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House of Assembly - Fifty-Second Parliament, First Session (52-1)
2011-02-09 Daily Xml
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STATE BUDGET

The Hon. I.F. EVANS (Davenport) (15:00): Does the Treasurer now admit that he was wrong when he said on radio this morning that the budget's net operating balance was a cash accounting measure?

The Hon. J.J. SNELLING (Playford—Treasurer, Minister for Employment, Training and Further Education) (15:00): Yes, I do admit I was wrong. It is an accrual measure. Net operating balance and net lending are both accrual measures. You've got me there. You've got me on that one. They are both accrual measures. I can spend the next five minutes explaining it.

Members interjecting:

The Hon. J.J. SNELLING: Okay, for the next five minutes I will explain the difference between the net operating balance and net lending. They are both accrual measures of the financial health of the state budget.

Members interjecting:

The SPEAKER: Order!

Mr PENGILLY: Point of order, Madam Speaker. The question was quite simple—yes or no. The minister has admitted he was wrong; there is no need for him to go on.

The SPEAKER: I think we will keep that in mind. From now on, we will have yes or no answers for all of our questions, according to your theories. Minister, have you finished your answer?

The Hon. J.J. SNELLING: No, ma'am; I have lots of information to provide to the house. The important difference is that the distinction between the two is the treatment of capital and how capital is expended. With net lending—

Members interjecting:

The Hon. J.J. SNELLING: Keep going. I am enjoying this; I love it. Net lending—

Members interjecting:

The Hon. J.J. SNELLING: Yes, come on; I am soaking it up. It is beautiful. I am soaking up your pain. When there is expenditure by government on a capital project, with net lending, the figure goes on the budget figures when the money is paid out, basically. So, for example, if you pay $500 million on the duplication of the Southern Expressway—which I know members on this side take as a very important project—that $500 million will count under net lending and will go on the budget figures when that money is paid. With net operating—sorry, I beg your pardon, net lending—

Members interjecting:

The Hon. J.J. SNELLING: Come on; it's been one day. Give us a break. Net operating balance works differently because the net operating balance takes in the depreciation of the asset over its lifetime. So, rather than just being—

Members interjecting:

The Hon. J.J. SNELLING: I know members on this side are far more interested in these matters than members of the opposition. Obviously, it is a difficult concept. We are talking about abstract concepts—

Mr Marshall interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: —abstract economic concepts—very difficult for members of the opposition to comprehend. I am trying to make it as easy as I can, but these are complicated things. I do not know how I can make it simpler.

Members interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: Depreciation—I think some members on the opposite side might understand the concept of depreciation. As an asset ages, its value reduces over time, so—

Members interjecting:

The SPEAKER: Order! Member for Waite, be quiet.

The Hon. J.J. SNELLING: —the net operating balance, with regard to capital expenditures, takes into account depreciation. So, what you will see over time is net lending. It will be much lumpier, because you are paying out—

Mr Marshall interjecting:

The Hon. J.J. SNELLING: I love the member for Norwood.

Members interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: I love the member for Norwood. I will tell you why I love the member for Norwood—

Members interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: —so much. Madam Speaker, I would ask for your indulgence just for a moment.

The SPEAKER: Order! I warn the member for Norwood.

The Hon. J.J. SNELLING: My in-laws are Italian and my mother-in-law tells me that in the little village they are from, Molise in Italy—

Mr WILLIAMS: Point of order.

The SPEAKER: Order! Point of order, member for MacKillop.

Mr WILLIAMS: The point of order is one of relevance. He answered the question as the member for Finniss said about five minutes ago and we have already indulged the member.

The SPEAKER: Yes. I will uphold that. I think that was a very lengthy response.

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