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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2009-04-08 Daily Xml
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CREDIT RATING

Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (14:43): My question is again to the Treasurer. What will be the decline in South Australian jobs growth if the government loses its AAA credit rating? The Treasurer told the house on 14 October 2004, 'Restoring our AAA rating is what drives jobs growth in this state.' But the Treasurer told the American Chamber of Commerce lunch just last Friday, 'Well, I can't be fixated on maintaining the AAA rating as a badge of honour.'

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (14:44): I think I actually said that in the parliament. I hope this state does not see a re-rating of our state's credit rating, but it is a distinct possibility. That is because in the last four or five months we have been notified by the commonwealth, and I am expecting a third notification in the federal budget or prior to that, of an enormous reduction in GST revenue due to the substantial decline in consumer spending.

GST revenue is down in excess of $1.6 billion over the next four years against forecasts that we had in our previous budget (our last budget) which was based on the commonwealth data in terms of expected GST receipts to the state. We are in the worst financial crisis this state has ever seen, even though—

Mr Hamilton-Smith: No, no, no.

The Hon. K.O. FOLEY: No, no, no? We are not in a crisis? Do you know what the Leader of the Opposition said on radio this morning, when trying to put some coherence around the fantasy project that he announced yesterday? Our new leader, who I have now dubbed Mr Bankrupt and will refer to him as such from here until the election, said: 'This is a plan for recovery from the global financial crisis. It is not a plan for the next four years of that crisis.'

So, he is now telling us the financial crisis has another four years to run. If that is the case—

Mr Hamilton-Smith interjecting:

The Hon. K.O. FOLEY: That is what you've said on the radio this morning. You said—

Mrs REDMOND: On a point of order, Mr Speaker, the Treasurer appears to be debating an issue which is not even relevant to the question that was asked by the leader.

The SPEAKER: I think the Treasurer has strayed from the—

Members interjecting:

The SPEAKER: Order! I think the Treasurer has strayed from the question, which was about transport.

The Hon. K.O. FOLEY: The—

An honourable member interjecting:

The Hon. K.O. FOLEY: You should see what my kids have to do for pocket money.

An honourable member interjecting:

The Hon. K.O. FOLEY: No, they have to work. On radio today the Leader of the Opposition referred to this crisis lasting a further four years, yet the day before he could announce a multi-billion dollar project that would bankrupt the state. Mr Bankrupt, the person who would be premier—

Ms CHAPMAN: On a point of order, Mr Speaker: you have just ruled exactly on the same substance. The Treasurer is deliberately defying your ruling, going back to read out and repeat exactly what you ruled on to say that that was straying from the subject. It was about jobs and the AAA credit rating.

The SPEAKER: Order! The deputy leader will take her seat. Yes, the Treasurer is straying from the question which was about transport policy. Has the Treasurer finished his answer?

The Hon. K.O. FOLEY: No, sir. I apologise. I will try not to do it again. One of the policy options to maintain the AAA credit rating would be to cancel $1.6 billion-plus of capital works over the next four years to decrease the pressure on the budget. To do that would be effectively to abandon the state's rail regeneration program or not proceed with the hospital, prisons, schools or a whole raft of capital works projects.

Firstly, that would be damaging to the economy but, secondly, the commonwealth government will not let us do it. The commonwealth has made it very clear that Infrastructure Australia money is contingent upon the state government's maintaining capex effort and not to cut back on capital expenditure. So, we are in a very difficult position.

If we were to lose our AAA credit rating, I would regret it, but the policy option of maintaining capital expenditure, which is substantial fiscal stimulus into the state's economy, is the right policy option in these very difficult times. I would hope that the Leader of the Opposition, Mr Bankrupt, would understand that we are under pressure with our rating, we are under pressure with our finances, and recklessly committing the state to $2 billion, $3 billion or $4 billion of increased expenditure above that already in the forward estimates is a recipe for bankruptcy and further downgrading, and it demonstrates that Mr Bankrupt has no real policy options for the state other than promising that which he cannot deliver.

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