Question Time

EMPLOYMENT FIGURES

Mrs REDMOND (Heysen—Leader of the Opposition) (14:24): My question is to the Premier. Why are there 13,000 fewer full-time jobs in South Australia since he became Premier given the Premier's statement that he has chosen jobs over the retention of the AAA credit rating, which obviously we have lost?

The Hon. J.W. WEATHERILL (Cheltenham—Premier, Minister for State Development) (14:25): It is no surprise that the South Australian economy is experiencing the effects of a global financial crisis; and, because of the nature of that global financial crisis and because we are part of the global economic story, we are affected by it. I know that these are difficult concepts to grasp for a leadership team that does not boast anyone with any economic credentials, but they are important matters to grasp and they do go to the heart of these matters.

We exist within a global economic framework, which means that, when they turn on their televisions and they see, essentially, Europe in some economic conflagration, it affects people's sense of confidence. That is causing two principal effects on the South Australian economy: one is the effect on people's spending habits (people are saving not spending in a very substantial way); they also are backing away from often the largest single expenditure of their life, which is their residential dwelling. So, they are not purchasing homes because of the same concerns about confidence.

We share the analysis of the Reserve Bank about this matter, that is, that much of what has occurred in recent times is a major readjustment of the way in which consumers are behaving because of what they see in terms of the asset values of their superannuation accounts and of their houses; so, they are looking at their valuations. They are seeing that that endless growth that seemed to be occurring in relation to their property values, and the growth that they were seeing in their superannuation accounts, is meaning that they are actually feeling as though, in terms of—

Members interjecting:

The Hon. J.W. WEATHERILL: Madam Speaker, there is a constant stream of discussion.

The SPEAKER: Order!

Mr Whetstone interjecting:

The SPEAKER: The member for Chaffey, order!

The Hon. J.W. WEATHERILL: So the Reserve Bank governor makes the observation that, because they are feeling those wealth effects, people are not consuming in the manner in which they were in the past. In fact, the consumption rates were reaching the level where people were consuming the whole of their incomes, relying upon the fact that their superannuation accounts and house prices kept going up. Many were drawing down on the equity that exists in their homes.

That has come to an end—it has come to sudden end—and people are adjusting their behaviour on that basis and that is having an effect on the level of economic activity. It is also having a particular effect on confidence—of course, it is. It is affecting confidence and it is also affecting in a particular way the finances of state governments, which rely upon those particular sectors of the economy for our revenue—so, our property transactions and our GST—

Mrs Redmond interjecting:

The Hon. J.W. WEATHERILL: Madam Speaker, I am happy to put up with some level of abuse from those opposite, but the perpetual stream of abuse that emerges from the Leader of the Opposition makes it difficult to answer a question.

Members interjecting:

The SPEAKER: Order!

The Hon. J.W. WEATHERILL: The property transactions, the GST transactions, that form the basis for our revenue base mean that we have seen a $2.8 billion reduction in our revenues over the forward period. Now, all those things place pressure on economic activity and they place pressure on confidence in the community, but what South Australians should be confident of is that there is an underlying resilience in the South Australian economy.

We will come out of this cyclical trough, and we will emerge from this stronger than ever. That is one of the principal motivations for us investing in the new construction grant that we are giving for new homes, because we know that we are going to emerge from this period. We want to make sure that the skills and capabilities that exist in the crucial construction sector are there and available when we do come out the other end of this; so, the community should be confident in the long-term security of the South Australian economy.