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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2008-10-14 Daily Xml
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STATE BUDGET

Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (14:30): My question is for the Treasurer. Will he rule out additional borrowings by the government or its agencies to prop up the budget as a response to the economic downturn?

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (14:31): What I have outlined to the house is that an appropriate and proportionate response will be prepared by government. In doing so, I stated that that appropriate response will involve the deferment and/or cancellation of capital works projects not considered vital or essential, given the current financial crisis that is confronting the globe, and from where it matters to us most, here in South Australia.

Again, I find it humorous that I would get such a question from the Leader of the Opposition, because when we came to government we stopped the pattern of budget funding that had been around for decades under both sides of politics, and that was to pay the wages of our teachers, nurses, doctors and police officers through borrowings—supplementing it by borrowings—and we broke the back of that. In the first four budgets at least, from memory (probably five budgets and final budget outcomes) we delivered net lending surpluses, that is, we covered the cost of capital and depreciation and our operating costs from the revenue we had available.

What we embarked upon two years ago was a program of rebuilding the state's economic and social infrastructure to the extent to which it was financially prudent. To do that we borrow money. The opposition was out there saying, 'You should not borrow money at this point of the cycle, you should be able to find it from within recurrent expenditure.' What utter nonsense. Why should today's generation pay upfront for infrastructure that will last 30 or 40 years?

What we have said in today's statement to the house has been very open, very transparent and very honest, with the impact of the global financial crisis on our state. What that is now necessitating is a rethink of what we are currently undertaking in our program to meet the current financial constraints that we are in. We have lost an enormous amount of revenue. We have seen our liabilities increase significantly, and we must tune our spending accordingly. That is the right thing to do and the responsible thing to do: a measured proportionate response consistent with the way we have managed the books since we came to office.

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