APPROPRIATION BILL 2013

Second Reading

Adjourned debate on second reading (resumed on motion).

The Hon. R.I. LUCAS (15:18): I rise to speak to the second reading of the Appropriation Bill. In addressing the bill I want to make some specific comments ultimately to the health portfolio, but firstly some general comments in relation to the general position of the state budget. As other members have highlighted, we are facing a financial disaster. We are confronting an annual deficit of $1.3 billion a year.

An honourable member interjecting:

The Hon. R.I. LUCAS: Yes. We are looking toward a state debt increasing by the end of the forward estimates close to $14 billion. As other members have highlighted, the sad reality of this is that we have seen similar circumstances in terms of state debt before in the period around the State Bank in the early 1990s when state debt went to $11.6 billion.

A newly elected Liberal government, in 1993, saved the state from financial disaster. When the government changed in 2002 the $11.6 billion state debt had been reduced to approximately $3 billion, so during that particular period there was a very significant reduction in the state's debt. Sadly, that is all for nothing now because in the space of approximately 11 years the Jay Weatherill government, supported by all and sundry across the chamber, has managed to increase the state's debt from $3 billion to $14 billion, higher again than the $11.6 billion post the State Bank disaster in South Australia.

While that is bad enough, what is even worse is the health of the annual budget; that is, the annual operating expenses, what comes in and out on an annual basis. The reality there is that, with the situation of a $1.3 billion deficit, we are in extraordinarily parlous circumstances. I did note, not that I was in the chamber but someone referred me to the fact that the Hon. Mr Kandelaars, with his closed eye approach to reading what is given to him in relation to defending the state government's financial record, said that he was comforted by the fact that at the end of the forward estimates there was a very healthy surplus, and it was even healthier than the surplus that was predicted last year or in the midyear budget or something like that.

The problem is that for about the last five or six years, or at least four or five years, the government has been predicting returns to healthy surpluses during the forward estimates period whilst overspending massively in the current year budget and the next year budget. So, it is always on the horizon, under a Labor administration, this mythical recovery from financial disaster. Just across the horizon is the financial rainbow of a significant surplus, which is predicted to occur under the Labor administration.

For the current year they say, 'Well, we're $1.3 billion in deficit, but if you just look across the financial horizon far enough there is this rainbow where there will be a significant surplus.' Sadly, it is only the foolhardy and the Labor backbenchers like the Hon. Mr Kandelaars who fall for the rhetoric, who fall for the claim, who, after so many years, still believe, or at least say they believe, that if a Labor government was re-elected that would be the circumstances.

The proof of the pudding is in the eating and we have seen, as I said, for four or five years now of the Jay Weatherill government and prior to that the Mike Rann government, both of them Labor governments, predicting disasters in the particular financial year in terms of the annual deficit but always predicting, just across the horizon, that recovery was just around the corner.

I will not waste time this afternoon. There are any number of other eminent economic forecasts from bodies like the South Australian Centre for Economic Studies and a number of other private sector economic forecasters, who have all reported either that this state is currently in recession and, more sadly, that at least for the next financial year is likely to continue in that particular way. So, not only do we have a fiscal disaster, a financial disaster, in terms of our budget management, in terms of the management of the state's economy—again contrary to the claims made by the Hon. Mr Kandelaars and other government members in both houses during this particular debate—the economic conditions of the state are parlous as well.

It pains us. We get no pleasure from having to report the facts. We would wish it otherwise. It would be good, from the state's viewpoint, to be able to say congratulations to this government, even though we disagree with them they have delivered balanced budgets, they have managed their debt, the state's economy is booming and the hundred thousand jobs that the Labor government promised it would deliver by 2016 will be delivered. The reality is that none of that has occurred.

We are not within a bull's roar of delivering the promised 100,000 jobs by 2016. Labor members who have spoken in this debate studiously avoid talking about it. It is a bit like the mad uncle at the Christmas party: no-one wants to talk about him sitting in the corner for fear of the embarrassment he causes. No Labor member wants to talk about the mad uncle sitting in the corner at the Christmas party—the 100,000 jobs the Labor government promised would be delivered by 2016, the economic recovery that was promised to be delivered, the financial recovery that was promised to be delivered. Sadly, from South Australians' viewpoint, none of it has been delivered.

I could spend a couple of hours talking about the misery that confronts the state, but I will not because the facts are too depressing for all of us. Those of us who are not members of the government recognise the facts for what they are and recognise the fact that the only way this can be changed is for a significant change in financial policy direction and economic policy direction; sadly, the reality after 11 years is that the only way that will be achieved is by a change in government.

The people of South Australia will have the opportunity in March 2014 to decide whether they want to see another four years of misery, another four years of financial mess, another four years of the Jay Weatherill Labor government, with all the inadequacies we have seen over the last 12 to 18 months or so, or whether they want to see a fresh start, whether they do want to see a change of financial and economic direction and whether they want to at least give somebody else a go in terms of tackling the major problems we have.

The substance of my remarks this afternoon I want to devote toward health. Sadly, as I have just highlighted in terms of the state's finances, we see the same sort of mess within health. We had in former minister for health, John Hill, a man who never saw a budget that he could not blow. That will be his political epitaph, 'Never saw a budget that he couldn't blow.' That is not just a commentary from the Liberal Party but is certainly a commentary from former Labor treasurers and also a commentary from Treasury officers in relation to his sad record in terms of financial management within health.

Let me acknowledge that he was a well-intentioned, albeit negligent and incompetent, health minister. His heart was in the right place, he had some good ideas, but in the end you need to be able to manage a $4 billion to $5 billion budget and, as former treasurer Kevin Foley will say to anyone who will listen to him privately, as will former treasurer Jack Snelling, now the health minister, John Hill just never could, or wanted to or was able to manage his health budget. Every year, there would be a massive blowout in the health budget. Every year, he would come, cap in hand, to Treasury and indicate that he had been well intentioned in the last 12 months but had not quite made it, was just a couple of hundred million short and could Treasury help him out in terms of balancing the books.

Of course, during the period when the rivers of gold were flowing into the Treasury coffers through massive increases in property taxation, massive increases in property valuations, and massive increases in GST revenue as a result of the GST deal struck by the former Liberal government with the former federal Liberal government, ministers such as then minister for health Hill were in a fortunate position. When they went to the former treasurer, Mr Foley, to say, 'Look, I am just a couple of hundred million dollars short,' the then treasurer was able to say, 'Well, as it so happens we have just won the financial equivalent of budget lotto, and we have an extra $500 million to $600 million in our budget this year that we did not predict, because of the GST and because of property taxes. Here's a couple of hundred million dollars to pay for the profligate overspending in your department.'

That lasted for a number of years, for six or seven years. Ultimately, though, your chickens come home to roost (to use a colloquial expression); ultimately we stopped winning the budget lotto every year, with an unbudgeted $500 million or $600 million a year coming into the accounts, and our budget position started to reflect the overspending of ministers like former minister Hill, as well as other ministers.

We now have a situation in health where there are ongoing examples of financial waste. The Budget Reform Unit was established just over two years ago at an extra cost of $10 million over four years. Why was that Budget Reform Unit established? It was established because Treasury was so frustrated at the executives within Health, and with the minister, that it could not trust them to try to target the savings that were meant to be achieved. So they superimposed a former Treasury officer, Mr Stephen Archer, and a number of other former Treasury officers, in a unit of up to 13 at the time, to try to force former minister Hill and his senior executives to meet their budget savings tasks.

What a travesty that is, that $10 million of taxpayers' money had to be spent because almost 100 senior executives within the health portfolio and the minister, the almost 100 executives earning between $150,000 and $440,000 a year—all of them above the basic wage for a member of parliament, I note—because those executives earning those lumps of money could not or would not bring their budget in on the required budget that Treasury had outlined for them. Instead of insisting that they perform and do what they were meant to do, the answer from the government was, 'Well, let's put in another 10 or 13 staffers, half of them from Treasury, to try to force these 100 or so executives—earning between $150,000 and $440,000—and the minister to do what they were meant to do.'

Here is a bright thought: instead of spending $10 million, why not tell the minister and the 100 executives that it is their responsibility to bring the budget in on budget? What a novel thought! I suspect that the former minister and former senior executives thought it would be outrageous, to actually expect them—even though they were earning between $150,000 and $440,000 a year—to bring the budget in on line. They supported the notion of putting an additional 13 full-time equivalent staffers into the Budget Reform Unit.

We have seen it right across the board, and I will just refer to some IT projects that are perfect examples of the financial mismanagement of the health ministers, both Snelling and Hill. The budget papers show a massive blowout of more than $40 million as the total impact of the Oracle IT project. That project was originally meant to cost $23 million. The actual project cost has now blown out more than double to $47.5 million, and $15 million that was going to be saved by introducing it has not been achieved. That means the total hit to the health budget is now about $63 million, instead of $23 million, or a blowout of $40 million on a $23 million project.

Many of us who have been on the Budget and Finance Committee have seen so many examples of IT projects blowing out massively because of financial mismanagement. This is one of the worst, but you have a situation—and we have seen it in many examples—where approval is given for a new IT project on the basis that legacy systems will be closed and wound up. Once the project has started, not only does the project cost more, but the legacy systems are either not able to be wound up or cannot be wound up as quickly as they were intended to be, and for a period of time both the legacy systems and the new systems have to be funded so the savings are not achieved and the budget blows out at the same time. There you are with a $23 million project and the total impact on the budget is up to $63 million.

We should be very fearful about another project called EPAS because that is a $400 million project, and we found out in the estimates committees that it had been budgeted to cost $404 million, and the minister has already acknowledged that that has now blown out to $422 million—a $14 million blowout. The minister said, 'Oh, well, look, that was just adding CPI to it,' but I am told that they had forgotten to include the CPI increases during the duration of the implementation of the project—a basic and fundamental error. It should have been picked up by Health. It should have been picked up by Treasury. All of these projects include—if the project is to extend over a number of years—some sort of inflater, whether it be at the CPI level or others, in terms of increased costs during the duration of the contract.

Minister Snelling sought to portray that as being, 'Well, it is neither here nor there. That is just a CPI increase.' That is the problem with this government. A lazy $14 million increase is portrayed as, 'Well, don't you worry about that. That was just a CPI issue,' as if it is not real money. 'It is only $14 million in the greater scheme of things.'

I think that is the problem with this government. If I can perhaps wrap up my comments, in relation to this part anyway, I would say that after 11 years they have lost touch with the real world. After 11 years they, and their advisers, have just lost touch with the real value of a dollar. The blowouts are so significant that, with a $14 million blowout on $400 million, the minister probably thinks, 'Well, I blew out the Oracle budget from $23 million to $63 million, so that was $40 million on $23 million. A $14 million blowout on $400 million isn't too bad.'

Sadly, that is the way Labor ministers, like minister Snelling, and Labor premiers, like Premier Weatherill, think about budget issues. They have forgotten the real value of a dollar. They have lost touch with the real world. They have lost touch with the people who voted at one stage for them. They are not in a position to recognise that $14 million is a hell of a lot of money. That is not the last we have heard of the EPAS project because it is certainly my view that the real blowout of the EPAS project will be significantly more than $14 million.

Certainly, whoever is elected after March 2014 in my view will either retain responsibility, if it is a Labor government, or inherit responsibility, if it is a Liberal government, for a potential financial disaster. It has all the makings of a potential financial disaster, and I know that minister Snelling is desperate to keep this under wraps until March 2014. With some of the questions that were put to the estimates committees, he was desperate to put a lid on it, to play a straight bat, or whatever expression you want to use to describe his response to the questions, but he is desperate to keep a lid on this particular financial scandal brewing within his own department until after March 2014.

If our audit processes are working well, the Auditor-General should, in his October report, lift the lid on a brewing scandal within health in relation to EPAS. I am not overly confident, given the past record, but I am ever hopeful that, if it is as I have portrayed it, we will get an early warning sign from the Auditor-General of some significance in his October report. If a new government is elected in March 2014 and the whistle has not been blown on this financial scandal within health, questions will need to be asked, not only of the department but also of Treasury, as to what they have been doing, but also I think the Auditor-General would need to ask questions of his own staff if it has not been publicly identified in relation to the problems that exist within IT.

I do acknowledge for the Auditor-General that, in recent years, they have given a focus to IT projects; certainly, I have welcomed that. We think they are a little late coming to the party in relation to the financial disaster of Shared Services but, soon after we first blew the whistle on Shared Services, the Auditor-General's staff did, in a detailed fashion and in a regular fashion on an annual basis, report the financial disaster of what is Shared Services. Whilst I still disagree with some aspects of their analysis, most of it I heartily agree with in terms of the detail of that analysis.

I think that same forensic analysis which has now been applied to Shared Services needs to be applied by audit staff to some of the IT projects and, in particular, big IT projects that exist within the health department as well. Sadly, we are seeing, as a result of this financial waste, massive cuts right across the board in essential services. We have seen the abolition of paediatric services to the hardworking families in the north-eastern suburbs. A heartless health minister has trodden on the wishes of families and their children in the north-eastern suburbs by the removal of paediatric services from Modbury Hospital.

Mr Acting President, you would well know, because you are in touch with the families of the north-east, that they are angry at further broken promises by minister Snelling and the Jay Weatherill government in relation to paediatric services at Modbury Hospital. It is sad that members in the Labor caucus in this place and in the House of Assembly have been virtually mute on the issue of the slashing of paediatric services at Modbury Hospital. The Hon. Mr Kandelaars in this chamber, who is quick to defend the government on every issue, has been unprepared to speak out on behalf of his friends, acquaintances and, probably, family members in the north-eastern suburbs who are railing against the heartless decision of the Jay Weatherill government to slash the paediatric services at Modbury Hospital.

Where are the Labor members who are prepared to speak out on behalf of their constituents in relation to a specific commitment or promise given by the Jay Weatherill government? I can tell you where they are: they are cringing, hiding underneath their desk in their office, collecting their annual salary each year and desperately trying to keep away from acquaintances and friends who are saying, 'Why are you doing this to us? Why have you abandoned us at a time when we need your advocacy within the caucus, within the community, and with the minister and with the Jay Weatherill government?'

It is galling to see lower house members, such as the member for Florey, turning up at media events and, in essence, attacking, or disagreeing I should say, rather than attacking (although I see from your nod that maybe 'attacking' was a better word), with those who are protesting about the decisions at Modbury Hospital. I think that is disappointing because the member for Florey, on some other occasions, has been prepared to stand up for her community. I would hope that Labor members in this place and the other place will join with the Liberal leader, Steven Marshall (the member for Norwood), and the Liberal Party and support the policy position he has put out on the Liberal Party's behalf to fight for and to return paediatric services to Modbury Hospital.

We congratulate the Hon. Mr Kandelaars on his initiative this week in terms of PitStop, the men's health initiative. He is very keen on bipartisan initiatives, and we were keen to support him. The Hon. Mr Dawkins, I understand, went there to support him. I now invite the Hon. Mr Kandelaars to join me, in a bipartisan way, to oppose the decision of his government in relation to the cutting of paediatric services at Modbury Hospital.

I invite the member for Florey, in a bipartisan way, to join me and the Liberal Party in fighting for the families and children in the north-eastern suburbs. I invite the other Labor members in the north-eastern suburbs, Mr Acting President, to join the leader of the Liberal Party, yourself and myself, in a bipartisan way, to oppose these heartless cuts to paediatric services in the north-eastern suburbs.

There are so many other examples. There will be a mass meeting in Millicent next week, and I am sure that the Hon. Mr Maher will be coming down for that, as a representative of the South-East, and the Hon. Mr Finnigan, I am sure, will be there as well. It is there that the Jay Weatherill government is cutting obstetric services from the Millicent hospital, and there will be a mass meeting. Many of those people would be friends of the Hon. Mr Maher, as I am sure they would have been quite active over the years in supporting community groups and others with the Hon. Mr Maher.

I invite the Hon. Mr Maher to join us, in a bipartisan way, to listen to the concerns of Millicent residents about the cuts in obstetric services from the Millicent hospital. We are seeing so many of these examples. It is disappointing to see that the Hon. Mr Maher and the Hon. Mr Kandelaars, in this chamber, have their heads our down and that there is no response at all to this open bipartisan invitation to them to join either of the particular causes.

There are many examples of heartless and pointless cuts in the health arena. That is why the waste we see with the IT projects, the waste we see with the number of executives and the waste we see with the Budget Reform Unit is so galling for all of us. We acknowledge that budgets are tight, we know cannot do everything for everybody at one particular point in time, but we do know that, if there is a change in government, at least a new government will be intent on trying to remove and reduce the waste within health and across the public sector and to spend it on important services such as the paediatric services at Modbury Hospital.

That is the challenge for a potential new government. That is the fresh start that Liberal leader Steven Marshall is promising. Not that we are going to be able to solve the problems and the financial disasters that it has taken 11 years for this Labor government to create, because they cannot be corrected in four years. What a Liberal government will set about doing in its first four years is commence the long process of recovery, the long process of correcting the mess that we inherit (if we do) in March 2014 of 11 years of financial disaster under Labor and start a process where waste is removed and priorities such as paediatric services at Modbury Hospital can be saved.

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (15:50): I would like to thank all those honourable members who have made a contribution to this important debate, especially those who have offered their congratulations to the government on an excellent state budget or at the very least have offered their support for the Appropriation Bill. I look forward to its speedy passage.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. J.M.A. LENSINK: I know that the minister would have been listening intently to my contribution, because I covered a lot of areas that were involved in his portfolio, but that was only a couple of hours ago and really, apart from not congratulating his government, I asked a number of questions. He obviously would not have had time to retrieve those, but I just request whether he is able to provide out of session some replies to them. Given that we members in the Legislative Council do not have the opportunity to participate in the estimates debate, I put a few questions to him that I would have liked answered.

The Hon. I.K. HUNTER: I did listen intently to the penetrating questions that the Hon. Ms Lensink put on the record. I am surprised, of course. Most of them had no pertinence to the bill that is before us. They were questions that could have been more appropriately directed to the estimates process, and I understand members in this place have the opportunity, as some honourable members over there did, of passing their questions to their friends in the lower house. But of course, the Hon. Ms Lensink wants all the glory herself. That is fine. I will have a look at those questions and see which ones I can bring back a response for her on.

Clause passed.

Remaining clauses (2 to 8), schedule and title passed.

Bill reported without amendment.

Third Reading

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (15:54): I move:

That this bill be now read a third time.

Bill read a third time and passed.