Supply Bill 2019

Second Reading

Adjourned debate on second reading.

(Continued from 4 April 2019.)

The Hon. S.C. MULLIGHAN (Lee) (12:34): I rise to make a contribution on the Supply Bill introduced for this year, a very straightforward bill. As we would be familiar, it is to provide the government with sufficient money in order to conduct the business of government in the early months of the subsequent financial year, particularly as the budget is going through its parliamentary stages, with estimates committees still to come.

The DEPUTY SPEAKER: Member for Lee, you are the lead speaker?

The Hon. S.C. MULLIGHAN: I am the lead speaker. I will make my customary brief remarks, Deputy Speaker, on this bill. This year's Supply Bill finds itself being introduced in an environment quite different from that in which last year's Supply Bill was introduced.

We have a significant change in the economic position of the state. We have had an increase in the trend unemployment rate in South Australia. We have had a dwindling of the number of new jobs that have been created over the past 12 months, and in particular in this financial year. Employment growth rates have plunged since March 2018, and that means fewer jobs are being created in this state.

We also have an increase in the number of unemployed in South Australia and, concerningly, a significant increase in the number of young people unemployed, those between 15 and 24 years of age. It is worth commenting a little more on those employment statistics because in the lead-up to the last state election South Australians were promised more jobs and more growth in South Australia. Unfortunately, what we have seen is a slowing of the jobs being created in our economy and a slowing of the state's economy.

We have also seen lower inflation, which may be welcome in itself. However, coupled with the fact that through the year inflation has stood at 1.3 per cent for metropolitan Adelaide, unfortunately it exceeds real wages growth in our economy, which means people have less money in their pockets to afford the higher prices being charged across the economy. We have also seen a significant decline in retail turnover growth. Of course, lower retail sales are an important indicator of the health and strength, and indeed the growth, of the state's economy.

Members will not be surprised to hear me comment on the dwindling number of building approvals that have been recorded over the past 12 months. Indeed, only this morning I was advised that the home builder Cubic has gone into administration, making it either five or six, I think, which have done so in the last six or so months. These are poor statistics at a time when South Australia should be continuing its economic recovery.

Much was made by those opposite about the state of South Australia's economy, particularly through 2016 and 2017, as employment growth slowed, as the state's economic growth rate slowed and as the unemployment rate continued to increase. Certainly, during that time there was a period when South Australia's economy was slowing. There was a dramatic reduction in confidence as our state was confronting the reality of losing one of its largest employing industries in automotive manufacturing.

However, it was very pleasing that in the 2017 calendar year, but particularly later in that year through the early months of 2018, the state was going through an economic recovery. The unemployment rate dropped month after month, the number of jobs created in the lead-up to March 2018 was well above 15,000, I think, and we saw the unemployment rate come down quite sharply.

This was good news for the state and it gave rise to media report after media report about a growing sense of confidence and optimism in the first half of last year. Unfortunately, that trend, as I have just described across those lead indicators, has all but evaporated and South Australia is now finding itself experiencing a time of very soft economic growth across those indicators.

I raise that because I am a firm believer that state governments can have a positive influence on the performance of the state's economy. I was previously a member of a government that invested very heavily in the economy to try to support a level of economic activity. That was done through a broad series of significant tax cuts, through a very large ramp-up in the state's infrastructure investment program, and it was also done through a regime of assisting businesses directly to grow employment and to make those investments necessary to enable them to achieve that.

Nearly all that effort, of course, was removed when the first budget from the Marshall Liberal government was handed down in September last year. That is unfortunate because that removal of such a significant level of support from the state budget to the state's economy is coinciding with this period of softer economic growth.

I know that there are a number of those on the other side of the chamber who believe that governments do not have a role to play in supporting businesses and that governments do not have a role to play in direct involvement in the economy, but I am not one of those because I firmly believe that the experience of 2016-17, and early 2018 in particular, shows the results of a government that is willing to invest in the state's economy.

The first budget brought down for the 2018-19 financial year was a fascinating budget, making spending decisions for that financial year and subsequent financial years. One of the great benefits experienced by that budget was a huge windfall in the forecasted amount of goods and services tax receipts—in fact, $991 million over the four years from 2017-18 onwards, and we are talking north of $300 million in additional GST revenue in those years. That is important because it provides some context for the complaints that we have from the current Treasurer and Premier about the reduction in more recent GST forecasts to be received by the state.

It is true that, if they draw a line in the sand from the release of their budget at the beginning of September last year, GST levels for the current financial year are down; however, the finances they inherited from the previous government are best encapsulated by the 2017-18 Mid-Year Budget Review, which shows that for the current financial year this government is still well ahead in GST revenues, in the order, I understand, of approximately $100 million in that year alone.

That provides some context and counterbalance to the argument at the moment from the Treasurer that this coming state budget is one that is being framed in a period when the government's revenues have suffered a massively damaging blow. Indeed, what we have seen is the regular—unfortunately regular, but regular nonetheless—ebb and flow of GST revenue forecasts, which all state budgets, of all jurisdictions around the country, must be mindful of, in particular a smaller jurisdiction like South Australia.

When a Treasurer is fortunate enough to receive a deluge of revenue, as Mr Lucas was for the benefit of last year's state budget, one would then suggest it might be imprudent to run out and spend all that money as quickly as possible, as he did in that budget, and only reveal a plan to deliver relatively thin budget surpluses in that context.

It is also true that that was not the only source of revenue that was significantly increased for the benefit of that budget. Members may be aware—certainly, the Minister for Water would be aware—that the South Australian Water Corporation has been shaken down for additional dividends in the most recent state budget, an extra $128 million over three years. Also, of course, the Treasurer reached into the pockets of his own agencies, his own portfolio, and extracted an extra $81 million in dividends from the South Australian Government Financing Authority.

You might think that having a strong and growing economy, having a huge increase in the forecast GST revenues and having an enormous additional deluge of revenues (pardon the pun) from SA Water, as well as from other government instrumentalities like the South Australian Government Financing Authority, might mean that the government could turn its mind to how best to support continual jobs growth. Unfortunately, that is not what happened, and I would argue that we see the state's economy suffering from the decision to deliberately pull back on the support for the state's economy.

We saw the boasting of the Treasurer that 29 job creation and job support programs were to be abolished, and we were told that the government would not be picking winners, that the days of direct financial or industry assistance to specific businesses were over, that that is not what this new Liberal government is about. It is a little incongruous, as members might have heard me comment before in this place, given the previous experience this state and the business community had of the Treasurer, when he was treasurer between late 1997 and early 2002, when direct financial assistance to businesses was very common.

We saw all sorts of grants being provided to all sorts of businesses, including to the infamous almond and tree harvesting regimes, which at that time benefited from significant taxation benefits federally. Nonetheless, we were told that this direct financial assistance would stop. Of course, we have a notable exception to that and that is the remarkable decision to provide a $42 million taxpayer-funded loan to the Adelaide Oval hotel, which the Minister for Infrastructure laughs about.

Other hoteliers do not quite feel as chuffed as he does to see an organisation that already has a significant leg-up in the market continue to be supported by the state government. They are basically being told that they are not good enough or that they are not warranted to receive financial assistance from the government, but the close relationship between the Stadium Management Authority board, in particular the deputy chair, and the new Liberal government has somehow managed to facilitate this $42 million loan.

I cannot go into that in too much more detail, of course, because there is a parliamentary inquiry underway, and we have already heard some startling revelations from that inquiry. Nonetheless, the environment that we have is a huge amount of additional revenue for the state government and a program of cuts to jobs growth and support programs. I say jobs growth and support, of course, because support has been important in recognising the role of those programs, given that over the last 12 months we have seen a number of notable businesses announce that they are having to close their doors in South Australia. I am not just referring to those builders of which I made quick reference to before; we have also had manufacturing businesses announce that they are having to close their doors.

I would also argue that there is a role for government to play when a company, particularly in an industry involving manufacturing, looks to close its doors, and that is in providing some assistance to the workers for an appropriate level of jobseeking support and retraining. It was certainly the policy of the former Labor government to try to give those workers the best possible opportunity of transitioning from their previous employment to a new job.

A good benchmark to recognise is the experience that Mitsubishi Motors Australia went through in their manufacturing operations in South Australia. They had two facilities: they had an engine plant at Lonsdale and they also had the vehicle manufacturing plant at Tonsley. Through what I guess we could call a protracted series of ongoing concerns about the viability of Mitsubishi's business making cars in Australia, that resulted in the closure of the engine manufacturing plant and then the subsequent closure of the vehicle manufacturing plant in late 2007 or early 2008, if my memory serves me correctly.

Those dates are important. In 2007 and 2008, South Australia, like much of the country, was experiencing a relatively high watermark for economic performance. This was, you will recall, in the months leading up to the September 2008 collapse of Lehman Brothers in the United States that precipitated the global financial crisis. In those months leading up to that, we had a very strong economy in South Australia. We had a very strong national economy here in South Australia and an unfortunately high exchange rate, which was not assisting Mitsubishi with their operations.

But it is important that we place the loss of those jobs in the context of a strong economy where there were many people leaving employment and seeking new employment. Sometime down the track, the workers representatives at the time told the story that there was a roughly one-third, one-third, one-third experience of those workers. Some of the older workers who may had been with Mitsubishi for many years, or indeed Chrysler before that, who were approaching retirement age took what redundancy provisions were available to them and they retired—about a third of them.

Another third took what redundancy provisions were available to them and sought other employment successfully. But the other third, in receipt of those redundancy provisions, despite seeking job opportunities, despite going through retraining and so on, were unable to find employment. That is when the economy is at its strongest. That is in an environment where the state's economic growth rate was getting up towards 4 per cent—almost double the range that we are in at the moment. That is when the unemployment rate was very, very low. We were not in that situation in the last 12 months. We certainly were not in that situation as Holden was winding down and closing its operations.

If we are not in such a strong economic position, then it stands to reason that many of those workers, coming from an industry similar to automotive manufacturing—these manufacturing businesses closing their doors—would need some assistance in transitioning to new employment. I think it is regrettable that the Minister for Innovation and Skills has repeatedly made it clear in his public remarks that he will not be providing any specific support for these workers above and beyond the redundancy provisions that those workers may be entitled to from their former employer.

That is very regrettable because it obviously means that we are likely to have fewer people in the jobs market for a longer period. Those workers who need support are less likely to be able to avail themselves of retraining, less able perhaps to even have the wherewithal to put their own shingle out and start a small business, for example. I think that is very short-sighted of the minister, particularly given that it comes at a time when he is boasting about the significant additional resources that the federal and state governments are putting into training and skills more generally.

That is a bit of an economic context of what we are looking for in this coming state budget. It may come as a surprise, in the face of having such a deluge of additional revenues into the state budget, combined with what we were assured by the Hon. Mr Lucas when he was shadow treasurer during the state election campaign, which was that all the funding promises of the Liberals would be able to be wholly funded, that they would not have to rely on any additional revenues, that there was, as the Premier called it, no agenda for privatisation and there was no need for swingeing cuts across the public sector.

However, that is the budget that South Australians were served with in September—a budget, as we have characterised, of cuts, of closures and of privatisations. There has been understandable community outrage about many of those cuts—the cuts, for example, to the Service SA centres; the cuts to public transport services, the bus and train services, as the budget papers were particular to point out; the privatisation of the Adelaide Remand Centre; the cuts and, if not successful, the privatisation of SA Pathology. None of this was countenanced in the lead-up to the last state election, yet this is the environment in which this state budget is now to be framed in.

It is important to recognise that, while many of these cuts have been ventilated publicly, there are many, many more cuts that not only have not been delivered but are yet to be identified by the various ministers and their portfolios. If you add up the unallocated cuts task across the four years, we are looking at $1.25 billion of cuts across the forward estimates. In particular, the locus of the greatest effort of those cuts finds itself in the purview of SA Health, which has taken the remarkable decision to bring in interstate corporate liquidators to administer hospitals.

The Hon. S.K. Knoll: Hear, hear!

The Hon. S.C. MULLIGHAN: Again, the member for Schubert cries out with a ‘Hear, hear!’ in strong support of the role of interstate corporate liquidators in administering our health system. That in itself is interesting not just for the fact that corporate liquidators might understand how to administer medical care to South Australians but that they have taken the view that not only is that important but there was no-one in South Australia who could possibly provide that support to SA Health, no other practitioner in our state who could possibly measure up to KordaMentha in providing those services. I seek leave to continue my remarks.

Leave granted; debate adjourned.

Sitting suspended from 12:59 to 14:00.