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House of Assembly - Fifty-First Parliament, Second Session (51-2)
2008-02-28 Daily Xml
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STATE FINANCES

Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (14:28): Does the Treasurer stand by the formula used in his 2003-04 budget to express risks to the integrity of the budget and government investments posed by equity market falls on government investments? Budget papers reveal a risk to state finances where there is a 1 per cent fall in equity markets equal to a loss of income for WorkCover of $2 million, $12 million for the Motor Accident Commission, and $30 million for Funds SA superannuation liabilities. The domestic equity market has fallen 18.3 per cent since the Mid-Year Budget Review and, using the Treasurer's own formula, that equates to a loss of income for WorkCover of $64.1 million, $29.6 million for the Motor Accident Commission and $549 million for Funds SA superannuation liabilities, losses potentially totalling $832 million.

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (14:29): The Leader of the Opposition's superannuation is safe because he has parliamentary super, so he does not need to worry.

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: What a silly question.

Members interjecting:

The SPEAKER: Order! I ask members on my left—

The Hon. K.O. FOLEY: Is the—

The SPEAKER: Order! Deputy Premier, I have not finished. Members on my left must not interject. I asked the Treasurer not to make comment. He does not assist the chair in maintaining control of the chamber when he makes commentary about the questions.

The Hon. K.O. FOLEY: I apologise, sir.

The SPEAKER: The question stands, and I ask the minister to answer it to the best of his ability. The Treasurer.

The Hon. K.O. FOLEY: Sir, I assume the inference of the question is that we should not invest in equities. Is that what you are saying?

Mr Hamilton-Smith: What losses have you made?

The Hon. K.O. FOLEY: What losses have I made? So I am to blame for the equities market fall?

Mr Hamilton-Smith: It is your budget.

The SPEAKER: Order!

The Hon. K.O. FOLEY: Mr Speaker, yes, I stand by what was in the first budget, obviously. And I say this to the house: in the first two budgets of the Labor government the equities markets crashed. We had two years in a row when there were negative returns to the stock market. I was briefed by Funds SA people that we forecast and plan for two negative years in every eight years. I copped two such years right upfront, and I was pretty happy with that. Yet, three or four years later, the performance of our funds management (I think in the last two or three years—certainly in two of the last three years) has been such that we have had double digit equity returns.

The government has invested $16 billion, from memory, in funds—the majority being from Funds SA, and about $800 or $900 million, from memory, from the Motor Accident Commission. WorkCover invests its funds separately from Funds SA. Also, we have some other pockets of investments. That is the nature of investment markets. The nature of the investment markets is that when the stock market goes down the value of your investments goes down. When the stock market goes up the value of your investments goes up. I would have thought as a business person you would fully understand that.

Ms Chapman interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: I just don't know what else they want me to do.

Ms Chapman: Answer the question.

The SPEAKER: Order!

The Hon. K.O. FOLEY: Is the opposition suggesting we should put all of the $16 billion we have in superannuation in the bank? Are you suggesting we should put it all in the bank?

Mr Hamilton-Smith: We are asking the questions. An answer would be nice.

The SPEAKER: Order!

The Hon. K.O. FOLEY: I do not think the PSA and public servants would be rapt if we had put the $16 billion, safe as houses, into a bank and it earned on average about 5 or 6 per cent over the last eight years. My guess is that over the last eight years their contributions have doubled, given the strength of the equities market.

Mr Hamilton-Smith interjecting:

The SPEAKER: I warn the Leader of the Opposition.

The Hon. K.O. FOLEY: Revelations, sir! If the stock market has crashed the value of the government's investments has decreased. Blind Freddie can see that. So what? Mr Speaker, the figure that I look at is the end of year result; and it may well be, given the nature of the stock market, that we have had a negative return from Funds SA. We do not know that yet. It is too early. There was a very strong six months.

Mr Hamilton-Smith: What about WorkCover?

The SPEAKER: Order!

The Hon. K.O. FOLEY: WorkCover is in the same position. It does not put it all into equities markets. It also put it into—

Mr Hamilton-Smith interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: —fixed interest, bonds and cash, like any other organisation. Look at your own superannuation accounts and you will get a fair idea of what is happening in the marketplace today. If the leader is trying to scaremonger, it is a very sad indictment on the care and concern the Leader of the Opposition has for the investment funds of government.

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