State Debt

The Hon. S.C. MULLIGHAN (Lee) (14:31): My question is to the Premier. What does the Premier believe is a sustainable level of debt, as set out in the budget's fiscal targets?

The Hon. S.S. MARSHALL (Dunstan—Premier) (14:31): I thank the honourable member for that question; it is an important question. Further to my last answer, we are living in very changed times. You would never have heard the Reserve Bank Governor or the Treasury Secretary out there telling state governments to go for broke in terms of borrowing money, but that is exactly and precisely the advice we have received.

The Reserve Bank Governor, Dr Philip Lowe, has made it very clear that he expects stimulus at the subnational level, and that's precisely what we have provided. We have provided $2 billion in our first two packages and we have provided a further $2 billion worth of state support in yesterday's budget but, when you actually add up a lot of the projects that were agreed to and put into our budget yesterday, a lot of it comes with some federal government money. A lot of our projects are supported on a fifty-fifty basis, some on an eighty-twenty basis, so our $4 billion ratchets up to $5 billion when you consider that.

This is a massive economic stimulus. Of course, this would not be sustainable if we had interest rates of 6, 8, 10, 12 or 14 per cent—but we don't. We don't have those interest rates here in South Australia; in fact, what we have now are interest rates at historic lows, even if we take those loans out over a 20-year period. One of the reasons why we in Australia, and particularly here in South Australia, are getting that capital in at a very low rate is because we have been able to demonstrate that we are a safe place to invest. Australia is seen as a stable government that is a safe place for international money to come.

Similarly, here in South Australia, since coming to government we have been able to recover some of the ground lost under the previous government with regard to our ratings. We have been able to recover that ground, and that sends a message to those wanting to invest here. So we haven't had problems in Australia like many other countries around the world. There has been some quantitative easing, there has been some Reserve Bank intervention in terms of quantitative easing, but mainly the capital markets in Australia over the last four, five and six months have recovered. That is good news, as we need to borrow money.

The Treasurer made it clear in his statement yesterday that he has borrowed $6.6 billion recently, but the average cost of that capital, the interest cover on that, has been well, well below—as I have already answered in the parliament today—significantly lower than anybody would have been predicting.

It is a fair enough question to ask what is going to happen in the future, but the more important question is: do we have a government that can respond to the changed situation and put the citizens first? As I pointed out in my previous answer, when the previous government were also faced with economic peril that enveloped the globe they pulled the handbrake on, they sacked public servants, they cancelled projects, they deferred projects and they cut budgets. That is exactly the wrong type of attitude to take.

This was very clear. Dr Steven Kennedy and Dr Philip Lowe made it clear that the automatic stabilisers in the budget should be ignored in this case. We shouldn't be leaning into that. We should be making sure that we can provide that fiscal support exactly and precisely when it is needed. Australia finds itself in a very unique position because we have been fiscally prudent over a long period of time under multiple flavours of government, Labor and Coalition, at the federal level. We have had low debt as a nation and that's provided us with an opportunity to support economies and jobs during these times, and that's exactly and precisely what we are doing.