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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) (14:37): My question is again to the Treasurer. Why has the government delivered the worst financial liabilities to revenues performance of all states in the commonwealth? Well before the present financial meltdown referred to by the Treasurer earlier today in his statement, the government set a fiscal target in its last budget which said that the government intended:

To achieve net lending outcomes that ensure the ratio of net financial liabilities to revenue continues to decline towards that of other AAA rated states.

However, the ratio now stands at 70.4 per cent, the highest of all states in 2008-09, and is forecast to increase across the forward estimates.

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (14:37): Historically, South Australia has had a very high net financial liabilities to revenue ratio, the highest of the mainland states from memory.

Mr Hamilton-Smith: Especially since the State Bank.

The SPEAKER: Order!

The Hon. K.O. FOLEY: My colleague is correct. The reason we did not have a AAA credit rating when this government came to office was because, notwithstanding the sale of ETSA, the former Liberal government could not make the hard decisions to bring down recurrent spending to actually see a decline—

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: If anything I am saying is factually incorrect or a lie then members opposite can call a substantive motion and accuse me of misleading the house; but they will not do that because they know that what I am saying is true. The last government was incapable of bringing that liability ratio down to a level that would enable the state to be re-rated AAA. This government did that, and we did it through making cuts, getting spending under control and building up surpluses and, for a period of time, eliminating all budget sector debt.

Mr Williams: What about the windfall revenue?

The SPEAKER: Order!

The Hon. K.O. FOLEY: The truth of the matter is that the reason that I made a statement to the house some 25 minutes ago is the fact that those ratios are blowing out through circumstances beyond our control, that is, a significant shedding of value of the Australian and international stock markets and a lowering of what is called the discount rate or the government bond rate that values future earnings and, because it is a lower rate, the liability grows. I have no control over that. We have no control over those two factors, and they push out these ratios. Then when you throw into the mix hundreds of millions of dollars of losses of revenue, your operating account suffers and the ratio blows out again.

The very reason that I have outlined to the house today that drastic and urgent surgery and action has to be taken on our state budgetary position is the very point that the leader alluded to. Historically, this state, South Australia, has always had a higher ratio than other mainland states which has reflected our state's relatively poorer position economically than the rest of the nation for decades and decades.

We are changing that. Our economy has never been stronger. Our economy has never been more diversified. There has never been a point when more people have been in employment than there are now. We will ensure that future generations of South Australians enjoy their lives in a more robust, diversified and wealthier economy than we inherited but, importantly, on the way through to that point, strong budget management will have to be delivered by governments and we are doing that and we will continue to do it.

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