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House of Assembly - Fifty-First Parliament, Third Session (51-3)
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APPROPRIATION BILL

Second Reading

Adjourned debate on second reading.

(Continued from 4 June 2009. Page 3096.)

Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (11:48): Here we have, after eight years of state Labor, its eighth budget—the budget that will define this government going into the next election, as it argues the case for a third term of government. It is a budget from a 'do nothing' government, which has spent eight years doing virtually nothing and which promises and borrows its way—using money borrowed from the Australian people via the Prime Minister—into a third term.

It is a budget that will be remembered for what it does not reveal rather than for what it does reveal. Cuts to services and programs and increases in taxes will remain secret for at least 300 days beyond the budget. This extraordinary strategy means that voters will be kept in the dark while the Treasurer decides where the axe will fall and which new and increased taxes he will contrive.

So, how do we judge the government's economic performance? We can judge it only on past budgets when, even in the good times, this government has not been able to exercise financial discipline—and this is a key point for the house to consider. Seven of the eight years have been the best financial years this state has ever seen. Money has been rolling in, thanks to windfall GST and property tax revenues. Despite having received windfall receipts beyond expectations, the government has budgeted very small surpluses, and now it has found itself short, not by millions but by hundreds and hundreds of millions of dollars, and it is being bailed out.

In 2002, revenue was $8.5 billion but, by 2013, revenue will be $15.1 billion. Just think about that—it is a significant increase in government revenues, and it is not being spent wisely. As the Auditor-General has observed of the Rann Labor government, year after year, in his reports:

...the state may have developed a culture of expecting growing revenues to continue to support increasing expenses.

I think the Auditor-General has been unremarkably modest in his observation, which was in his 2007-08 report, part C, page 6. The fact is that Labor has quickly and unwisely spent the windfall revenues it has received.

In its first term from 2002 until 2006, nothing of substance was built and nothing was done, bar opening projects like the Alice Springs to Darwin railway and the Adelaide Airport terminal, all the work of the former Liberal government which, despite extraordinary debts inherited from Labor as a consequence of the State Bank, still built and did more in its eight years than this government has done in its eight years.

Of course, in that first term of Labor, there were glossy brochures and plenty of plans. We had a lot of creative tension spawned from having everyone talking among themselves: 'We will go out there, and we will form a lot of committees, economic development boards and so on'. However, I saw no sign back in 2002 to 2006 of action for the future. There was no action for the future back then. It was all about hanging on for your first term and then thinking about what you would do in your second.

Over the past week, the people of South Australia have seen the advertisements promoting the government. Over these two terms of government, there has been plenty of spin. There has been plenty of government-funded advertising. We all know what the Premier and the Treasurer had to say about that when they were in opposition. Now, millions of dollars are being spent on what is, in substance, politically inspired advertising.

It is time for South Australians to reflect on the true state of the state. The Liberal opposition recently reviewed the Economic Development Board's work known as the 'State of the state'. South Australians will remember that the Economic Development Board was commissioned to complete a strategic plan, a step that the government and the opposition jointly supported. There was a 'State of the state' report that was to snapshot where we were positioned relative to other states. That report endeavoured to clarify how competitive or uncompetitive we were within the nation.

A copy of our work is publicly available. It is on my website martin2010.com.au, and I would encourage people to look at it. We have looked at those key measures that the EDB used back in 2002. We have looked, for example, at our slice of the national economic cake. It has continued to decline over the past eight years. We have looked, for example, at our share of the nation's exports, our share of national economic activity, our share of investment and our share of population growth. Guess what? It has all continued to decline over the past eight years.

Our work on the 'State of the state' report demonstrates—and South Australians can read it for themselves—that a great opportunity has been lost over the past eight years. During this up cycle, this boom that we have had from June 2002 until recently, when buoyant revenues could have sustained structural reforms, tax reforms, planning reforms and infrastructure reforms, instead, the money has essentially been wasted.

The government has suddenly realised that it needs to go out and build things. After eight years, it has suddenly realised that it needs to take action for the future. 'Let's go out and take some action now for the future!' It has now to borrow the money from Mr Rudd—really, the Australian taxpayers—in order to make it work. Beyond the spin, there is considerably more work to be done, and the 'State of the state' report tells its own story.

So, in this budget the opposition and, I think, the people of South Australia were looking for a change of direction. We were looking for signs of a fresh start from the government, signs of a new beginning or a new direction, one which reflected fresh thinking and a long-term view, but the reality of the budget when it is examined is quite different.

The first point I want to make about the budget is that, after eight years, it should have defined this government based on its results, rather than present as a budget of promises. I make this point to South Australians: you must judge governments on what they do, on the results they achieve, not on their words and their promises. Look back over the last eight years and ask yourselves what Labor has done for you in that eight years. It is a soulless exercise.

Thanks to the Australian taxpayer, borrowed federal funds gifted to the states mean that the Rann government does not now have a revenue problem. Contrary to what we have been told, revenue is actually up, and it is not up by a small amount: it is up by $1 billion a year, and that is a significant pay rise. Any shortfall in GST or property tax revenues have been more than offset by just short of $3 billion in extra grants from the commonwealth which have sprung up out of nowhere since the last federal budget from the bottom line.

The Treasurer would have us believe that the $2.9 billion of special purpose payments from the commonwealth extra over the last 12 months are not something you can consider. It is extra funding that was not there last year. It is windfall revenue. You have rushed off to your federal colleagues, you have asked to be bailed out and you have been bailed out using borrowed money. It is being used to build your electrified rail. It is being used to build a raft of infrastructure promises you are putting forward because you cannot afford to do them yourselves. It is also being used to build infrastructure in schools, community housing and for a raft of other measures which the state budget will now not need to fund.

If the Prime Minister suddenly turns up with an extra $3 billion and says, 'Here, have this to build things that you would otherwise have to fund,' then you can use your GST revenue and your property tax revenue for other things: you can use it to pay wages, you can use it for a whole host of purposes.

The Treasurer sits here, having had to be bailed out to the tune of $3 billion, and says that other members in the house need help with the accounts. I think that the person who needs help with the accounts is the Treasurer because he has left himself with a very significant deficit. I remind the house that, on a net lending basis, it is $1.541 million and, on a cash deficit basis, it is $1.54 billion. His deficit on a net operating basis is $304 million. It is a sorry state of affairs.

This borrowed money he has from the Australian taxpayers, via Mr Rudd (a pattern repeated in all the states), we will have to pay back. This state understands better than any that, when you go out and rack up taxpayer debt, sooner or later someone has to pay it back: it will be our children, it will be our grandchildren or it will be us.

The state is delighted to have that money. It has dropped out of the sky. Like Santa Claus, Prime Minister Rudd has come along and said, 'Here, have I got a Christmas stocking for you.' It has bailed out the business of the state government in this eighth budget, a bailout that should never have been necessary.

The second point I make about this budget is that, despite the bailout, the next four to eight years depend upon prudent cost controls within government—something this government has never ever shown. State Labor is trying to reverse its indulgences during the boom years. The budget shows that over the last eight years it has hired over 16,400 extra public servants, of whom only 4,400 (according to the last Auditor-General's Report) are nurses, teachers, doctors and police officers. That is 12,000 people extra.

The Treasurer is now looking to get rid of 1,600, and I put this question to him: why hire them in the first place during the boom if you did not intend to keep them on? Why did the government not manage the business well in the first place? Why let it grow so that the only choice you have is to slash it back when things turn down?

Of course, the budget hinges on pinning wage growth across the public sector to 2.5 per cent per annum. All I can say is: good luck and best wishes. Looking over the record of the last eight years, it will be nothing short of a miracle if that is adhered to—leaving us short.

Then there is the $750 million in savings either through tax increases, cuts to public sector jobs—and there will be thousands and thousands of them—or services. But, wait for it, we will not be told what those cuts will be until after the election. How curious is that? I am trying to imagine members opposite, when they are in opposition, wearing that one. 'By the way, here's $750 million worth of promises. We're going to make these savings, but we will tell you about it the day after the election.'

I signal to the Public Service Association: I hope you are watching, because we know what the view on this was at the time of the last election. It is very clear what the government is doing. It is a massive con—$750 million, 'We will tell you about it the day after the election.' All I can say to the people of South Australia is watch out!

The standard now appears to be that Labor governments are so arrogant that they make whatever outrageous promises they want without specifying how the savings will be made—they can put it all off for public scrutiny beyond the next election. All I can say is: do not ask the opposition again to explain what they will cut when they make any commitment. If you are not prepared to do it yourself, if you are not prepared to hold yourself to the same standard you require of others, do not expect to be treated credibly.

If you want to talk about dodgy goings-on, ask the Premier how he managed to appoint a goose with 60 speeding fines and traffic offences as the minister for road safety. Ask the Premier why he did not refer the allegations of corruption against Randall Ashbourne to police immediately when they were first made known to him.

If you want to talk about people's judgment, we are happy to engage. Do not worry about that. The question you have to answer is, how you are going to make this $750 million worth of cuts, because the standard now is that apparently no-one needs to explain where they are going to make the savings; it is all right, you can leave it until after the election.

The Hon. K.O. Foley: Where's your deputy? Where's Vickie?

The SPEAKER: Order!

Mr HAMILTON-SMITH: The third point—

The Hon. K.O. Foley interjecting:

Mr HAMILTON-SMITH: Look, he's a little bit frisky. He has been the Treasurer for eight budgets. He cannot balance the books. Kevin Rudd and Wayne Swan have come along and said, 'Here's a quick $3 billion, Kevin. We'll help you out,' and now he is getting prickly.

Remember, this is the Treasurer who was getting up for seven budgets and saying, 'Mr Speaker, I've spent seven years making tough decisions.' As Stephen Baker beautifully explained on ABC Radio, this bloke would not know what a tough decision was if he tripped over it at the Colac Hotel.

For the first time in his life he has actually faced some tough decisions, and what happened? Kevin Rudd let him off the hook: 'Here's $3 billion.' I reckon Billy the goose could go to his accountant and bank manager with $3 billion in his pocket and his bank manager would probably say, 'Gee, you've run a good business this year; we'll give you a AAA rating.' Anyone who gets given a $3 billion gift is going to balance their books—and I make that point, Mr Speaker.

The third point I want to make about this Labor budget is the true debt position. The Treasurer got up at the media lock-up and told people that the government's debt was $3.1 billion. That's it—we are ratcheting up debt to $3.1 billion—

The Hon. K.O. Foley: Budget sector debt.

Mr HAMILTON-SMITH: Oh, a little qualifier. What was it?

An honourable member: Budget sector debt.

Mr HAMILTON-SMITH: Oh, the budget sector debt—right. He conveniently forgot to mention to the media that there is this other little bit of public sector debt called the public non-financial corporation sector. These are all the other things that he is responsible for; he just forgot to tell them—things like SA Water, which is going to borrow hundreds and hundreds of millions to build a desalination plant; TransAdelaide has plans to build as well; the South Australian Housing Trust; and ForestrySA. He just forgot to mention that, when you include their debt, the true figure is just short of $6.7 billion. He just forgot to mention that. We won't.

The Treasurer might argue—as I think he just attempted to by interjection—that that does not matter. He says, 'That bit of the debt doesn't matter; it's all right, it's only $3.1 billion.' Well, I am not surprised to hear the Treasurer say that, because he would remember, along with the Premier—

The Hon. K.O. FOLEY: Point of order, Mr Speaker.

Members interjecting:

The SPEAKER: Order! The leader will take his seat.

The Hon. K.O. FOLEY: He's a very excitable young man today, isn't he—red-faced? Sir, I ask the member to withdraw. He actually said that I said something when I did not.

Mr Hamilton-Smith: What standing order?

The SPEAKER: Order!

The Hon. K.O. FOLEY: It's about something you have a track record for. It's about misleading people—

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: He can't accuse me of one thing, sir, and then—

The SPEAKER: Order! There is no point of order. If the Leader of the Opposition has said something that the Deputy Premier believes is incorrect, the Deputy Premier can either correct the record in the course of his reply or by way of personal explanation. The Leader of the Opposition.

Mr HAMILTON-SMITH: Thank you, Mr Speaker. You see, we have a government that is accustomed to having a house where they can get up and say whatever they like and then rely on standing orders to contain the contributions of the opposition. When we get up and have a go, they get all hurt, they get all frisky—

The Hon. K.O. Foley: Dodgy documents.

Mr HAMILTON-SMITH: You know what, Treasurer, not a single member of the opposition, or their staff, has been charged by the police with corruption like you—not like your government has with Randall Ashbourne.

The Hon. K.O. FOLEY: Point of order.

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: I ask that he withdraw immediately that I have been charged with corruption. That is a misleading statement.

The SPEAKER: Order! The Deputy Premier will take his seat. The Leader of the Opposition will withdraw that statement.

Mr HAMILTON-SMITH: Well, I was referring to the government, sir. I was referring to the Ashbourne matter.

The Hon. K.O. Foley: No, you didn't; you said me.

Mr HAMILTON-SMITH: No, I said, 'like your government'.

The Hon. K.O. Foley: No, you didn't; you said me.

Mr HAMILTON-SMITH: Well, you, your government—all right?

The SPEAKER: Order!

The Hon. K.O. Foley: Check the Hansard.

The SPEAKER: Order! The words I heard were, 'At least none of us have been charged with corruption, like you.' I ask the Leader of the Opposition to withdraw that statement.

Mr HAMILTON-SMITH: Let me make it very clear, Mr Speaker. I was referring to the government and not the Treasurer.

The Hon. K.O. FOLEY: Mr Speaker, no member of government has been charged with corruption—no member of government. No member of the elected government has been charged with corruption. I ask the leader to withdraw that accusation. It is unparliamentary and untrue.

Members interjecting:

The SPEAKER: Order! I think the allegation that a member of the government was charged, or has been charged, with corruption would generally be understood to be a minister. So, I think it is best if the Leader of the Opposition withdraws the remark, and that will enable him to get on with his speech.

Mr HAMILTON-SMITH: Mr Speaker, if there is any suggestion that I was referring to a member of parliament, I am happy to withdraw that. I was referring to the Ashbourne matter—I think that is very clear—and only in response to interjections from the Deputy Premier.

The Hon. K.O. FOLEY: Point of order, sir.

Mr HAMILTON-SMITH: If you are going to let him interject, he is going to get something back.

The Hon. K.O. FOLEY: Point of order, sir. I asked that he withdraw and apologise for accusing members of government of being charged with corruption. It is black and white. I demand that he apologise.

The SPEAKER: I understand that the Leader of the Opposition has withdrawn the allegation of corruption against the minister, and I think it best that we now just proceed. The Leader of the Opposition.

Mr HAMILTON-SMITH: The third point I want to make about Labor's budget is the true debt position, and I have been emphasising that point. This state needs nothing more in terms of demonstrating how important it is to consider the non-financial corporations sector than the fact of the State Bank collapse. In that instance an entity outside of government itself collapsed, resulting in a very significant debt to the people of South Australia. That position must be included in the total debt figure, and it brings the figure to just short of $6.7 billion—and that is without considering the $1.7 billion worth of debt linked to the rail yards hospital.

The rail yards hospital proposal is conceived, at present, as a public-private partnership, but the Treasurer has conceded that it may eventuate that the project needs to be partly or fully debt funded. He is hopeful that it will proceed as a PPP, but recognises that it may be necessary for that to become debt. That is not due to be completed until 2016. If debt is needed to fund it then, presumably, a significant element of the debt would need to come onto the books before that time so that the hospital could be built. So, there is an additional risk that $1.7 billion, or part thereof, could be added to the $6.7 billion, bringing it to about $8.4 billion.

On top of that, the budget papers confirm that unfunded superannuation liabilities—and this should be of concern to every public servant—have risen from about $4 billion in 2002 to almost $10 billion in this budget. Members should also not forget WorkCover unfunded liabilities, increasing from $56 million to $1.3 billion under Labor, and rising. That is close to $20 billion of debt in unfunded liabilities. One day we will need to pay the bill—$24,000 for every working South Australian. Unfunded liability is a future debt which sooner or later will have to be paid.

I turn now to the fourth point I want to make about Labor's budget. This government does not deliver on its promises; it makes policy on the run. Consider the number of projects promised in one budget and cancelled in the next. We were promised a Mount Bold reservoir expansion. Remember that one? It was in the 2007-08 budget. There was great fanfare. It was in the budget; it was on the front pages and prominent in TV news. Mount Bold was out there in the headlines but, in the next budget, it had vanished. Where is the money? It is nowhere to be seen. Are we to get a Mount Bold reservoir extension? We are not.

Members will recall the Upper Spencer Gulf desalination plant, promised in the 2007-08 budget. It was front-page stuff and led the evening news bulletins. We were going to build the biggest desalination plant ever known to man, and it was all going to happen in the Upper Spencer Gulf. Last Friday, in response to the budget, when I made this point the government had to concede that the project had been cancelled. Remember the tramlines to West Lakes, Port Adelaide and Semaphore that were promised last year? There was great fanfare—on the front pages and heading the news bulletins—but where is the money for that in this budget? It is nowhere to be seen.

We were promised an underpass along South Road beneath Port Road and Grange Road. Does anybody remember that? It was front page, leading the bulletins, promised in the 2005-06 budget. Where is the money for that? Action now for the future! Last year—almost exactly a year ago—the Treasurer and Premier were down at AAMI Stadium with their cheque book saying, 'We're going to give $100 million to AAMI Stadium; this will be the future for the World Cup; this will be where it all happens.' Where is the money this year? It was delayed in the Mid-Year Budget Review, and now it has gone completely. I say to the SANFL, 'If it isn't in the budget, it ain't in the budget. The idea that we will dust it off if you need it, if you haven't got it, you haven't got it! It isn't there—it ain't happening!'

Now we have the Mobilong prison. Last year South Australians were told that we would have a new prison system, which included developments at Cavan and Magill. This year that promise was thrown out the window. There is a pattern here. We go out there, we promise the world, we get the headline and in the next budget or subsequently we bin it—and that is not just the prison. This is a repeat performance, an ongoing scene in some sort of Greek tragedy, and the curtain just keeps going up and down.

The implication is this: we are now promised a whole stack of things in this budget, including electrification of the rail system, doubling the size of the desalination plant. There are all sorts of promises in this budget using borrowed money from the Australian people, courtesy of Mr Rudd. I would ask: what will be there next year? Will the rail yards hospital be there next year, or will it be the first decision of the razor gang, formed to cut and slice the budget B, to either scrap the rail yards hospital or considerably wind back on our plans for electrification of the rail system or push back the time frames on the basis that, 'Well, now the election is over and we have had a look at the budget and things are a bit tight, I have an idea: we will scrap the rail yards hospital and, guess what? We'll build the new hospital right where it is, at the Royal Adelaide!'.

South Australians cannot trust this government to deliver on any of the promises in this budget. It has broken promises in the past and will break them again. This is a budget full of promises. I predict today that, if this government cons the South Australian people into a third term, those promises will not be delivered, as the razor will be out.

Let us talk for a moment about the delivery of infrastructure by this government. It has a poor track record of getting results. I remember the catch phrase at the last election: 'Rann gets results'. Let us look at some of the results Rann gets. There was the Northern Expressway: I recall a nice glossy brochure—the government's infrastructure plan. It would cost $300 million to do the Northern Expressway, all the way from Gawler to the Port River Expressway. The sums had been done and everything was done and dusted: 'Don't you worry about that. Action now for the future!'

The only problem is that it cost $600 million and not $300 million and it has blown over in budget and time frame, and that does not include the fact that they just forgot that another section is required from the Salisbury Highway out west through Penrice Salts down to the Port River Expressway—another $200 to $300 million. It will finish up costing nearly $1 billion, but they costed it at $300 million. They are pretty good at costing and developing a project. Just look at the Northern Expressway!

Then there was the Anzac Highway underpass. That was costed but is still not finished yet. Anyone who wants to drive through it at 40 km/h is welcome. It was going to cost $65 million, but then, lo and behold, when they went away and did their sums they got it wrong: it is almost double that at $118 million. They forgot that when you come out of the tunnel you hit a tramline, so it is another $32 million to build an overpass for the tram—a good one there, too.

Of course there was Techport, a very worthwhile development that we fully support. It was costed at $120 million, but they then realised that they had really messed it up and that it would cost $260 million, actually. So, they came here and said, 'We've decided to rescope the project.' This is great: you muck it up and then come in here and say, 'We've rescoped the project. We've had a second think about it; it will cost more than twice what we said it would.' Do not be surprised to find a few of the promises in this budget rescoped a little bit if this lot gets a third term. Their track record on delivering infrastructure is less than inspiring.

I want to make some additional points about how things could have been different, because things could have been done better. If the Liberals had been in government over the last eight years, I can tell you quite a number of things would have been done very differently indeed. Let me start with a few.

We would have kept the costs of government under control, in particular the uncontrolled growth in the size and cost of the Public Service. We are not advocates for trying to turn back the clock and slashing and burning as this government is now attempting to do. There is a better way—do not let the problem evolve in the first place. The government has gone out and offered some wonderful people (16,400 of them) work. It did that because it had windfall revenue flooding in and it rushed out and spent it. Now that it has been caught out by the downturn, it is in the position of having to turn around to those good people and say, 'Now we want to get rid of you.'

My point is simple: if the government had kept its belt tight instead of opening it out as quickly as it swallowed the cash, it would not have put those people in that position. It would not have built up their hopes for a career in the Public Service only to tell them later that the government wants to get rid of them. You have to manage your affairs stringently and properly.

We would have used buoyant surpluses in that up cycle to make structural changes to state taxation so as to make us more competitive. This current state government—and this is a point that has largely been missed—and this Treasurer, in particular, have turned South Australia into the highest taxed state in the commonwealth. It was not that way when they came to government. It is now official. It is in the budget papers. The government has even recycled in the budget papers the Commonwealth Grants Commission table that proves it to be so.

It is not me making the claim: it is the Commonwealth Grants Commission, which is the independent auditor. Property tax is up by 95 per cent; taxes on insurance are up by 52 per cent; and taxes on motor vehicles are up by 37 per cent. It is now more expensive to buy and register a car in Mount Gambier and the Riverland than it is in Victoria or New South Wales. Payroll tax is up 52 per cent, with thousands of employers paying more. Land tax has increased by 292 per cent since the Rann Labor government came to office. Back in 2002, 69,000 people paid land tax. Today, the figure is 188,000.

One of the first actions I took as opposition leader was to hold a tax summit. We have been hard at work looking at the options for reform and talking to stakeholders about them. Everyone in the country agrees that root and branch reform of taxes is needed, even prime minister Kevin Rudd—but not the Premier, and the Treasurer and Deputy Premier. Reform must be comprehensive, long-term and strategic, and must take South Australia into a more competitive space. We do not need piecemeal offerings.

In recent months I have been out, along with all opposition members, talking to businesses, and I can give three examples of where this comes home to roost. I was at a child care centre and they were explaining to me that they pay the highest land taxes in the country. They explained that those costs are passed on to mums and dads through their child care fees, and they were appealing to us to look at ways to help them out.

Then I went to the Pooraka food and produce market and I met with food and vegetable producers—Italians, Greeks, and Australians of all backgrounds—who are trying to make ends meet. They told me that our food and produce market is the highest taxed in the country and that, again, those high land taxes are being passed on to mums and dads in the supermarkets when they buy their fruit and vegetables. They are in a considerably disadvantaged position—and they do export interstate—compared to their competitors in other states.

Then I went to an earthmoving business, and this is particularly interesting. Here was an earthmoving business with a lot of items of plant in their yard and employing a lot of people. It is paying the highest land tax in the country; it has the most difficult payroll tax threshold in the country and it is facing a raft of other government taxes and charges inflicted by the Rann Labor government—

Mr Williams: WorkCover.

Mr HAMILTON-SMITH: —that are the highest in the country. In particular, as my friend the member for Mackillop points out, the highest WorkCover levies in the nation. They are finding that their costs of business have been pushed to a point where they are bidding for work and getting knocked off for that work by interstate companies which are coming over here and using lower costs and winning business for South Australian contracts from our own people. We are not opposed to interstate trade: it is a wonderful thing. Our companies are doing business over there, too, but it irks these businesses when they find, as in the case of the northern expressway, for example, and as I have been told by stakeholders, that three out of every four items of plant and machinery on that project are from interstate.

Where is the justice in that? It would not be so bad if it was a level playing field, but those Victorian, New South Wales and Queensland businesses are coming over here, they are paying lower WorkCover fees, lower land taxes, lower taxes and charges, and lower payroll taxes. Of course, they can bid more cheaply for the work because they are more competitive than our businesses—

The Hon. K.O. Foley interjecting:

Mr HAMILTON-SMITH: Well, go and talk to them. I will take you out there. Come with me; I will introduce you to the business. Talk to them yourself. Ask them, and they will tell you the facts. The same stakeholders tell me that the picture is looking very similar for the desal plant. This is a problem, and it is a problem of this government's design. Another thing a state Liberal government would have been doing is building infrastructure during the up cycle and using surpluses for that task, not leaving it for promises in our eighth term of government.

Desalination infrastructure would have already been in place and supplying water to ease water restrictions to secure Adelaide's future. Western Australia was building its desalination plant years ago. It has been up and running for years. They are building a second one. Every other state has left us behind. Under a Liberal government, the state would already be drinking desalinated water and the River Murray would be much better off for it, and so would our food producers.

Stormwater infrastructure is a glaring shortcoming in Labor's whole approach to waterproofing South Australia. A state Liberal government has been calling for years for a $400 million investment to capture stormwater in 13 sites throughout the west of the city. It is green and it is clean. It would save Gulf St Vincent and balance our water resources. We would have had world-class expertise in the state. We have it here. Our experts in stormwater harvesting and re-use are the envy of the world. We will back them, we will support them and we will deliver a diversified water capture and re-use capability to South Australians. Building it will be one of the first decisions we make. I think it is a decision this government should have made and considered more carefully before it decided to double the desalination plant, but that is the decision it has made. It is an important point of difference.

On roads, the budget and previous budgets have failed. The backlog of road maintenance is well above $200 million. There is no plan to develop major regional roads to build bypasses around places like Port Wakefield and to duplicate major highways like the Princes Highway and the Dukes Highway. There seem to be no long-term planning structures in place. We have a State Strategic Plan and we have an infrastructure plan, yet we keep getting decisions from this government that bear no resemblance to the plan. We must eventually be able to drive nonstop from Wingfield to the south—and the north-south access through the city is a glaring deficiency in this budget. It is important for workers, it is important for businesses and it is important for families. We need a plan on roads, and we need execution of that plan and delivery.

I have mentioned in the past the need for our state to develop emerging technologies in energy. From solar thermal to wave-powered energy and wind-powered regional desalination plants, there is a new horizon on energy delivery, and we must embrace it more fully. Federal Liberal government MRET funding has already been used in this state to build wind power, and we fully supported that. We will work further with green, renewable energy developers to lock in such capabilities in this state further, and we will deliver more than a mini wind turbine on the Premier's office building.

Government policy on land use and availability must be reformed. This is another area where it would have been different had it been a Liberal government. On behalf of this government, LMC is operating as a profit centre instead of a land use manager. Small businesses and home owners are paying the price with spectacular increases in South Australia over recent years, making home loan affordability even more difficult. There simply needs to be a 20-year infrastructure plan addressing all these issues.

All we have been offered are a few projects with no overarching vision. The state Liberals would have been making sure that we got what we deserved, that we got what we needed. The key to transforming South Australia's economy is to fully embrace innovation venture capital and entrepreneurship. Manufacturing has been suffering under Labor. Mitsubishi is gone along with a host of other well-known names—South Australian businesses, gone. Labor needs to understand that we will not be able to compete with China, India and other emerging economies on the cost factors of production. We have to be smart; we have to be innovative.

Linked to innovation is the need for venture capital and greater encouragement of entrepreneurship. Government needs to facilitate the coming together of business entrepreneurs and financiers with our creative centres of excellence across the state. The state Liberals will have a lot more to say about this later, but we are not doing enough as a state to encourage entrepreneurship and risk taking within our business community or to protect intellectual property and to establish frameworks for cooperation. The budget is mainly silent on these initiatives.

Most importantly of all, a state Liberal government would have delivered a budget which provided a long-term vision. We needed a budget in this eighth year of Labor which pointed to the government's long-term vision looking out 20 to 30 years. Instead, we have been given a budget—like its predecessors—that looks out to the next election. The Liberals have released a master plan for Adelaide which sets out a vision for a new hospital at its present site (why on earth would you move our major hospital away from its teaching university?) and a vision which provides a City West precinct beside the Torrens, including plans to be part of a World Cup soccer bid and a Commonwealth Games using first-class sports and entertainment facilities as a catalyst to enliven the city, to create jobs and to create economic activity.

It is a plan for recovery from the financial downturn. It is about jobs. It is a vision which builds ring roads around the city and which enhances public transport. It is a vision which brings alive and preserves the Parklands by staking out a greater role for state government in planning decisions in the city and in the Parklands, and a vision which points to a city of seaside villages—a unique and beautiful city which stands out from other Australian destinations.

We have exciting plans for regional South Australia, which has also been forgotten in this budget. A Liberal budget would have been moulded to inspire our children and our grandchildren so that they want to stay here and not leave. It would have aimed to support Adelaide's vibrant business community. We would back our teachers and build on our heritage of excellence in education. We believe in the excellence of our doctors and nurses; we believe in preventing our young offenders from becoming adult criminals rather than the 'rack 'em, stack 'em and pack 'em' approach adopted by the Treasurer and the Premier. We would have done things differently.

In summary, South Australia has missed a great opportunity over the last eight years of economic growth. The Premier ignores this and spends much needed taxpayer funds promoting the notion that he is a good economic manager. Endless millions have been spent on government funded advertising. I remind him once again of his now famous words on 19 June 2001 in this place, when he said: 'We all know that when we see a politician in taxpayer-funded ads it's just a cheap way of doing party political ads.'

Last week, I challenged the Premier to engage in three debates during the coming election campaign: one on water, another on tax reform and jobs and another on a vision for the state's future. I repeat that challenge here in the house: let us get the debate out there for the public to consider. The reason for this challenge is simple. The government has failed to deliver a comprehensive and diverse answer to the challenges of our state's water security. It has failed to deliver on tax reform—in fact, it has turned us into the highest taxed state in the country, and jobs have been lost as a result. It has no vision for South Australia's future. Glossy brochures and slick TV ads are no substitute for a genuine framework for the future.

This government will go to the next election with a poor record of expense control and budget discipline, but it will plan to get out the $750 million worth of cuts the day after the election.

The Hon. K.O. Foley interjecting:

Mr HAMILTON-SMITH: Well, I can tell you, anyone who was gifted $3 billion would look pretty good to the ratings agency. This government will go to the next election having failed to build infrastructure and reform outdated and unfair taxes. It has just delivered a budget that gives no direction, no assurance and no vision to South Australia, but it is full of promises for the future. In the good times it is very easy to govern, but in the tough times citizens look to their government for strength, stability and security.

The budget shows that, in these difficult economic times, the Rann government has failed its toughest test. It has had to be bailed out hook, line and sinker. It is a government with no vision, no detail and no idea, and that government must change.

Mr GRIFFITHS (Goyder) (12:37): It is my pleasure to follow the Leader of the Opposition and also contribute to this debate. I commend the leader on his contribution. There is no doubt that in the last hour he has identified many issues about which South Australians should be very concerned. Members on this side of the house will continue to raise points of interest to us within our particular portfolio areas or, indeed, within our electorates, as part of the grievance debate. However, there are some contributions that I also wish to make.

I am a glass half-full type of person. I try to look at things reasonably to identify where there is a strength or a weakness. I must admit that, when I provided some commentary to my local newspaper about the budget this year, I sent it through and on the bottom I put a personal comment that this time I am a lot more political in my responses because I am angry about this budget. I think there are more people in South Australia who should be angry about this budget, because I do not believe that it delivers upon the needs of South Australians, be they metropolitan-based or regionally-based, and what they need for the next four years that the budget projects, or certainly even for the next 12 months over which the government currently has control.

There are some issues that I want to target straight away. We heard incessantly and constantly from the Treasurer about the financial pressures that the budget would be under: the global financial crisis, the surplus last year and the anticipated deficit of $265 million this financial year. That is why it really surprised me when the first figure that I looked at showed that the budget income this year had increased by $1 billion. We have gone from $13.4 billion to $14.4 billion, thereby creating an enormous additional capacity to undertake works, to support people and to provide the necessary infrastructure and services that people need.

However, again, we have a lot of frustrations. It appears to us, from our quite diligent review of the budget papers, that it is not delivering on what the real needs of South Australians are. This figure of $14.4 billion is an enormous sum. It has grown from slightly over $8 billion in the 2002 year, when the budget was last presented by the Liberal Party, to $14.4 billion. Imagine what capacity that creates to undertake work. It is an opportunity that we feel has been lost.

Vital infrastructure has not been recognised and funded and put into programs to ensure their delivery. Our continuing frustration is the fact that, where commitments have been given to infrastructure areas, in particular, within two years they seemingly drop off the radar completely. Mount Bold, as highlighted by the leader, was one of those. Two years ago, the Treasurer talked in his budget speech about the vision for Mount Bold: increasing its storage capacity to provide for Adelaide's water needs for two years. The year after that it suddenly became the Mount Lofty Ranges, and now it has gone completely.

Water is the absolute critical issue facing our state. I have no doubt that the member for Hammond and other members in their contributions will highlight this particular area, but I also want to make some comments. I am a believer in desal technology. All of us within this chamber recognise that for the future of South Australia we need to have some level of desal to ensure a constant water supply, and that is why in January 2007 we supported the provision of a 45 gigalitre desal plant, similar to what was constructed south of Perth.

At that time the government said that it was not interested, that a desal plant was not necessary and that it had other plans in place. It has since been proven that there were no other plans in place. We have relied upon a continual drawdown of the River Murray. There is no more capacity in there. Funds have been allocated to buy water for critical human needs. It is important that South Australia provides as much as it possibly can for its water needs and that is why desal is part of the solution. We support the 50 gigalitre plant. We recognise that the $1.5 billion allocated for the 50 gigalitre plant is necessary—it will ensure that we have water supplies available to us.

We have great concern about the intention to double the size of the plant to 100 gigalitres at a cost of some $330 million, of which the federal government is contributing just over $220 million. As we have said constantly to the South Australian public, our solution is that there needs to be a combination of technologies. In this case we feel that stormwater harvesting on the Adelaide Plains—there is the potential to capture and reuse some 89 gigalitres at a cost of approximately $400 million—has to be part of the answer.

Salisbury council has done magnificent work—and no member in this chamber would refute that. I am advised that within the next 12 months it will have available around 18 gigalitres per year to supply to its consumers. Why do we as a state not recognise that good work and improve upon it in order to ensure that we have a larger amount of stormwater? Adelaide's water needs fall upon Adelaide each year. We should make sure we use it.

I also want to comment on budget restraint, which is a particular issue for me and which will remain so as long as I have the opportunity to serve in this chamber. My great frustration is that whenever the Treasurer presents a budget there is an opportunity for a far greater level of revenue than he anticipated. Over the eight years of the budgets he has presented, the cumulative additional revenue that has been received is some $3.8 billion. He also has the capacity, seemingly—not always as part of policy announcements—to incur significant additional overruns and costs.

Since the 2002-03 financial year, the additional costs the South Australian public has had to fund have amounted to $2.742 billion. That demonstrates a real incapacity of ministers in government to control expenses and revenues. Revenues come from the pockets of hardworking South Australians. Expenses are the area where government has to ensure it controls costs—and that is where I have the greatest frustration.

There is a direct ministerial responsibility for departmental budgets. It appears to me that that direct responsibility and control has been very lax. I know many members talk about the increase in Public Service numbers, but my comments when I talk about that are never a criticism of the fine people who work for the Public Service: it is more about the inability of ministers and departmental CEOs to ensure that the people they hire are funded as part of the budget process.

There is a reality attached to the fact that services are important in our state. Services are provided by public servants, so we need a good level of public service to ensure that all South Australians—irrespective of their social standing, financial capacity or residential location—get the greatest range of services possible. I am serious about the fact that government controls have been terribly slack in this area. It is something that needs to change and I assure you, Mr Speaker, that from 21 March 2010, with members of the Liberal Party in government, there will be a very different focus on that.

Tax increases hit every person, every family and every business in our community in some way. It is easy to level the accusation that tax increases are only for the richer people in our community who as a result of what they do are up for more dollars. In reality, it affects everybody, and I want to take the opportunity to demonstrate this in a few ways.

Land tax has been a very emotive issue in the past 12 months, probably longer. A constant stream of callers to talkback radio have spoken about their particular case and how land tax has gone up to enormous levels. The leader has already commented on the fact that, in the seven years of budgets presented by the Treasurer, we have had a 292 per cent increase in land tax alone. But for me, the drastic impact of that knowledge came about in the 2008-09 financial year. In the previous financial year, the state government collected from private property owners some $220 million in land tax. As part of the preparation for 2008-09, it budgeted for a 37 per cent increase in that land tax. That is a disgraceful amount. That was the position I tried to get out to the media very early on: that this is an area where you need to ask questions. It has become evident that it is an issue.

It is amazing that, when we got the budget papers for 2009-10 and looked at the estimated result for 2008-09, we found that land tax has increased by more than 37 per cent; it has gone up by 49.8 per cent. So, we have had a situation where, in the previous financial year, $220 million in land tax has come in from private property owners, yet in the 2008-09 financial year the anticipated result is $330 million—an increase of 50 per cent. This is a cost that each South Australian bears. It is not just the fact that it is the very vast number of 188,000 people who have paid land tax who are responsible for this, because you have to consider the properties to which this land tax applies and how that impacts on people.

In the past 10 years there has been a growing trend for people to plan for their own retirement, to invest and to ensure that they have a revenue stream that will fund the level of lifestyle they want. For many of those people that has been based around property investment, and they must now be seriously considering whether they want to continue with this philosophy, because they are suddenly faced with the holding costs of those properties that they purchased at the time. It might have been many years ago when there was a very different taxation structure in place and a reasonable level of tax was being levied, but now they suddenly find that it is near impossible to be able to afford to retain those properties.

I have had people come to me who have quoted examples in the North Adelaide area of land tax bill increases from $14,000 to $124,000. That is one extreme end of the spectrum. I know that a lot of holiday home owners in coastal areas, including the Yorke Peninsula, face land tax that is now in the range of $7,000-odd, and that makes it very difficult to hold on to those properties.

I refer to those people at the lower end of the socioeconomic scale who will always be reliant on private rental accommodation because of the crisis within public housing with not enough accommodation available to them. Those people are renting properties upon which land tax is paid, and the owners of those properties may have managed to accumulate two or three homes as part of their investment strategy. In addition to the added effect of the accumulation of the values in question, the effect of having a threshold of $110,000 on site value is a very significant land tax bill that eventually has to be passed on to the consumer—in this case, the tenant.

This is forcing rents to increase dramatically, making it very difficult for families with even average means to be able to afford to rent homes. It is hurting communities in South Australia. Sadly, the response from the government has been that, yes, the Treasurer has recognised the fact that a few people are talking about it, but it appears as though he believes that the political issues involved are that the property owners—those 188,000 people who pay land tax—in the main are conservative voters and, therefore, seemingly the Treasurer does not have a great deal of concern or even a response to that, and he just lets it slide.

The leader has quoted three examples of where businesses are under pressure, including the produce market at Pooraka. That market has an enormous level of land tax liability, which in turn has to flow on to the cost of the produce sold through that facility. That cost is outlaid into the fruit and vegetable stalls everywhere around the state and, in turn, it has to be paid by the consumer. So, the consumers are paying, the tenants are paying and the property owners are paying—it is the whole cycle of payment that goes into the government coffers. Land tax is a burden that is hurting a great number of people.

We need to be better about this. The opposition is focused on developing policy that is fairer because I know that the people I speak to recognise that when you own property, run a business and employ people, there is society's expectation of a reasonable level of tax being paid. They understand that but they just want to ensure that that level of taxation still allows businesses and people to be profitable. That is not happening, and that is where the real concerns are.

Water prices, too, are a big concern for me. Last year we had significant increases in water costs across all levels. The figures I saw for the lower end users showed an increase of some 42 per cent. This year, in the budget announced by the Treasurer, there is a reduction in the supply charge, but there is an increase of between 36 and 37 per cent in water per kilolitre that will be charged to every consumer for every kilolitre that goes through SA Water's mains network this year. This is affecting real people; this is affecting families who are already struggling to pay the mountains of bills that a difficult economic environment creates. It is a grab for cash.

I would love for the Treasurer to come into this place and indicate that, yes, funds have to go into SA Water to pay off the desal plant, which is coming from borrowings. Many members have spoken about the fact the dividend taken into Treasury from SA Water should be able to fund that, but it has not been used appropriately. Let us ensure that we do not make it impossible for people to have the level of water they need.

Again, the focus is on debt, and this is an issue that I want to talk about for a little while. Debt in 1992 was terrible for the state. Its slowed us down and made things economically difficult for us for a decade. It was slowly overcome. Difficult decisions had to be made on our side of the chamber, when in government, to improve the financial position of the state. Through the treasurer's efforts to repay debt, in the 2007-08 financial year we reduced the liability to zero for government sector debt.

Now, though, we find that the forward estimates project an enormous increase out to some $3.1 billion in direct government sector debt; and that is in four years. It is an enormous level of borrowing that has to be paid by the taxpayer in South Australia. On top of that, we also have non-public sector debt, where instrumentalities, such as SA Water, SA Housing Trust, and TransAdelaide, all increase the liability for South Australians out to $6.7 billion. All of this should be a concern, because our children and our grandchildren will be liable for that.

We have recognised for some time the liability on public sector superannuation. There is a plan in place, formulated by the Liberals, I might say, to repay that debt. That plan was formulated in the early 1990s, when the economics of the state were somewhat difficult, to fully fund by 2034. That period has not changed, with the Treasurer in power in a far more advantageous financial position. I note that he has to make an interest payment of, I think, $430 million in this year's budget to the unfunded superannuation liability to keep up with the repayment schedule, but it presents an enormous challenge for our state.

In closing, I want to comment on the Sustainable Budget Commission. I am truly amazed that, after reviews by this government in 2002 and 2006, from which recommendations on savings opportunities were created—and the Treasurer himself has talked about $1.5 billion—we now find that, as part of an announcement one year out from an election, it was intended to put in place a Sustainable Budget Commission, the first job of which was to make recommendations on when the state budget for 2010-11 should be presented. I was flabbergasted.

Subject to the terms of reference the Treasurer provides to them, supposedly after 20 March 2010, if, in fact, the Treasurer is returned to power—and we and people we talk to in South Australia do not believe that will be the case—the challenge is a recurrent saving cost of $150 million in the first financial year and then an extra $150 million to create $250 million in the second year and then an extra $100 million to create $350 million in the third financial year. Those savings are on top of savings previously announced over the last three budgets, and they create a current saving in 2012-13 of $545 million.

My real concern is that, when the Treasurer presents this budget, he factors in wages costs; there is no doubt about that. He must have taken a reasonably prudent level, one would presume, of wage increases across the forward estimates. However, as part of the budgetary commentary and as part of the Treasurer's media statements, of that eventual $350 million in savings in 2012-13, he is talking about $290 million being achieved by keeping public sector wage increases to a maximum of 2.5 per cent, basically from 2009-10 out to that period.

If the Treasurer is saying that that is an opportunity to save $290 million, what is he actually factoring in as wage increases from 2009-10 out to that period? I am really concerned. I would love the Treasurer to clarify this with me if I am wrong, but is there some level of duplication there? Surely, the Treasurer has factored in reasonable increases, given the state of our economy and the national economy. I know that other states have talked about restraint in public sector wage increases—in Tasmania, I think it is in the range of 1 per cent for the next two years.

If the Treasurer has factored that in but is then talking about $290 million in savings in public sector wages on top of that across that forward period, what does he have in the budget, as it is presented in its raw form, for wages growth? That is something the Treasurer needs to respond to because it is an important issue. It is also an important issue in relation to the AAA credit rating.

Prior to the government bringing down its budget, I was criticised for saying that the loss of the AAA credit rating could cost this state in the range of $50 million to $60 million, but that statement is actually correct. New South Wales, as part of its mini-budget presented several months ago, talked about the loss of that state's AAA credit rating having the effect of adding between 20 and 25 basis points to the cost of that state's borrowings.

We have done our sums and, based on the liability out across the forward estimates of $3.1 billion, an increase of 23 basis points will give you that figure. We have brought to the attention of the South Australian community a concern of which they need to be aware. There are a lot of concerns within this budget. I know that members on this side of the chamber will talk about the worries they have with many different areas of this budget.

South Australians deserve far better. This state deserves a budget that not only has vision but, importantly, encourages business, and that is where my concern lies. It is a difficult time for business. Business has been hit with the cost of regulation responsibilities, and it has been hit with payroll tax, which is payable after you get to $600,000, which is a rate of 4.95. It is very difficult to see that we can be competitive when compared with other states across Australia. That is why the leader constantly quotes the example of major infrastructure projects, where interstate companies are working in South Australia. These companies do have a competitive advantage because they have a cost structure. Until we get our cost structure right and until we can ensure that business opportunities exist, that business is encouraged and that the opportunity will constantly be there for employment, this budget concerns me.

Debate adjourned on motion of Dr McFetridge.


[Sitting suspended from 12:57 to 14:00]


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