STATE BUDGET

Mr MARSHALL (Norwood—Leader of the Opposition) (14:31): My question is to the Premier. As Treasurer, will he explain why this year's budget deficit increased from a record $867 million forecast to a new record $1.17 billion forecast in the Mid-Year Budget Review, given that South Australia has remained the highest-taxed state in the nation?

The Hon. J.W. WEATHERILL (Cheltenham—Premier, Treasurer, Minister for State Development, Minister for the Public Sector, Minister for the Arts) (14:31): I thank the honourable member for his question. He does repeat that last proposition which is factually inaccurate. Can I say that the real measure of South Australia's competitiveness is all of the things that make up the cost of doing business in South Australia. On that measure, as measured by an independent organisation (KPMG), we are the least expensive place to do business in Australia of the capital cities that have been measured. So, of the things that matter—that is, the bottom line for businesses seeking to invest in this state—

The Hon. A. Koutsantonis interjecting:

The SPEAKER: I call the Minister for Transport to order.

The Hon. J.W. WEATHERILL: When you look at all of the costs associated with doing business in South Australia, we are, in fact, one of the least expensive places in the nation to do business. But all of the arguments and all of the bases for the present situation in relation to our budget have been laid out regularly and extensively by this government and they are familiar to you. There are things such as the $3 billion in revenue that has disappeared through the changes to—

Mr MARSHALL: Point of order. Mr Speaker. My question was specifically about why there was an increase in the forecast deficit this year from $867 million to $1.17 billion. The Treasurer, the Premier—whoever is answering at the moment—hasn't addressed the substance of the question whatsoever.

The SPEAKER: No, that is a matter for the house to judge. I have a clear recollection of what the question was and, I am sure, so does the Premier. I am sure the Premier will answer the substance of the question.

The Hon. J.W. WEATHERILL: Thank you, Mr Speaker. I am going directly to the substance of the question now, which is that members will be familiar with the global financial conditions that are creating—

Members interjecting:

The Hon. J.W. WEATHERILL: They laugh, but these are the facts. The global financial conditions are reducing confidence. Confidence is having a particular effect on the retail sector and on the largest single purchase a person is likely to make in their life, which is their home. Those two sectors—residential construction and the retail sector—just happen to be the two parts of the economy that state governments like ours rely upon for their revenue base.

We get our property transactions through residential construction. That activity has fallen to historically low levels. Retail has fallen to historically low levels because of the uncertainty about the future. People are saving money. We still have a robust economy though, with growth at 2.1 per cent last year, and we still have relatively low levels of unemployment. So we have a strong economy but the parts of the economy upon which we rely for our revenue are not doing as well as other parts of the economy, so that translates into a very substantial writedown in revenues—$3 billion over the forward estimates. So, that is the principal reason. The other factor which bears on the particular result that the honourable member mentions is the effect of the health portfolio—

Mr Gardner interjecting:

The SPEAKER: It would be a great pity to warn the member for Morialta for the second time, so I won't.

The Hon. J.W. WEATHERILL: To give a complete answer is to say that the other part of the equation is the health savings which we programmed to be achieved during that financial year were unable to be achieved, and therefore have been backed out of the budget. That has had an effect on the deficit. The Mid-Year Budget Review responded to that challenge by identifying further savings measures and some revenue measures which have compensated for those changes. So that is the explanation for the way in which that particular deficit has been comprised.