of financial equations, that is, that to fix the bottom line you have to cut spending. It is a lesson they have been told over and over again by the Auditor-General since, I think, 2005-06, but this government just has not listened. Year after year, Labor has promised to do just that, and we have listened year after year as Labor has tried to spin its way out of the reality which is this: you cannot keep spending more than you earn. Not that this government earns it: they got it free. They expected to receive everything and they think that, if they could keep on going for long enough, everything would be alright in the end. That is why, for 10 years, they have been promising us this wonderful, magnificent mining boom. We all hope that occurs, but for 10 years this government has been relying on that happening and, thus far, it has not.

The proof is here for all of us to see. This year's predicted budget surplus—that is right, it was going to be a surplus—was $304 million. That is what they were telling us they were going to achieve—a budget surplus of $304 million. Instead of that, they have managed to turn that around into an $867 million deficit. That is a turnaround of $1.2 billion in our budget, in a few short years. In fact, they have budgeted for six deficits in seven years. The only surplus being—surprise, surprise—the election year. What a surprise! It would be over $1 billion more if it were not for some pretty clever creative accounting on the Adelaide Oval.

At the 2012-13 budget, there are deficits on all three measures. The one I have already mentioned is the net operating deficit, which is $867 million. They have got that one there because that sounds the best. The others are the cash deficit of $1,952 million in 2012-13 and the net lending deficit of $1,901 million in 2012-13.

Year after year, the Auditor-General, as I said, warned this government that it could not rely on revenues to continue coming in over the budget to rescue it from its spending addiction. So, way back in 2005-06, the Auditor-General said:

Given the forecast expectation that such revenue growth may not be sustained, control of expenses will be important.

That was six years ago and no-one in government listened. Instead, the rivers of GST and property tax gold were bled dry. Now, the forest will be sold, the lotteries will be sold. There will be nothing left and what they are actually going to leave us with is a $13 billion debt by 2015.

While that figure is horrifying enough, it is even worse when you think that, when we came out of office back in 2002-03 and they came in, we had that state debt down to $2.7 billion. So, they will have increased it by more than $10 billion in their 10 years. I keep saying that, when I am out in public talking about this issue, the fact is this government had all those rivers of gold running in. If they had just kept to their own budget, they should have had money in the bank to protect us against an economic downturn. They should have had money in the bank but, instead of that, they not only spent everything that was coming in but then more, and so we have got a debt.

Premier Weatherill, when will you say enough is enough? You cannot keep abusing this state's credit card. Can I remind you of the Treasurer's own words—and this was on his first day in this house as Treasurer? He said:

I will not allow this state to run up a credit card debt which [will be] left to our children to pay...

That is what he said on 8 February last year:

I will not allow this state to run up a credit card debt which [will be] left to our children to pay...

But, Treasurer Snelling, this is exactly what you have chosen to do. You have chosen to increase the debt because you say you do not want to punish the electorate. Treasurer, leave Parliament House, go out into the electorate and you will see they are already being punished every day, thanks to your addiction to borrowing.

What is more, they will be punished for years and years into the future and so will their children and so will their grandchildren. Remember, with that hospital which they are going to build and which we will start paying for in about 2016, the child who was 15 when they entered into the contract will be 50 and still paying off that debt when it comes around—$1.1 million a day of that debt. At some point those borrowings, that credit card debt, has to be paid off. Right now we can hardly afford the interest. It is approaching $2.3 million a day and that does not include the $1.1 million a day that will be added to it once we have this new hospital built.

Imagine what the state could do. I hear the gasps when I go around the state and I am out in the regions and the suburbs talking to people. Even when I say the figure is $2 million a day, I say to them, 'Imagine how this state would look after just one year of those interest payments if, instead of paying interest on a debt we should not have, we were able to go out and say, 'Here Mount Gambier, have $2 million; here Port Pirie, have $2 million; here Salisbury, have $2 million; here Playford, have $2 million' day upon day upon day.' That is the position we should be in, and instead of that we are going to have to pay it in interest on a debt we should not have. Imagine the better transport, the better hospitals, the better policing we could have—

Members interjecting:

The SPEAKER: Order!

Mrs REDMOND: The cold, hard reality is that this state is going to be crippled by a debt that you have given us. Thanks to this government, we will carry that debt for years and years.

Mr Pengilly: Can't deny it.

Mrs REDMOND: No, they cannot deny it. South Australians are much smarter than you think they are. They are already feeling the pain and they know that you are making it worse. Listen to the lines that are being peddled out of the Labor government regarding the AAA—talk about double speak! Do you want the AAA or not? The messages have been mixed for months depending on what suits you on the day.

Former treasurer Kevin Foley was very clear about what he thought would happen to this state if the AAA was lost. Back in November 2011, he said, 'It would send our state spiralling down into an abyss of debt.' Then, last September, Treasurer Snelling, our shadow-boxing Treasurer, said this. His exact words were, 'We are committed to make sure we retain the AAA credit rating,' and why would you not be when you consider what the loss of the AAA has cost other states.

It is going to cost Queensland $200 million a year and New South Wales $375 million a year, but Treasurer Snelling's commitment did not even last 10 months, and now his change of tune is, and I quote again from what Treasurer Snelling said on 1 June this year, just a couple of weeks ago:

I always said if I was confronted with a choice between our historic once-in-a-lifetime infrastructure renewal and the AAA credit rating, I'd choose the former.

Well, he had not always said that; he had never said it before, I do not think. But we are not getting any once-in-a-generation infrastructure renewal. We have trains that we are not going to have going into service, water pipes are bursting regularly so that we have massive problems with our water infrastructure, and we are even borrowing the money to pay the wages. That is what the money is being used for. That does not sound like a once-in-a-lifetime infrastructure renewal; and you only need to look at the construction site of the new Adelaide hospital and the dreadful mess of the once beautiful Adelaide Oval to wonder what on earth is going on.

According to the Financial Review, this AAA downgrade will cost the taxpayers over $22 million in extra interest per year, and that is only part of the debt; but remember, this Treasurer seems to suggest it is only $2 million or $3 million, not $22 million a year. That is what the Financial Review says but not what the Treasurer says.

Treasurer Snelling recently misquoted me as saying that I was not too concerned about the AAA, but sadly the Treasurer must be a little hard of hearing because what I actually said was, 'If'—that is a big 'if—'all'—a big 'all'—'the other indicators are good it may not be pivotal'. I said, 'If all the other indicators are good,' but in this state not one of the indicators is good. We have high debt—the highest ever. We have a high deficit. We have high youth unemployment—now something like 32 per cent.

We have high uncertainty. Oh, and do not forget that you have given us the highest taxes of any state and a complete lack of fiscal responsibility evidenced by your own Auditor-General year upon year telling you that you had to rein in spending and you kept ignoring him. May I suggest that you contemplate the financial disaster engulfing European countries and their worrying similarities to our state. The lessons are all there to be learned, but Premier Weatherill and his Treasurer have decided to disregard them, setting our state on very much the same course—a very slippery slope.

There is at least a one-third likelihood that we could further lower our long-term rating on South Australia within the next six to 12 months, according to Standard & Poor's. That is further from the downgrade we have already had. What this Labor government has done to our economy is unbelievable. Your budget claims that it involves some tough choices, but it is nothing but hollow rhetoric. Where are they? You have tinkered around the edges and nothing more. Your budget's theme of strong foundations and a stronger future is just rhetoric. Your budget's punt on GST and other revenues picking up is a pipe dream and nothing more. Indeed, there is nothing to suggest anything other than some very grim times ahead.

On the issue of jobs, Treasurer Snelling, of course, has told us that he is now happy to sacrifice our AAA credit rating for more jobs. As for this 'jobs, jobs, jobs' mantra, where do you think they are going to come from? Former premier Rann—does everyone remember former premier Rann?—just before the last election he promised 100,000 new jobs? Of course now, what do we have? We have 20,000 fewer full-time jobs in our economy than we had when that promise was made—20,000 fewer. We are going backwards, not climbing the ladder of more jobs. Where are they going to come from, Treasurer and Premier?

They certainly will not be coming from small business, which is on its knees thanks to the relentless rise of taxes and charges. Indeed, the government's abolition of the payroll tax exemption for apprentices and trainees means businesses will pay up to $1,440 extra per apprentice. Remember this all came about because prior to the last election we had a situation where people received an exemption or a rebate of 80 per cent of the payroll tax that they paid for apprentices and trainees.

We did some costing and said, 'Okay, what we'll do is remove a lot of that red tape and we'll make it a 100 per cent rebate and therefore you don't even need to include them in that anymore.' So by getting rid of the red tape there will be this benefit for apprentices and trainees. Just before the last election the government said, 'Yes, me too; me too'—a la Kevin Rudd—'it is an excellent policy, we'll copy it.' So they did, they copied it and introduced it for one year and now they have abolished it. What sort of sleight of hand does this government think they can get away with without the people of this state and the businesses of this state recognising what they are doing?

So your jobs will not be coming from manufacturing, which has failed to attract any support from government. In fact, manufacturing, farming and fishing as a sector in South Australia had more jobs 27 years ago than it has now. The perfect example of government disinterest in manufacturing was Innovate SA, launched with all the usual bells and whistles but then funding was axed. How does that decision support business in South Australia? They certainly will not get new jobs from the housing industry where the real estate market is worse than it was in 1985. Prices have plummeted and the government knows that the real estate market is in severe trouble.

As for stamp duty, last year the government was predicting that this year it would get $1 billion in stamp duty but the budget papers just released indicate that they have lowered that to $708 million; that is a reduction of $292 million in stamp duty that the government was expecting. So the figures in their own budget tell the truth about the real estate sector. I know from talking to people in that sector that things are very tough indeed, so you are not going to get more jobs in that sector and, hence, not in the housing sector.

The jobs may not come from the mining area with storm clouds looming on the Olympic Dam horizon. Again, the much-trumpeted growth in jobs in the mining sector is negated by the figures which show that there has been a growth of only 1,400 jobs in the last 26 years, compared with 64,000 jobs in Queensland and 104,000 jobs in Western Australia. So there certainly are jobs in the mining sector, just not in this state.

Perhaps Treasurer Snelling has an economic lamp he can rub and they will instantly appear and a fiscal genie will jump out and maybe question his 1,000 job cuts to the Public Service. The growth of the public sector has ballooned since Labor took office in 2002 by 20,000 jobs. Just in the last few years they have gone up, even though we have had economic clouds since the global financial crisis—

An honourable member: What do they all do?

Mrs REDMOND: We know there are lots of them doing lots of things. I was in Rundle Mall the other day and there were 14 people apparently from the Natural Resources Management Board entertaining kids from schools but no-one is dealing with the dingoes coming down south of the dog fence, no-one is dealing with the rabbits and the foxes and the pest plants. That is what they were set up to deal with, but we had 14 people under the canopy in Rundle Mall.

Even in these last couple of years since the global financial crisis, we have gone from 84,625 public servants to 86,888 in 2011-12. Again, I quote from treasurer Foley—sometimes people look better in hindsight when you have a new comparison—who said, 'There is no question that the blowout in expenses is a problem.' Hello!

May I remind you that the state is still borrowing to pay Public Service wages, and it will be for years to come. Minister O'Brien—your minister O'Brien—in 2010 said, 'We are actually having to borrow to pay wages. That is unsustainable in the long term.' Hello! It is clear that these people have never run a business.

Consider this alongside the post-budget news that Labor has doubled the amount of money it has paid to consultants and contractors in the past financial year—$445.7 million to consultants and contractors. That is extraordinary, when you think that these people are paid so much now. Remember, I had an FOI not long ago that indicated that in the last year, in the Department of the Premier and Cabinet alone—just that department, and they basically are not running the health system or the education system—there were seven people paid in excess of $300,000. To do what, when the consultants and contractors are having to take all the decisions so that the public servants can say, 'It's not our responsibility.'?

The hypocrisy of this government beggars belief. On the one hand the people of South Australia—the hard-working small businesses (you don't know about those), the struggling families (you don't know about those), young people and pensioners—are forced to cop higher prices and charges, while on the other the Premier maintains this team of high-end public servants who cost taxpayers in excess of $2 million.

There are many, many hard-working public servants out there, but what justifies seven people in the Department of the Premier and Cabinet earning in excess of $300,000? That is more than the Premier, and for what? What do we get for it? The money spent on those seven alone could fund the Keith hospital for the next six years, and Premier Weatherill and this government think they are in touch. To me, this shows an incredible and arrogant lack of accountability. It is ignorance or economic stupidity, or perhaps—and I fear this—a combination of both.

Treasurer Snelling, in the real world—that is, the private enterprise world—there are no jobs. Read your own figures: jobs growth is forecast to be 0.5 per cent; youth unemployment, as I have already mentioned, 32 per cent. You have promised jobs before: 100,000 jobs over six years, which was a core election promise, and instead we have gone backwards. Your own forward estimates show there will be less than two-thirds of that, and that is assuming Olympic Dam proceeds on its original timetable, which is certainly looking less likely at the moment.

Jobs growth is running at a much slower pace than the rest of the country, and our young people are running at full strength across the border to find work. We now have more than twice as many people migrating interstate compared to the previous Liberal government's term, and the reason is they cannot see a future here under a Labor government. So, when you say the AAA might have gone but it is suddenly and bizarrely okay because we will have jobs instead, do you really expect South Australians to believe you?

Let us look at families, the people forgotten by Labor. If you drive a car, catch a bus, use water, pay insurance, have children at school—basically, if you live in South Australia—then you are worse off under this budget than ever before. Just ask Treasurer Snelling's wife, who only a fortnight ago on budget eve said, 'My two daughters catch the bus each morning and they have been having a lot of trouble with buses not coming and buses being late.'

Mr Williams: Don't you talk to her, Jack? Doesn't she give you some advice?

Mrs REDMOND: We know that he must talk to her, at least occasionally. Not only will that not be fixed; commuters are going to pay more for a deteriorating service. If you live in the western or northern suburbs and rely on the QEH or the Modbury Hospital there is no good news, because the government has deferred or scrapped planned redevelopments, which would have meant more beds and better inpatient facilities. The future survival of these hospitals is now in doubt.

Can I take you back to when you guys came into government. When this Labor government came in, remember the Menadue report? They employed a guy called John Menadue, who came over from interstate to say, 'This is how we are going to fix our state health.' What did he say? Fundamentally, his report said, 'Look, you can't go spending all this money on acute care hospitals. What you've got to do is put the money into primary health care.' So, what has this government done? It has blown the budget building a new hospital instead—more money into acute care, instead of primary health care, which is where it is needed.

If you use trains, the electrification of the Gawler and Outer Harbor lines has been suspended. If you use the O-Bahn, planned parking has been delayed. If you live at Port Adelaide, Semaphore or West Lakes, forget about the tram extension: it is not going to happen. Yet again, a promise to get the headline, but an absolute failure to follow through. Labor needs to face the inconvenient truth: the cost of living is skyrocketing in this state. Electricity prices here are set to become the highest in the world—we have already had that report that showed that we are the third highest in the world—and, of course, we have a bullet to number one once we have a carbon tax, which is starting in less than a month. Gas prices are up by 79 per cent. We already have the nation's highest capital city water charges. Since the desalination plant was announced, the average household will pay almost an extra $3,000 in water charges.

Let me address this matter of water for a moment, this cash cow that Labor keeps milking. Labor's unnecessary doubling of the $2.2 billion desalination plant means that households will continue to be slugged. Can I remind everyone what the cost would have been if we had got them to agree to this 50 gigalitre desalination plant when we first proposed it? A number of us went to Western Australia, and we asked them specifically, 'How much would it cost to build that if we signed the contract now?', and it was $450 million.

This government said no to a desalination plant for the best part of two years, and then it did a double backflip pike and somersault with reverse, and we are going to have a double-sized desalination plant of 100 gigalitres. The Productivity Commission has said that we will never need more than a 50-gigalitre plant, but we are spending all of that extra money to get it. The result is that we are now, after all of this time, up to $2.2 billion. Water bills have already trebled. They have risen by 176 per cent since the desal plant was announced and, after the one-off concession is paid (and 'one-off' is a big note in there), the annual household water bill will still increase by 14 per cent, and the tricky thing, and the devil in the detail, is that there is a concession of 'up to' $75—and, as I said, it is a one-off. So, from 13 July next year, consumers will be slugged again when the concession is gone and next year's hikes are factored in.

Further, and to add insult to injury, water users will pay an extra $135 a year because Labor chose to make the desal plant carbon neutral. Remember Mike Rann promising that it was going to be only green energy? The remarkable thing is that I had asked the very question about this when I was over in Perth because they made the same payment. I said, 'How do you that?', because unless you build a purpose-built wind farm or solar farm to provide the power, you cannot actually claim that it is green energy because you produce energy from whatever sources, it goes into the grid and it is pushed out of the grid at the other end. Arguing that this plant is powered by green energy is simply a way of paying more for the energy that goes into it.

It is like arguing that you put a bucket of red-dyed water into one end of a swimming pool and you go to the other end and pull out a bucket of water and say, 'There's my red-dyed water.' It just does not work that way. Once it goes into the grid, it is electricity. What we are going to do is make people pay $135 a year extra because Mike Rann wanted to have green credentials and say, 'This is green energy.' Finally, the $328 million federal grant to double the desal plant has effectively been neutralised because we have lost about that amount in GST revenue in exchange for it.

Then, in the ultimate act of deception, on 31 May, when this budget was being brought down, the government tried to slip through 328 pages of increased fees. The government trumpeted no new taxes, but it did not mention the 328 new fees that will hurt families and households even more, including rises in licence fees for plumbers, gasfitters and electricians; rises in car registration fees and driver's licences; rises in learner and P-plate driving tests; rises in real estate fees. Would you not think that, of all the things you would not want to attack at the moment, real estate fees might be an area where you would want to try to keep the fees a bit lower? But, no, the government is putting them up.

There are rises in occupational health, safety and welfare fees; every one of those they tried to slip under the radar when no-one was looking. So, when the final sums are done, the cost of living will rise by an average of $1,000 per family. More strain and more pain! Of course, that is before we factor in the impact of the carbon tax, which is supported by Premier Weatherill. This will have severe ramifications for families and businesses.

State Treasury modelling shows that South Australia will have 1,500 fewer jobs and $155 million less in economic output next year, solely due to the carbon tax. The carbon tax will contribute $150 to the $340 increase in average power bills next year. A quarter of all consumer price increases will be because of the carbon tax. That is just on the things the government directly controls. We know that councils are having to factor in the carbon tax to their rates, so people's rates will also be hit. We went up to visit Tea Tree Gully, and the Tea Tree Gully council told us about the money it is having to factor into its budget. The Treasurer says—

Members interjecting:

Mrs REDMOND: They think it is funny. They think it is a laughing matter that families will have to find all this extra money to cope with their abysmal economic management for 10 years. The Treasurer says, 'The impact of the carbon tax on the state Budget will be $10 million.' How do you arrive at that, when Victoria says it will cost them an extra $660 million? One council alone is predicting a jump here of $1 million in its budget, and that has to be recouped from somewhere. All this sits alongside the fact that under Labor South Australia has become the highest taxed state in the nation.

Land tax is levied at 40 per cent above the national average. It is the worst of all the states, and it is quadrupling under Labor. I say again—and I have mentioned it before in this chamber—I had a gentleman come into my electorate office who spent his entire working life building up a portfolio of property in this state totalling $15 million; rental properties he rented out to people in our community. He was selling every bit of that portfolio and moving to another state just because of land tax. He said, 'You know, I can't actually hold these properties here'.

He said, 'The first six months of every year's rent goes just to pay the land tax. I still then have to pay the council rates; I still have to pay the maintenance; I still have to pay the insurance and all those other costs.' He said, 'I'm lucky if I make one or two weeks' profit out of the whole year's rental—that's all the return I am left with myself.' He said that he could not afford to stay in this state; he was selling the whole lot. He is not the only one; indeed, the former Treasurer, I seem to recall, had an investment property interstate.

So, land tax is levied at 40 per cent above the national average, and the worst of all the Australian states. Stamp duty is levied at 27 per cent above the national average, and again it is the worst of all the states. Insurance tax is levied at 53 per cent above the national average, and again it is the worst of all the states. So, the tax comes in and the money goes out: it is a simple equation if you have it under control, but in the hands of Premier Weatherill and this Labor government they have lost control of their spending. Let us be clear here: it is actually the taxpayers' dollars they are spending. There are examples of waste everywhere.

Remember, they cancelled the Newport Quays contract. It became a slightly inconvenient contract during a certain by-election, so they cancelled that. They cancelled it a matter of days after they had renewed it. Of course, if you chose not to renew the contract there is no penalty, but when you cancel it just after you have renewed it there is $5.9 million—nearly $6 million—in penalty. That may not be the end of it, but that was the minimum fee.

Mr Venning interjecting:

Mrs REDMOND: It is absolutely true, member for Schubert. Also $5 million to pay Marathon Resources after declaring Arkaroola a no-mining zone—again, part of what Premier Rann wanted to have as his legacy in this state. I have read the affidavit about minister Koutsantonis and where he was in Western Australia and who said what to him: he's got his head down now, because I know what's in that affidavit.

An honourable member interjecting:

The Hon. A. Koutsantonis: You've read it, have you?

Mrs REDMOND: The fact is—we've all read it.

Members interjecting:

The SPEAKER: Order!

An honourable member: It said you were out of the loop.

Mrs REDMOND: Yes; so the Premier didn't trust you. Can I make it very clear: Marathon Resources did nothing wrong. They just did what they were entitled to do. We actually came to a conclusion that we could stop mining in Arkaroola with no cost, and we had announced it months and months earlier, but then suddenly Mike Rann decided that he was leaving and he had better have a legacy and that legacy was going to be to stop mining in Arkaroola for the cost of another $5 million.

What about the prisons project? Remember the prisons PPP? I am sure the member for Hammond remembers the prisons PPP. That only cost us $10 million to cancel. What about Mike Rann's farewell and the other perks we gave him? It is a small matter by comparison—only a couple of hundred thousand dollars—but it is a couple of hundred thousand dollars I am sure the people of Keith would appreciate for their hospital. But no, we spent it on Mike Rann. Does anyone remember Puglia?

Mr Williams: Who could forget it?

Mrs REDMOND: Who could forget that? Or the thinkers in residence or the Integrated Design Commission, which have now been cancelled, of course. We have spent a fair bit of money on those over the years. What about the $168 million we are already spending on media and spin services over three years, and the government is now out there tendering for more? Of course, we do not know what the cost of some of their other stuff-ups will have been. What about the million dollars of printer cartridges bought by government departments at inflated prices in exchange for personal benefits?

Then consider the money pit known as the new RAH. The new RAH—I have already mentioned it and I will mention it again before I am through—will cost us $1.1 million a day for 30 years, on top of all the other debt we have, once this building is built. It is just for the building—

Mr Williams: And that is just for the building.

Mrs REDMOND: No doctors and nurses. No, we have to—

Mr Williams: The minister is trying to make out it was everything.

Mrs REDMOND: Well, it is the building. It is maintained and it is cleaned, and by—

Mr Williams: Yes, but it has nothing to do with the doctors and nurses and equipment.

Mrs REDMOND: No, and remember this building was going to be supplied for $1.7 billion before the last election. It is now $2.8 billion; that is according to the current figures. I would like to see what it actually turns out to be. It will cost us $1.1 million a day for 30 years. What about the shared services plan? Shared services, there was a—

Mr Williams: That is a doozy, that one.

Mrs REDMOND: Yes. They thought they would save money, even though Western Australia had already come to their senses and said, 'Hey, this is not the right way to go,' but did we cancel it? No. We went down that path anyway—a human resources and administration arm of 2,300 staff called Shared Services SA. The aim is to save $60 million a year, but it has turned into another bungled project. The costs have blown out from $60 million to $128 million and counting, and the Auditor-General has found a savings shortfall of $93 million over the forward estimates. That is a $93 million shortfall in their savings, having spent an extra $68 million so far. It is extraordinary.

That is not the end of our debt and deficit story, of course. In 2001, our unfunded superannuation liability stood at $3.2 billion. Guess what? It has blown out. It was $3.2 billion, but try trebling that. It is now $11.9 billion. We have the nation's worst performing workers compensation system. Is it any wonder businesses are struggling here? We have some of the highest levies and the lowest return-to-work rate of any workers compensation system in the nation. Industry premiums are still among the highest in the nation, and the total workers compensation unfunded liability is over $1.5 billion. We had that down to $56 or $59 million.

Mr Williams: $50,000 or $60,000.

Mrs REDMOND: —million—before the last election. We had it all the way down to $56 or $59 million, and now it is $1.5 billion. Labor has enjoyed seven of the best years this state has ever seen, not due to anything it has done—far from it—but from the rivers of gold I mentioned before from the GST flowing in unbounded amounts, from the property taxes that were flowing in because of the boom. But instead of putting some of that away, as I said, for the tough times, it just spent like there was no tomorrow. It spent well beyond its budget and then some, hence we have a debt. This type of reckless spending has now come home to roost, and the amateur boxing Treasurer has this state down for the count on every economic indicator.

The Hon. J.J. Snelling: If only I was an amateur boxer!

Mrs REDMOND: Indeed—well, we could see that you weren't!

Members interjecting:

The SPEAKER: Order!

Mrs REDMOND: Indeed, the Treasurer's budget has failed on three main counts: honesty, competence and sustainability. Honesty: fail; competence: fail; sustainability: fail. It has led to our domestic economic growth falling so far behind the rest of Australia that we are at risk of becoming irrelevant. Already, national growth is seven times faster than it is here in South Australia—seven times faster.

For too long, Labor has taken the ultimate high-risk punt, gambling it can keep on borrowing until times improve. They are hoping for the mining boom to rescue them, but they may find that that is now further away than ever before. Labor has let state debt—

The Hon. A. Koutsantonis: Keep on talking down mining. Keep on talking it down.

Mrs REDMOND: Minister Koutsantonis, we have never talked the mining industry down. We have never talked the mining industry down in this state. We have supported every opportunity for mining, but we have never managed this state relying on what might be in the future. That is what this government has done. Labor has let state debt become a financial cancer that, left unchecked, has spread through all sectors of our economy. Under Labor, our budget position has deteriorated so quickly it makes it almost impossible to predict what is coming next.

The Liberal Party knows that there will not be much money lying around. We do not know how many dollars there will be in the Treasury wallet, but I fear it might be just the small change on the dressing table.

An honourable member interjecting:

Mrs REDMOND: Yes, a credit card that has already blown its limit. It is nigh on impossible to begin imagining what the state's finances will look like in March 2014 when we next go to the polls. The financial facts and figures coming from Labor are rubbery at best, and of course we will not know until the Mid-Year Budget Review immediately prior to the election in December 2013—or they might put it off until January 2014. Can I remind you that three years ago they were predicting that this year we would have a surplus of $424 million. For next year, as I already mentioned, they were predicting a $304 million surplus, and now it is an $867 million deficit.

We on this side have always been responsible economic managers, so we know we cannot go to the next election with our pockets full of promises. We have long been regarded as the party of strong, sensible financial control. We have always rejected the flashy extravagance of Labor, but we do know also that there has been a drastic decline in our finances, as evidenced by the loss of the AAA, the record debt and the record deficit.

The Liberal Party, if it wins government in 2014, will immediately establish an audit commission. The aims of this commission will be to return to a sustainable budget surplus, to lower debt, to restore, again, the AAA, and to provide cost-effective service delivery. We will use external experts to undertake the audit and in a major point of difference from the Labor government, we will do it properly. We will do it properly. We all know former treasurer Foley established a sustainable budget commission after he had been treasurer for seven years and should have been able to do the work through Treasury. Of course, like most economic initiatives Labor has turned its hand to, it failed dismally.

We are coming in with a fresh set of eyes and it is imperative that we are able to address these figures as quickly as we can. By restoring the state's finances to a sustainable position, we will then be able to address cost of living issues. We recognise that for this state to succeed, private enterprise needs to succeed. That seems to be something lost on this Labor government. Again, we are ready to fix up a Labor mess. We did it before, after the State Bank debacle, rescuing the state from economic oblivion and helping restore the AAA credit rating in the process.

It has taken Labor only 10 years to lose that and everything else the state had. A Redmond Liberal government is not afraid of the hard work ahead. We know that for the sake of this state's future we have to get it back on a sound economic footing. We understand that to have a sustainable economy that can provide a sustainable social justice policy, a sustainable arts policy, a sustainable environmental policy, we have to have a sound economy where people have the confidence to grow their business, to employ people and to build the state. Private enterprise, and the success of private enterprise, is the key to our success, but Labor just does not understand that. It thinks you can spend money without realising that when you break the back of private enterprise there is no money to spend. What a Redmond Liberal government will do is be honest, accountable and open to scrutiny. As I said, we know how to fix a Labor mess, we have done it all before, we have had to.

Part of this economic responsibility will be announcing policies on our time line, not anyone else's, and they will be considered, not rushed. We will not be put under pressure by the media or government, that would be irresponsible and reckless and South Australians have had more than enough of that. The Liberal Party looks forward to offering the people of this state a truly credible alternative government.

Ms BETTISON (Ramsay) (11:45): I rise today to speak on the 2012-13 Appropriation Bill, a bill that will enable the government to provide the training and skills needed in our changing economy. This is a budget that recognises that while there is an uncertain global outlook, the South Australian economy is well placed for a bright future. This is a budget that has the balance right, by making some tough decisions, while supporting those South Australians that need it most.

This budget also recognises that there is good news for South Australia's future, with record infrastructure programs, historically low unemployment and huge investments in the pipeline. The South Australia of tomorrow will be a very different place from what it is now. Olympic Dam will be exporting a wealth of copper, gold and uranium, we will have Australia's most advanced hospital and the Future Submarine Project—the largest nation-building project since the Snowy Mountains scheme—will make South Australia an even more prosperous place.

The outlook for South Australia's economy is strong, with economic growth of 2.75 per cent forecast for 2012-13. An enormous $109 billion worth of projects are underway or in the pipeline in both government and private investment, and mineral exports in March 2012 totalled $4 billion, which is four times greater than a decade ago. Our unemployment rate of 5.2 per cent is very low compared with unemployment rates around the world. I am glad to see the government has kept this low figure in mind as it has looked toward the skills and training reform needed to meet the needs of our changing economy and labour market.

I was pleased to see that the budget this year acknowledges the skills shortage our state faces in the mining, engineering, defence and transport industries. There are between 25,000 and 30,000 expected vacancies within the next five years as our state's new industries expand. The new state-of-the-art Mining and Engineering Industry Training Centre announced in this budget, to be located at the TAFE SA Regency campus, will be a national leader in training for these industries. By consolidating and upgrading major training centres on one site, South Australians will be provided with better quality opportunities in training.

And the reform will not stop there. As of 1 July, the state government will roll out the Skills for All initiative, reforming the state's Vocational and Education Training sector, to raise the skill level of South Australians, increase the number of South Australians with post-school qualifications and increase employment participation. Students will have more choice in training providers, free training for over 400 certificate 1 and 2 level courses and funding for a further 1,000 certificate 3 and 4 level courses, diploma and advanced diploma qualifications. There will be concessions for low income students and VET FEE-HELP for diploma and advanced diploma students, improved pathways for SACE students and reform of the Adult Community Education Program.

The move to more advanced manufacturing in South Australia also continues to be a priority for this government with this investment in skills and training, as well as the creation of an advanced manufacturing council and improved links between research institutions and industry to drive innovation.

The state government understands the cost pressures facing household budgets when it comes to essentials such as housing, water, power, transport and education. The government has lived up to its word to make South Australia an affordable place to live (as one of its strategic priorities) when it comes to housing, water, power, transport and education. Adelaide remains the most affordable capital city in the country.

Not only were no new taxes announced in the 2012-13 budget, but extra support has been provided for lower income households experiencing higher utility prices. Utility concessions have been increased with the water security rebate. Those who aspire to own their own home also have an easier task ahead of them with the first home owners grant extended for 12 months. All first home contracts entered into before 1 July 2013 will be kept at an $8,000 grant level.

Finally, this budget is to be commended for prioritising people with disabilities and their carers with a $212.5 million injection into the sector over the next five years. The transition from institutionalised care to community care and individual funding is a bold one, one that brings the disabled and their carers greater control in deciding the services they need. I urge the house to pass the Appropriation Bill 2012-13 to enable the government to lay the foundation for South Australia's stronger future.

Mr WILLIAMS (MacKillop—Deputy Leader of the Opposition) (11:51): What an amazing budget we have before us. Let me just go back over the 11 years of this Labor government. Promises were made by the then premier (the then leader of the Labor Party) that we would have lower costs in South Australia and that there would be no privatisations. We have had continual claims over the years by the government that it had a record of sound financial management. It kept talking about how important the AAA credit rating was and that the retaining of the AAA credit rating in South Australia was a sign of its financial management. I will come back to that.

Now, 11 years down the track, what have we got? We have the highest taxed state in the nation. It was disturbing a couple of years ago when the budget papers revealed that we were taxed at a rate 11 per cent higher than the average across Australia. I note in the latest budget papers that that has now gone up to 13 per cent. So, not only have we been the highest taxed state in the nation for some years, but that rate is increasing relative to the other states. Instead of it being a blip, a once-off, an aberration, it is the culture in South Australia that this government has to tax the people of this state at a higher rate than any other state government in Australia. That is not suggesting that we have had good governments in some of the other states: it is just that this one is by far the worst.

We have just heard that South Australia is a great place to live and that it is a low-cost place to live. Nothing could be further from the truth. Not only are we as individuals burdened with this high tax regime, but our small businesses, our medium enterprises and our large businesses are all burdened with the same tax regime. That is why we are finding that those 100,000 jobs promised by this government at the last election have turned into a loss of full-time jobs in South Australia: because South Australian small businesses, the engine room of the South Australian economy, are suffering under a tax burden they cannot bear. So, businesses that were considering putting on staff have actually not put on staff, and sometimes, in some cases, they have let them go.

Electricity prices—I remember, because we have kept copies of the pledge card that Mike Rann signed all those years ago. We will deliver lower electricity prices—that is what he said. We will build interconnectors so that we can import lower cost electricity from interstate. Have not seen them. What we have done is encourage the investment in South Australia in wind farms. What we have done is encourage investment in South Australia on rooftop solar panels. In Victoria the Victorian government, with their feed-in tariff scheme, set a cap that when the cost to the average electricity consumers became $10 the scheme automatically was closed down by the minister. The rooftop solar panel scheme in South Australia, funded by a feed-in tariff—a very generous feed-in tariff—is costing the average electricity consumer in South Australia $70.

The Hon. A. Koutsantonis: Why'd you vote for it?

Mr WILLIAMS: Madam Speaker, the minister says why did I vote for it. I remind the minister, if he goes back and consults the Hansard, that I said at the time, way back in I think 2008 (it might have been November 2007), that this piece of legislation would have to regularly come back to the parliament because of the changing world that we live in. That is where the government failed. That is where you failed, minister. We note now that not only do we have higher electricity prices than our cousins in the other states but we have higher electricity prices than anybody in the world.

The Hon. A. Koutsantonis: That's a lie.

Mr WILLIAMS: Well, we will, come 1 July, when the carbon tax kicks in, minister.

The Hon. A. Koutsantonis: That's a lie.

Mr WILLIAMS: Madam Speaker, I think it is unparliamentary for members to call other members liars. The minister is sitting there interjecting that I am a liar.

The Hon. A. Koutsantonis: I did not call you a liar.

Mr WILLIAMS: You said, 'That's a lie.'

The Hon. A. Koutsantonis: Yes, that's a lie. I didn't call you a liar. I'd never do that to you, Mitch. I just pointed out—

Mr WILLIAMS: I ask you, Madam Speaker, when I am making a comment, if the member sits there and says 'That's a lie,' is that parliamentary? Because it will come back in spades if it is.

The Hon. A. KOUTSANTONIS: I withdraw the term 'it's a lie'. It's untrue.

The SPEAKER: Thank you. Also, the minister will note the interjections are out of order. Are you comfortable with that, member for MacKillop?

Mr WILLIAMS: I am not very comfortable, Madam Speaker, but the minister will wear it, because his use of the truth is at a level much lower than pretty well anyone else in this place, and it will come back in spades to him, so I am fairly relaxed about that. If that's the standard this minister wants to set in the parliament that's the standard that he will live by, and it will come back to him. I will move on.

It is predicted that, come the introduction of a carbon tax after 1 July, South Australia will have the highest electricity prices in the world. I would argue, and I have been arguing for some time, that by investing heavily in wind farms it has been one of the things that has driven electricity prices high in South Australia. Investing the same money in interconnectors or some sort of conventional generation may well have delivered us much lower electricity prices, but this government did not have the wit to go down that path.

The Hon. A. Koutsantonis interjecting:

Mr WILLIAMS: Now they talk about privatisation. I remember that there was a promise that there would be an end to privatisation, but we are now selling the forests, we are now selling the Lotteries Commission.

The Hon. I.F. Evans: And Fleet SA.

Mr WILLIAMS: And Fleet SA. That was a good one. I remember that it was in the term of this government that this government said we can save a fair bit of money by buying back Fleet SA. So they brought it back into government control. It used to be owned, I think, by Westpac Bank, and they brought it back because it was going to be a budget saving measure, and now they are selling it. Why are they selling it? Because in the long term it is probably going to lose us some money but it will give us is short-term injection of funds into the budget. That is what it is about. It's about—

Mr van Holst Pellekaan: They can't manage it.

Mr WILLIAMS: No, they can't manage a damned thing, that's right. It is about a short-term injection of money into the budget, a budget which is failing. You do not lose the AAA credit rating because you are managing things effectively, or smartly, or wisely. You lose the AAA credit rating because you stuff up, and that is what this government has done. The Labor Party has a record of losing the AAA credit rating in South Australia because they just cannot manage. Unfortunately, they keep being too long in government to the point where they just stuff up the state, and they have done it again. It is going to take years and years for this state to get off its knees and back on its feet.

I want to talk particularly about water in South Australia. We had a debate running up to the last election where the government had made some decisions about building a desalination plant, and then they decided that they would double the size of the desalination plant. Again, we talk about mismanagement: that would have to be one of the dumbest decisions ever taken by a government in South Australia—an extra billion dollars to build something that none of us will probably see being used.

The Australian Academy of Technological Sciences and Engineering put out a report within the last couple of months. By their reckoning and their modelling, even accounting for global warming and climate change impacts, we will use on average maybe up to 10 per cent of the desal plant's capacity between now and 2050. In that period, under the most severe weather conditions, including allowing for climate change, we might use up to 30 per cent of its capacity

Why on earth did we build a 100-gigalitre desal plant? What possessed the government to go down that decision path? What modelling did they have done? The people of South Australia really deserve to know where the modelling was done and who made those calls because those people should be run out of town. We have the highest water prices in Australia here in South Australia, and yet we heard from one of the government backbenchers a few minutes ago that this is a low-cost place to live.

Go out into suburbia and do some doorknocking, I say to the backbenchers of this government, and talk to the people about the cost when they get their electricity bill, their water bill or their state tax bills, when they renew their registration on their car, renew their driver's licence or buy a new bus ticket and a new train ticket—all those day-to-day things. I do not think this is a low-cost place to live and that is the reality. It is not, and a fair bit of it is directly to do with this government.

Let me again come back particularly to water. I have heard the Treasurer over the years talk about water prices, and he says, 'We have to get all this money from SA Water for two reasons: first, we've got a big investment there and we need a return on that investment and, secondly, we pay a lot of money in community service obligations to give things like postage-stamp pricing across the state.'

I refer to Budget Paper 3, page 93. The table on that page talks about financial transactions between SA Water and the general government sector, and one of the things it includes is the flow of grant moneys. A lot of this grant money comes from the commonwealth and flows through SA Water. Grants, subsidies and CSOs are all bundled together, so it is a bit hard to pull them out and see how much there is in each but, looking at another table in the budget papers, we can see what the community service obligations (CSOs) are and indeed they will this year be falling quite dramatically.

They will be falling from $153 million in the current year to $105 million this year. In round figures, that is a fall of about $50 million in community service obligations. Why is that? It is simply because the price of water has increased so dramatically that no longer is it necessary to subsidise the cost of providing water to many country communities where the cost obviously is higher, yet the revenue is at that postage-stamp price.

When we combine that gain to the government of just under $50 million because of the increase in water prices with the increase in dividends—going from $138 million in 2011-12 to $223 million in the current year—we find that the net contribution to the government from SA Water is rising dramatically. It is estimated that, in the current year, SA Water has actually cost the government $62 million, and that is not accounting for the money that has come from the commonwealth—

Mr Venning interjecting:

Mr WILLIAMS: That is not counting the money that flows through the commonwealth, which is channelled through SA Water for a number of projects, particularly along the River Murray. This year, SA Water will contribute $149.9 million to the government: that is a turnaround of some $212 million. It is a $212 million turnaround, according to the budget papers, just from SA Water, yet we have seen the biggest increases in water prices that you could ever imagine.

Last year, there was a 40 per cent increase in water prices, yet the government keep claiming it was 26 per cent; I think they keep saying it is 26.3 per cent. I think they even used that figure in the press release that went out a few weeks ago when the new water prices were announced for the upcoming year. I urge all members to go to the budget papers from last year, where it clearly states, for the average user, based on 190 kilolitres of annual use, the increase in the cost of water was 40 per cent.

Using the same methodology, and it is used again in this year's budget, there is a 25 per cent increase; so, 40 per cent last year and 25 per cent this year. This is an absolutely unbelievable cost increase. Why? Because, in this year, the government is expecting a huge turnaround in the amount of money that flows to government. In fact, as I have said, a $212 million turnaround in receipts from SA Water, compared to the current year's position.

SA Water is definitely used as a cash cow by this government, but the downside is that it impacts on every household, it impacts on every business and, as I have said before in this place, it definitely impacts on the vast majority of farmers in this state who use water supplied by SA Water for livestock production.

Mr Venning: They don't paint their pipelines.

Mr WILLIAMS: As the member for Schubert said, they still don't paint their pipelines. I mentioned the government's return on its assets at SA Water. I was talking to another business owner whose business owns regulated assets in South Australia, and I asked, 'How do you actually value your assets?' He replied, 'We use historic costs less depreciation,' which is a pretty normal way of valuing an asset.

I said, 'It's not the way they do it in SA Water,' and he asked, 'Well, how do they do it?' I told him, 'They value their assets at the replacement cost,' which significantly inflates the value of those assets, and the government still demands a return of a bit over 6 per cent on that. So, they are getting a 6 per cent return on a very inflated valuation, and that is the way they justify these incredible price hikes in water to South Australian consumers.

I might briefly talk about the mining sector. The government keeps talking about the mining sector and what it is going to do for South Australia, and I sincerely believe that South Australia will have a sound future as a mining state, but it is not just around the corner; in fact, most of the pundits suggest that the BHP Billiton board is seriously considering delaying its vast investment in South Australia. I remember the Treasurer, at some stage not that long ago, referring to the state's economy as being in 'turbo drive'. I think that was the phrase he used: 'turbo drive'.

Mr Venning: Turbo Tom.

Mr WILLIAMS: Yes, maybe he was thinking about his colleague; maybe he was. When the Olympic Dam project—and I say 'when' because I think it will happen, it is just a matter of when it will happen—gets underway, it will make a big difference to this state. It will be a significant driver to our economic fortunes. The reality is though that governments should not rely on something that may or may not happen. They should not rely on that to underpin the state's economic future. They should not take decisions to put the state's economic future at risk in the hope that some of these things will come onstream. That is what we have had in South Australia. We have had a government that has gone out and spent the largesse that has flowed into Treasury coffers, and has spent them on recurrent expenses rather than one-off things like infrastructure.

The Treasurer keeps saying that we have this huge infrastructure spend in South Australia to underpin our future. A fair bit of it is doing nothing for our future. The desal plant is doing nothing for our future because, as I said, and as the evidence shows, we are not going to need it—not in the next 40 years anyhow. I do not know that the Adelaide Oval upgrade is going to do a lot for our economic future. Some of the transport infrastructure will; most of it is commonwealth funded. We have racked up $10 billion worth of debt and we have not got any great infrastructure—certainly not $10 billion worth of state-funded infrastructure for that. The debt has been racked up on recurrent expenditure, and that is the problem for South Australia.

Flicking through the budget a few moments ago, I came across a couple of tables. In Budget Paper 3, at pages 33 and 35, there are some interesting tables. If we look at page 35, in the years 2011-12 we were supposed to see a reduction in the public sector by 2,006 full-time equivalents. What we have actually seen between 2011 and the estimate for 2012 is an increase of 3,355, from 79,859 to 82,214 full-time equivalents.

That is the problem with this state government's management of the state: they cannot control their expenses, they talk about cutting the Public Service by a handful of people and yet they are still employing more public servants at a greater rate. That is the problem: we spent the largesse on recurrent expenses and we have nothing to show for it except the highest taxes in the nation and the highest costs in the nation for electricity, water and a whole host of government taxes and charges.

Mrs VLAHOS (Taylor) (12:12): I rise today to speak on the Appropriation Bill for the 2012-13 budget: a budget that was delivered by Treasurer Snelling in this place in the face of exceedingly difficult financial circumstances. As members in this place would be aware, current economic conditions continue to affect the state's revenue, with total taxation and GST revenues being revised down by over $2.8 billion since last year's budget. This, of course, has placed significant pressures on the state's finances. Nevertheless, the government has throughout this time remained committed to responsible fiscal targets.

It has made this commitment in a distinctly Labor way by prioritising the needs of South Australian households, businesses, chief industries and the economy in the face of difficult circumstances. The South Australian Labor Government has looked to the future, and there is plenty of good news to be found. The economic outlook is strong, with growth of 2.75 per cent forecast for the coming financial year. Our unemployment rate continues to be low compared with the rest of the world, we have had a strong winter crop and we continue to look forward to solid growth in mining.

This is a budget that contains no new taxes despite significant revenue falls: a truly commendable decision that will not place extra burden on South Australian households and businesses. This is also a budget that recognises that our state flourishes when our people feel confident in their economy. The setback of the global financial situation has had a dampening effect on the national and state economies. Households, in particular, are mindful of their savings and it is important to remember that economic growth in this state has a strong outlook for the future.

South Australia has faced the turbulence faced by those across the seas in America and Europe, but we have fared well. The government does, however, understand that the forces felt overseas can still be felt here. The government understands that many people are finding it increasingly difficult to manage cost pressures on their family budgets. In particular, low and fixed income earners are spending more on essentials like housing, water, power and transport.

By making an affordable place to live one of its key strategic priorities, the government has proactively sought to ease cost pressures on South Australian households. This includes providing a once-off water security rebate of either $45 or $75 (depending on usage) to SA Water's residential customers in order to provide relief from the increases associated with the state's sorely-needed water security investments.

The government also continues to focus on investing $38.3 million over three years to establish the Mining and Engineering Training Centre to ensure that South Australians make the most of mining opportunities in the future. The Skills for All initiative, which will commence on 1 July this year, will reform the state's vocational education training sector to raise the skill level of many South Australians and increase the level of employment participation. This change offers hope for many re-entering the workforce or entering it for the first time, like so many people in my electorate.

When times are tough it is crucial that the state government stands by important industries. I was delighted the South Australian government committed nearly $2 million over the next four years to help build a strong foundation for a secure future for the Defence Teaming Centre. This commitment recognises the important work done by the Defence Teaming Centre over recent years and reflects the key role it will play in the long-term future of the sector.

DTC is critical in sustaining South Australia's defence industry through the decline of indigenous defence spending over the next few years. It is vital in ensuring that, as a state, we are prepared for the significant growth in defence expenditure forecast for the second half of this decade. DTC will work closely with the South Australian government and industry to build and maintain innovative and internationally competitive defence industry capability within South Australia.

We are confidently investing in DTC's ability to help industry adopt innovative strategies to improve its competitiveness and productivity and capture national and global supply chain opportunities, to harness strategic management skills across the defence industry to ensure that we are even more competitive with our home-grown firms, and promote collaboration between many companies, driving the industry workforce development initiative as well. Combined with Defence SA, the nation's only dedicated state-based defence agency, and the high-calibre Defence SA Advisory Board, the DTC provides a unique point of difference for South Australia.

Finally, this government can be proud of its substantial efforts in investing in disability services. With $212.5 million over five years, the South Australian government is truly living up to its promise of Every Chance for Every Child. This represents a massive 33 per cent increase in funding.

The government's approach to belt tightening in light of our state's economic revenue falls has been responsible, while protecting the level of service to South Australians. I urge the house to support the Appropriation Bill.

The Hon. I.F. EVANS (Davenport) (12:17): I rise to speak on the government's latest budget, through the Appropriation Bill. Things have got worse; it is hard to imagine, but things have got worse. We might recall that in previous budgets they set out budget deficits of over $400 million a year and over $300 million a year, and a debt rising to a predicted $11.2 billion once the new hospital comes on stream. Under this budget the state's financial circumstances have actually got worse.

We are now having nearly $900 million a year deficits followed by nearly $800 million a year deficits, and the Labor Party is driving state debt to over $13 billion. These are historic levels of debt and historic levels of deficit—and this from the Treasurer who said, on his first day, that he was not going to drive up credit card debt for our children to pay sometime in the future. Well, under this Treasurer the debt has just continued to climb. In fact, it is this Treasurer who will go to the election never having delivered a surplus; it will be this Treasurer who will go to the election only ever having delivered a deficit budget in each one of the budgets he has delivered.

Roll back, and it was only two years ago at the 2010 election that the then treasurer Kevin Foley said that all the state had to do was find $750 million worth of savings and everything was going to be sweet. The books would be balanced, the financials would be strong; $750 million worth of savings. We know that was another Labor lie. Straight after the election, out comes the $2.5 billion of increased taxation and increased cuts the government would have to make to the budget to make it sustainable.

In this budget they have managed to push the deficit even higher, to nearly $900 million. Next year it is nearly $800 million and the debt continues to climb to $13.2 billion. So what they have actually outlined since the 2010 election is, essentially, a set of state accounts that is getting worse on every measure, on every year, up until the next election. In short, they have lost control of their budget, they have simply lost control of it.

Just as a business does not go bankrupt on the day it closes its door, a state does not lose its AAA credit rating on the day because of one single budget. It loses its AAA credit rating because of a number of decisions taken over a number of years that accumulate the effect of the budget. That is why Standard & Poor's have been warning this government for the last two or three budgets that their AAA credit rating was under pressure. They were signalling to the Treasurer and the cabinet of the day that their financial management of the state was under scrutiny. They recognised that their financial management was sloppy and they were giving them time to make decisions to change course.

That is why the Auditor-General warned them back in 2005-06, 2007-08 and 2008-09 that their expenses were too high and they were, more importantly, based on unsustainable revenues. The Auditor-General put that before the parliament and the government on a number of years. So the reason we lose the AAA credit rating is not just because of this budget but because all the decisions that have 'layer caked' on top of this budget in previous years. That is the reason we have lost the AAA credit rating. We now have a state facing historic levels of debt and historic levels of deficit.

Let us look at the AAA credit rating. It may not be sexy out there in mum-and-dad land, but let me say to South Australians that they are paying significantly more in their cost of living—higher water prices, higher car registration, more for drivers licences—because of the extra interest being charged to the state because of the loss of the AAA credit rating. It all flows into your cost of living. That is the problem with losing the AAA credit rating.

The sad thing is that this state worked damn hard as a state. The taxpayers worked damn hard, with governments, of both colours, over 12 years to restore the AAA credit rating and restore the state's finances after the last time it was lost under the State Bank fiasco. For 12 years the governments have tried to work the finances of the state back into a position where they could be managed properly and within a high credit rating so it was a positive place for investors to invest. Now what we have is the government saying that the AAA credit rating simply does not matter.

It went to the people and said, 'We are going to sell the forests so we can keep the AAA credit rating.' That was their reason for selling the forests. The Hon. Michael O'Brien at the forestry forum was asked by Mr McDonnell, 'Why is it so critical to retain the AAA credit rating? Why can't there be some sort of balance? Why are you putting in jeopardy the industry? This is all about retaining the AAA credit rating, obviously.' Minister O'Brien answered, 'Yes, that's right.' So, when they announced the sale of the forests (an income-producing asset for the state), it was all about saving the AAA credit rating.

Now, of course, the Labor Party has got the state into such a position that, even after selling the forests that generate $43 million a year (this year it is a bit less in the budget papers, I think) and even after selling the Lotteries Commission (which brings in about $80 million, a $20 million net dividend) and even after receiving the record level of tax revenue (being the highest taxed state), this state loses its AAA credit rating. We are selling assets at a rate of knots. We are selling income-producing assets that the state owns and we are still going backwards financially.

How did they get it in such a mess? You will only sell the forest once, you will only sell the Lotteries Commission once, and guess what? The debt will still be $13 billion and the deficits will still be the $800 million and $900 million that you are predicting. You are predicting $800 million and $900 million deficits after you sell the forest and Lotteries, and you are predicting a $13 billion debt after you sell the Lotteries and the forests.

How did it get this bad? I will tell you how it got this bad: they simply kept on spending when the Auditor-General said, 'Hello, you are spending at very high levels of expenditure on unsustainable revenues.' That is exactly the position we are in. The high levels of expenditure built in two, three, four budgets ago have layered cake onto the budget today and, ultimately, that is why we have lost the AAA credit rating.

Of course, the government is running around saying, 'No, we are giving away the AAA credit rating,' having fought for it for 12 years, having defended it themselves for 10 years, having gone out and defended the AAA credit rating for nearly 10 years. When Kevin Foley himself was the treasurer, the government line was that the AAA credit rating is all about investment in jobs, that it brings investment and it brings jobs to the state.

This Premier is saying, 'No, you can't have a AAA credit rating because that means we have to spend less on infrastructure and that means we have fewer jobs.' Which argument is it? Is it that the AAA credit rating brings investment and jobs to the state or the AAA credit rating kills investment and jobs in the state?

Why is it that Victoria wants a AAA credit rating, Australia wants a AAA credit rating, New South Wales wants a AAA credit rating, Western Australian wants a AAA credit rating, Queensland is putting in place a program to get back the AAA credit rating lost by that Labor government and this Labor government is going in the totally opposite direction? They are saying it just does not matter. The reason they saying it does not matter is that they know they would have to tighten their fiscal responsibility and they are not prepared to do it—that is ultimately the reason.

On the very day that South Australia lost the AAA credit rating, New South Wales introduced legislation, or announced the introduction of legislation, to protect the AAA credit rating. We are losing it: they are protecting it. Why are they are protecting it? New South Wales said that, if they lost the AAA credit rating this week as a result of their budget, it would cost them $375 million in extra interest a year; that is $375 million you cannot spend on schools, hospitals, the disability sector or small business.

When Queensland lost their AAA credit rating, the Labor treasurer announced a $200 million extra cost every year in interest. Financial commentators suggest that in South Australia it is an extra interest cost of $22 million a year, every single year—$22 million, that is what the financial commentators suggest it is costing South Australia.

You only have to look at the government's approach in the Mid-Year Budget Review when they introduced new budget targets for the budget. For 10 years, up until that point, one of the budget targets was to retain a AAA credit rating. In the Mid-Year Budget Review, Premier Weatherill and Treasurer Snelling gave that up, even though only months before in this place Treasurer Snelling was still telling this place that it was an aim of the government to retain its AAA credit rating. They gave it up as a budget target. That target did not last 10 months under Jack Snelling—it did not last 10 months.

Another budget target which impacts on business and households was to have an effective tax regime. They gave up that budget target, so no longer does this government have a target of having an effective tax regime. They have abolished that target.

Just for a minute, let us put the debt into some context. How much debt are we borrowing a day? If you go from the 2007-08 year to the 2015-16-year—in that eight-year period—the Labor Party is increasing the debt at the rate of $3.9 million every day for eight years. The debt in South Australia is increasing at the rate of $3.9 million each and every day for eight years—in round numbers, $4 million a day every day for eight years. So, if South Australians wonder why their cost of living is going up, look no further than the state debt. When the Labor Party starts borrowing $4 million a day every day for eight years, well, someone has got to pay it, and that is why your interest payments are going up to over $800 million. That is why interest payments become $2.3 million a day.

Debt is going up at $4 million a day and the interest you are paying is $2.3 million a day. If you wonder why your cost of living is going up, that is the reason. If you wonder why business taxes in South Australia are so high, that is the reason; and might I say that those debt figures—$4 million a day every day for eight years—is after we sell the Lotteries and after we sell the forests. The net increase is still $4 million a day every day for eight years. That is why people's cost of living is so high, and the Liberal Party recognises that people out there are struggling under Labor's high cost, high tax agenda.

Let us just go back to the Auditor-General's warnings. A warning was given in 2005-06 by the Auditor-General. He said that, given the forecast expectation that such revenue growth may not be sustained, control of expenses would be important. That was in 2005-06. The reason he gave that warning in 2005-06 was that the 2005-06 budget actually overspent by $370 million—so, in the year that he was looking at they had overspent by $370 million.

The government's response to that was to overspend the next year's budget by $374 million. So, having been warned about its overexpenditure, it overexpended again the next year. Then in the 2007-08 year it overspent by $304 million, and that is why the Auditor-General gave a warning in that audit about that year. He said, 'You've overspent by $304 million.' Again, he talked about the problem with increased expenses and unsustainable growing revenues. The government's response in that year was to overspend by $670 million.

The issue for the government is that it ignored the warnings from the Auditor-General and ignored the warnings from Standard & Poor's and just kept on spending. They say they are spending and losing the AAA credit rating because of the infrastructure they are building. The infrastructure they are not building is actually a bigger list than the infrastructure they are building. Gone is the O-Bahn extension they talked about at the last election. Gone is the prisons' announcement they talked about in a previous election. Gone, of course, is the Sturt Road-South Road crossing/underpass in my electorate. It has been promised twice at the last two elections. Gone is the famous 'Atkinson underpass' on South Road. I think it was six kilometres long, or something. That is gone.

The reality is that, in this budget, they have now cancelled the electrification out to Gawler. We have the bizarre situation of all these poles with nothing to do for the next few years but stand there as a symbol to this government's incompetence. They talk about a one-way road, the Southern Expressway (which they supported at the time, of course), and then they have the gall to go and cancel the project to Gawler. They have all these posts, and I bet there will be lots of election signs on there come the election. They will be there. It is a monument to this government's incompetence.

Then they have cancelled the electrification to Outer Harbor. They have cancelled the trams down to the western suburbs. In actual fact, the list of cancelled projects under this government is bigger than the list of achieved projects. You have cancelled more than you have actually completed.

The other issue of concern to the state is, ultimately, the ongoing liabilities: the daily cash position, the deficit position and the budget position on a yearly basis are of concern. Six deficits in seven years: a $2 billion deficit over that period—six deficits in seven years. The one year they had a surplus happened to be the 2010 election year and, of course, Treasurer Snelling told the parliament a couple of weeks ago that the only reason they had a surplus in that year was that they were bailed out by the federal government. It was not because of frugal government spending or good government management: they had a bailout from the feds.

Another issue is our liabilities: the state liabilities sit at or are approaching $28 billion. The state liabilities have essentially doubled in a matter of years. The unfunded superannuation liability is $11.9 billion, the WorkCover liability is around $1.2 billion and then, layered on top of that, of course, is the hospital liability of $1.1 million a day for 30 years. So the state's budget position is certainly in a mess. To summarise, it goes something like this: under this budget the debt is expected to exceed $13 billion and interest payments are expected to exceed $800 million a year.

The state has run six deficits in seven years. It has lost its AAA credit rating and is put on negative watch that it may be downgraded further in six to 12 months' time. The unfunded superannuation liability is $11.9 billion; the unfunded WorkCover liability is $1.2 billion; and our budget deficit is, in round numbers, $900 million in the next year and $800 million a year after that. How could it get any worse than last year? They have managed to do it, and it really is a sad story for South Australians how the Labor Party's total budget mismanagement has landed them in this mess. Their cost of living is the cost of Labor's mismanagement, and that is the brutal reality of it.

Debate adjourned on motion of Hon. J.R. Rau.