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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
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APPROPRIATION BILL 2013

Second Reading

Adjourned debate on second reading.

(Continued from 6 June 2013.)

Mr MARSHALL (Norwood—Leader of the Opposition) (11:03): After 11 years in government, the Labor Party has handed down its most disappointing budget to date. The 2013-14 budget is a culmination of gross economic mismanagement over the past 11 long years of government under Labor. The Treasurer said that this was a responsible budget, based upon a whole pile of conservative assumptions. He said, 'I am improving the budget outcomes by making some prudent savings.' Well, nothing could be further from the truth.

This is an extravagant budget, delivering the largest deficit in this state's 176-year history. But more than this, it lacked any vision for our state, any plan of how this government plans to turn this state around. Its forecast growth rate is below that of the rest of the country. This state is performing at the bottom of the class, and this government's plan—their blueprint, their budget—is to keep us at the bottom of the pack.

This budget offers no plan to provide relief for businesses here in South Australia. It provides no relief for households struggling with ever-increasing cost of living pressures. It provides no plan to support our important regions here in South Australia. It delivers cuts to police, health, and education, and it sends a dangerous signal to our next generation. It says that South Australia's future is going to slip further and further behind the rest of the states in Australia, and if you want a job somewhere, head interstate. This is a dangerous budget and the effects of decisions made this year will be felt for many years to come.

On Thursday 6 June, the Treasurer confirmed what we all suspected, and that is that this year we will record the largest deficit in this state's history: $1,314 million—$1.3 billion. It does not sound much when you say it quickly, but let us look at the chronology. Two years ago we had a budget deficit of $53 million. Last year, the government delivered a budget deficit of $258 million—completely unacceptable. What do we have this year? A massive deterioration to $1,314 million in this single year. To make matters worse, this was the year that the government promised that we would be returning to the black. This is the year that it promised a surplus. Instead, it has delivered the largest deficit in this state's history. Shame on you!

Of course, this government has announced in its budget a further massive deterioration from the picture that was presented to us in December last year. When the Mid-Year Budget Review comes up, it gets to update the people of South Australia on how we are tracking. Since then, there has been a further massive deterioration to the final budget that was handed down the Thursday before last.

Of course, the Premier (the part-time Treasurer) would have us all believe that this is because of some once in a lifetime writedown in revenue coming into this state. Well, it is just simply not true. Your own budget document points to in excess of $50 million worth of increased write-up in taxation revenue coming into the state and an initial $260 million write-up in other revenue coming into this state.

The problem was not the revenue line: the problem was its addiction to spending. This is a government which is completely and utterly addicted to spending. Blowout after blowout, new announcement after new announcement. The line-up outside of the Premier's office is huge. They are all lining up asking for new money. He is a soft touch—he cannot make a tough decision.

The Premier, of course, famously sacked the previous treasurer who is sitting just two seats along from him this morning. Quite frankly, he did not think he was doing a good job, and neither did we, so that was a good decision. But the Premier says that he is the man for the jobs and he boasts saying that he studied economics at university. I am not sure how lessons went back then, but I studied economics as well.

I can remember my very first lesson in economics—1983, year 11 economics. Let me tell you what was in the first lesson because it is sage; it is important to understand this. The first lesson talked about how we have infinite wants and finite resources in the world. That is the basis of economics. Let me tell you, the Premier was awake for the first half of that lesson but unfortunately he fell asleep halfway through. The Premier understood the first part, but he completely forgot the fact that we have got finite resources.

In the December Mid-Year Budget Review, the Premier announced a new $1 billion worth of operating initiatives and capital expenditure—$1 billion—with $888 million just in new operating initiatives alone—profligate spending. Not to be outdone, in the budget that was handed down the Thursday before last, the Premier announced an additional $1.3 billion worth of new spending.

It does not stop at new spending. Almost half of the budget deficit this year is on unbudgeted expenditure, but money that was never even in the budget. So each year the government gets the opportunity to come and set its budget for the people of South Australia. Let me tell you, it blew its budget this year by a staggering $626 million worth of money that it spent that was never even in its budget. If we look at it over the last 11 years—a total of $3.8 billion. This government has no control on its spending whatsoever.

How to do we plan to fund this government's runaway spending? Let us turn our attention to the net lending deficit. To put it simply, this is the factor we look at that defines how much we borrow, how much the government borrows on our behalf over the course of a year. So, it is our cash operating deficit, plus our capital expenditure. In this year alone the net lending deficit will hit $1.376 billion. To make that simple for everybody, that is $3.8 million per day every day for the year that the government is borrowing on behalf of the people of South Australia.

That is a staggering number but, of course, it only paints half of the picture because this year is the year that the government has sold the forward rotations of the forests. This is the year that the government has sold the licence to operate SA Lotteries. Those two sale items came in to offset the net lending deficit. If we add those back in, let me tell you what that figure goes from. It goes from $3.8 million a day to $6.8 million a day. That is what this government is spending on our behalf. It is absolutely, completely and utterly shameful.

The budget states that we are now on track to deliver the largest debt in our state's history, a staggering $13.75 billion. The problem with this mounting debt is, of course, the interest. Ordinary South Australians and taxpayers are going to have to pay this incredible debt that the government has run up. This is not a headline number. This is not something that was included in the Premier's speech to the parliament. This is not something which was in his budget summary. We had to look deep into his document, in fact it is hidden, shamefully hidden, away on page 155 of Budget Paper No. 3. What that reveals is that the government has indebted us to such a degree that we will be paying a staggering $952 million per year interest on that debt—$952 million, that is absolutely staggering.

When we queried the government about that it said, 'Well, what would you have us do? Cut spending? It could get worse.' That is its whole defence of this profligate spending, that it could be worse if it did not keep spending at such an inordinate rate. The government sees no opportunity for reforming its performance and getting this state back on track. Quite simply, this is a dangerous budget for the people of South Australia. It proves conclusively that Labor and, in particular, this Premier simply cannot manage our economy and simply cannot manage our money.

South Australians were looking forward to a budget that charted a course to prosperity, but they have been sorely let down by this budget. Ordinary South Australians who I speak with simply cannot believe that government spending has got this far out of control. More than that, ordinary people who I speak to say that they simply cannot believe the government has decided to put all that cost pressure back on them. They are the ones who are going to have to pay for it. Bus fares, licence fees, car registrations, all are up nearly double what CPI is. Water prices are up 249 per cent under Labor. Electricity prices are up 150 per cent under Labor.

Do not get me wrong; ordinary people in South Australia expect that prices are going to increase over time. We have a CPI adjustment, which has been 37 per cent while this government has been in office. So, people can expect and are happy to expect that prices will increase at around that mark of 37 per cent, but not 150 per cent for electricity and not 249 per cent for water. That is the problem with this government. It has no appreciation of the pressure it is putting on ordinary South Australians.

To make matters worse, not only is the government increasing tax rates and fees, it is actually introducing a new tax: the car park tax. The government has previously stated that what it wants to do is increase city vibrancy. It wants to get more people into the CBD. The best mechanism it has been able to come up with is to charge people $750 a year on car parks. It is a complete and utter cash grab. Interestingly, in the budget, it is called a transport development levy.

Not even the Premier believes that. On many occasions in this house he has been referring to it as the 'car park tax', only to be corrected by the former treasurer who says, 'Actually it's a transport development levy.' However, the Premier knows what it is: it is a grab for cash. His own team, of course, have been counselling him against it. We all know that; that is out in the public now, but he will not listen. Families are doing it tough under Labor and he is not listening.

Now let us turn our attention to the business community. Unfortunately for the business community there is no relief in this budget for it either. South Australia remains the highest business taxed state in the nation. We have the highest electricity prices in the nation. We have the highest water prices of any capital city in the country. We have the highest WorkCover rate in the nation. It is not 5 per cent more than the national average; it is not 10 per cent more than the national average: it is over double the national average. It is the worst-performing scheme and it is the most underfunded scheme in the country.

This is the scheme that the Labor Party has presided over for the last 11 years. This government has the handbrake on the South Australian economy, it has the handbrake on the productive component of the economy, it has the handbrake on the business sector, and it is pulling it on tighter and tighter. We are all paying the price. You only have to look at the statistics which came out earlier this month in terms of state final demand. This shows unequivocally that, in the first three quarters reported through to the end of March this year, the South Australian domestic economy has contracted 3.75 per cent.

We are going backwards. We have stopped treading water under Labor and we are now heading backwards—a 3.75 per cent contraction. It is not as if we need to wait for these statistics to come out. Every time we go out and speak to people on the streets or go into their small businesses, we know that they are doing it tough. They have never had it tougher. A lot of people have been very concerned about Spring Gully in recent months—a great South Australian company. Let's face it, we all want that company to survive. I think everybody I have spoken to now has a pantry filled with pickled onions and gherkins—

The Hon. C.C. Fox interjecting:

Mr MARSHALL: The member for Bright is nodding in furious agreement. She has been out buying gherkins and pickles.

Ms Bedford: Mustard pickles.

Mr MARSHALL: Mustard pickles, says the member for Florey. We love our family business sector. We love our small business sector but those people are doing it tough and we want them to survive. However, it is not about Spring Gully; it is not about an isolated case. If we look at the ASIC insolvency appointments statistics for the March quarter there were 264 insolvency appointments for the quarter—that is three per day. It is not only about Spring Gully—three companies from South Australia have made insolvency appointments with ASIC in the first three months of this year. That is up 118 per cent on the previous quarter, while the rest of Australia has gone down by 2 per cent.

What does the Premier do? He shakes his head and says that that is wrong. Look it up; it is there for all to read. The Liberal Party does not accept that we should have the highest business taxes in the country; it does not accept that we should have the highest utility prices in the country; it does not accept that we should have the worst WorkCover scheme in the country. We want to get off the back of the productive component of our economy and we want to grow our economy.

The Liberal Party has a plan to get this state back on track. Our approach revolves around three core strategies: first, to return our budget to surplus; secondly, to grow our economy; and thirdly, to make this a more attractive place for the next generation to live. I would like to go through those three items in some small detail. First, to return the budget to surplus, we do not accept the government's position of six deficits in seven years. It has delivered a structural deficit for this state which is, quite frankly, unacceptable.

It is not only unacceptable and unsustainable but, quite frankly, it is immoral. Why should we be spending up big at the moment only to put that burden onto future generations? In fact, a lot of people talk about future generations, but it is not even about future generations: it is about next year's budget. A $1.314 billion deficit this year will hit next year's budget to the tune of approximately $65 million in interest. It will hit the following budget by approximately $65 million in interest. And the year after? You get the picture: $65 million.

The profligate spending in this one single year alone will have this ongoing cost to our future budgets just to pay the interest. This is not paying down the debt that they have run up, this is just paying the interest, at the historic low interest rate that we have. It basically cuts off so many options for us in terms of our budgets going forward. We believe that we need fiscal discipline within government. When you set a budget, you stick to the budget—you do not have these massive accumulating blowouts each and every update, and you do not announce a whole pile of spending within that period.

Our second focus is, of course, to grow our economy. As I said, this government has the handbrake on our economy: whether it be with our completely uncompetitive taxation and cost system; whether it be with our massive and escalating regulatory environment with which this government has basically got the noose, the stranglehold, on the productive component of our economy with increased regulations; or whether it be that they have provided the wrong infrastructure—and that is going to be the focus for the Liberal Party—getting our cost basis right, reducing regulation and making sure that we invest in the right sort of infrastructure to get our economy going.

But, more than that, it is about confidence. This state's business community has lost confidence in Labor; they have lost confidence in Labor at the state level, they have lost confidence in Labor at the federal level, and they want them gone. What we need more than anything now is a government which is going to provide confidence so that people are not worried about the future, they are not worried about their jobs, and they do not continue to squirrel more and more money away, contracting the size of our economy.

Thirdly, our policy will be to make South Australia a more attractive place for our next generation. I have young children, the Premier has young children, and I am sure that we both share the goal that these young people stay here in South Australia, but this has not been the case in South Australia over the last eleven years under Labor.

If we look at the picture, we have had net interstate migration of in excess of 32,000 people, most of them young people, most of them school leavers and university graduates who do not see their future here in South Australia under Labor. Imagine this state if those 32,000 people were back in our economy, buying homes, contributing to the productive capacity of our state, spending money in our economy, maybe starting businesses and employing people. We would be a completely different state if we had not lost those people, and it is incumbent upon all of us to work together to make sure that we can keep those people here.

Since becoming leader I have promised to work with the people of South Australia to create a vision for this state through to our bicentenary in 2036. It will be a vision which does not accept that South Australia should be at the bottom of the pack. This vision recognises that South Australia needs a vibrant, growing business community, and a vibrant growing economy to make sure that we achieve our full potential as a state.

Unlike the government, we do not believe the road to prosperity is through increasing government spending. Unlike the government, we do not believe that the future prosperity of this government is encumbering the next generation with increasing debt. We do not believe that we are going to have a tax-led recovery of our economy. We do not believe that we are going to have a increasing-regulatory-led recovery of our economy. No. It will come by installing a government that understands the needs of the business community—the productive component of our economy—and a government that understands the struggles of our households and sets government priorities based upon those which are shared in the community.

I have said that a key for us in the lead-up to the next election will be a focus on the small business and the family enterprise sectors of our economy. These sectors are truly the backbone of our South Australian economy and they are doing it tough. They have been let down by an avalanche of broken promises, and by a government that does not understand them and does not understand their voice.

We have 142,000 small businesses in South Australia and they have been completely and utterly forgotten by this government. They took this government at their word when they overspruiked Olympic Dam, and they took this government at their word when they overspruiked the defence sector, Arafura Resources and a range of other projects. The problem with this over spruiking, of course, is that the small business sector responds. They increase their capacity, they take on more staff, and they spend capital in preparation for what the Premier had promised. Unfortunately they have spent a lot of money getting themselves ready for this boom which just simply will never come. They also, of course, relied on what the government said in the lead-up to the last election.

The government matched the Liberal Party's initiative to offer payroll tax exemptions for all trainees and all apprentices in South Australia, yet in last year's budget the government abolished that promise. It took it away at a saving to the budget over the forward estimates of $120 million. So what did the government do? Just before this election it said to the small business sector, 'Don't worry, we're going to have a great new payroll tax reform.' The only problem is it is only $11 million. So the government took away $120 million and it is going to get back $11 million a year. Permanently? No, it is just a temporary measure for two years. Well, don't worry, the small business sector is not going to fall for it. There is no way they will be falling for that one again.

The Liberal Party will elevate the small business sector to its rightful place as the core driver of our economy here in South Australia. We have already announced policies in this area. We have said that we will pay our bills on time. This government's payment history is absolutely appalling. Over the last two years it has paid in excess of $2½ billion late, and this puts a massive pressure on the small business sector and the wider business sector here in South Australia. It consumes working capital that could be used to grow those businesses and, of course, it increases their costs. It makes it harder for them as a business to actually pay their suppliers and to pay their employees. It puts a huge amount of pressure on them and we say it is completely unacceptable.

Of course, when we announced this policy, we had the government coming out and saying, 'They just stole that off of us. We were just about to announce that.' Well, we are still waiting. We still have not had the government's announcement on that one. In addition to that, we have said that we will introduce a regular repeals day here in the parliament. I can see the Attorney-General is already smiling because he knows it is a good idea. We are going to be able to get rid of obsolete and outdated regulations, legislation and, of course, consolidate and simplify the regulations so that we can get off the back of the productive component of the economy so that we can grow the economy.

Of course, there are many more things that we will be announcing in the lead-up to the next election and I am working very closely with the shadow treasurer (who is also the shadow minister for small business) on a range and exciting offer for this sector. It will focus on a number of key elements, including, but not limited to reducing regulatory costs on the small business sector, improving access to state government procurement contracts—and what a debacle that has been under this government—a focus on reducing costs that are within the control of this state government and an exciting framework to back improved business start-ups and acceleration. We will not forget this sector.

In addition to our policies that we have released that will relate specifically to the small business sector, we have already announced a number of other core policies that will advantage not only the small business sector, but the wider business community. The most important of these, of course, is Infrastructure SA. We have said that if we are elected in March next year we will establish an independent statutory authority to do a robust cost-benefit analysis of each of the projects that we look at in this state. This is something which has been sorely missing from this government over an extended period of time.

You only have to look at the debacle which was the doubling of the desal plant. The commonwealth Auditor-General took a look at that project and what did he say? He said there was no business case whatsoever for the doubling of that plant—$800 million that could have been spent on the highest priority, the highest return projects in this state, if only the government had done some work. The commonwealth Auditor-General said there was no business case, that no robust cost-benefit analysis was done and, in fact, Infrastructure Australia recommended against it, but he did not care. The government did not care. It decided to spend $800 million on a project which, quite simply, did not stack up. Well, that will not happen under the Liberal government.

This is a major reform where we want to concentrate our capital spend on the highest priority, the highest return projects. Imagine this state if we had Infrastructure SA in place over the last 11 years. I put it to you that we would have lower debt in this state, we would have more productive infrastructure and our economy in South Australia would be growing because of that productive infrastructure.

I have also announced that we will establish an auto industry task force. Not only will we establish an auto industry task force but we have invited the government to do the same thing immediately. Other states have already done this. We need to work and move towards a more bipartisan approach in terms of industry development. We can fight about education and we can fight about law and order and health, but economic development is something that affects every single person and it affects the future prosperity of our state, and we need to work and move to a more bipartisan approach. The auto sector, the manufacturing sector, the workers at Holden's, are too important to play politics. We again invite the government to join with us in a cross-party auto industry task force.

The other major announcement we have already made is about the car park tax, to which I have already referred. The government is out there spreading this line about creating city vibrancy. It is hard to go past four or five entries on Twitter without one of them telling you that they are at a small bar. I do not know when they get the time to do any work—they are always at small bars or painting blue lines on the street. But when it comes to the real issues, what does the government do? It introduces a tax that will discourage people from going into the CBD.

Today I want to turn our attention to the issue of productivity. It is interesting when we look at the most recent ABS statistics in terms of productivity on a state-by-state comparison. In his most recent article on this issue, Professor Blandy makes the point that:

South Australia's labour productivity is more than 10 per cent lower than the rest of Australia in the following sectors: mining, construction, retail trade, accommodation, cafes and restaurants, finance and insurance, property and business services, cultural and recreational services, and other services. South Australia's labour productivity is about the same as in the rest of Australia in the remaining sectors, including manufacturing, but overall South Australia's labour productivity is about 14 per cent less than Australia's as a whole.

South Australia is getting left further and further behind. Naturally we must look to help businesses improve their productivity, and I have announced some of those things already today, but government must not just preach. Government needs to focus on its own efforts in terms of improving productivity in its own sphere. Improving productivity is about maximising outputs with finite inputs. It is about recognising that the solution to every problem is not necessarily new spending and it is not necessarily introducing a new tax. It is about working smarter. That is what we need in government.

The public sector under Labor is not performing at its optimum. We have been listening to the public sector. We hear their concerns about the government, and we will be responding. They tell us that the public sector has become highly politicised under Labor. Senior appointments are routinely made not on merit but as a reward for political loyalty. They tell us that senior management has changed the orientation of the public away from serving the people, away from serving the public, to serving the minister of the day, towards serving the government of the day. That has diminished our Public Service.

They say that ministerial minders and press secretaries are now directing departments. They tell us that key work is taken away from the department and given to external consultants and contractors at huge cost to the departments and at huge cost to our state. They tell us that departments are being stripped of capability, that decisions are being poorly informed, and the wrong decisions are being made. They tell us that an overwhelming culture of complete risk intolerance is emerging in our state Public Service.

Ministers are scared to make decisions. They are worried about getting into the media, so what do they do? They do not make any decisions. Even the smallest error they are so concerned about. Decision-making is slow; it is not based on a rigorous cost-benefit analysis. The government's risk intolerance slows decisions, grinds decision-making to a halt and also significantly increases the costs of the public sector here in South Australia. But, most importantly, it stifles creativity, it stifles innovation. Quite simply, we are falling further behind.

There has been a major focus in the media in recent times on the size of the Public Service. The government has announced plans to shed approximately 5,000 positions in South Australia. But these are the same positions that the government has created over its terms in government. The government has put on these additional employees at great cost to the taxpayer, and now it will remove these positions from the Public Service at great cost to the people of South Australia. These cuts will also have a massive effect not only on our budget but on the public servants themselves. In trying to deflect attention from its own public sector cuts, the government has set off on a massive scare campaign.

I stated on day one of becoming the Leader of the Opposition that I would not be taking the axe to the Public Service here in South Australia. I said that I thought that the public sector was in fact the greatest asset in our state government. I come from the private sector. Let me just say this: no private sector organisation says, 'The problem with my organisation is the people who work for me.' People in the private sector realise that their greatest asset is the people who work for them; but not this government, whose mindset is stuck in some sort of 1960s IR cost-control mentality. It does not realise the asset that it has. It is not putting in any effort and it is not getting the result that it needs.

The problem with South Australia is not the Public Service. The problem with South Australia is the government of the day. I completely and unequivocally rule out massive cuts to our public sector. The claims that South Australian Liberals are going to cut 20,000 or 25,000 people from the public sector are completely and utterly incorrect. Whilst it is impossible to put a final number on the Public Service today, we will be making that final number clear to the people of South Australia before we go to the next election. I genuinely do not believe that our final number will be significantly different from what the government has announced, but we are genuinely not in a position to put a final number on that this far out from the election, when we have no clear picture of what the state budget is going to look like at the time we go to the election.

Members interjecting:

Mr MARSHALL: Yes, we have had an update. We have had an update, and what it showed was the complete deterioration in what we were promised a year ago. In fact, the budget deficit has blown out by more than $300 million since just the Mid-Year Budget Review. That is the situation which we find ourselves in here in South Australia, so it would be wrong—it would lack credibility, it would lack rigour—for me to put a number on that, but people will have plenty of time to consider our position in the lead-up to the next election.

We have previously stated that we will create an audit commission if we are elected to government in March of next year and today I announce a new approach, an approach which will deliver better outcomes for the Public Service and an approach which will deliver better outcomes for the people of South Australia. To bring the state budget back into balance, the government is announcing a range of drastic cuts to services. What we want in South Australia, what we need in South Australia, is reform, not cuts—reformed departments so that the public is not disadvantaged by the cuts that the government will be making.

Today I announce that the public sector productivity will form a major focus for a Liberal team if we are elected in March next year. This is an area where the government has performed particularly poorly in the past, and this continues in this state budget. Just look at its announcement regarding savings: this year it is going to be 1 per cent; next year it is going to be 2 per cent; the year after it is going to be 3 per cent. This is the cookie cutter approach to government savings. It takes no account of where the actual waste lies. It takes no account of where the opportunities to grow a section actually lie.

Why should every department have exactly the same savings target? Why should one department, which might have wastage of 6 or 7 per cent, only be tasked with the responsibility of finding 1 or 2 per cent, while another department, which is really struggling to deliver on behalf of the people of South Australia and which has a contribution to make to improving our productive capacity as a state, has its budget slashed because this government has no sophisticated method of determining where the opportunity for reform actually is?

We need a new paradigm based upon real productivity improvements. Today I announce that if elected next March the Liberal Party would immediately set about the task of establishing a state-based productivity commission. This would be modelled on the federal commission, which of course has long been supported by both the Labor Party and the Liberal Party. It has been supported because it is a good model. It will become an independent research and advisory body on a range of economic, social and environmental issues affecting the welfare of all South Australians.

We envisage that this commission would provide the government with high-level independent advice on a range of sectors in our economy. It would look at the sectors of mining, manufacturing and defence. It will look, importantly, at how we can get more out of our regions and our small business sector, food and fishing, tourism, and a range of sectors which have been long neglected by a government which has an ineffective, inefficient way of working with the private sector.

We also envisage that it will report and advise on areas where government performance affects business. In particular here, of course, I talk about our hopeless WorkCover system and our hopeless and ever-increasing red tape system under government. The first term of reference will be to conduct an independent review of our state finances ahead of our first budget. This new commission will play a major role in helping the government determine the best way to improve public sector productivity. What we promise is a focus on productivity and on reforming government to serve the people of South Australia. Our approach will not be simply setting a savings target for a department on a cookie cutter approach but by providing government with high-level advice on reform to maximise our outputs. What we want is reform, not cuts.

I also announce today that an incoming Liberal government would focus on a more connected, simplified government structure. What do we have today? We have 43 separate ministries. We have 15 separate departments. We have untold numbers of different agencies. In one situation, we have one chief executive reporting to five separate ministers. It is a completely disconnected, disorganised structure and it needs to be changed. We have already made changes within the shadow ministry. We have reduced the size of our shadow ministry, and this is working extremely well. We envisage that we will be moving to a smaller number of government departments and agencies and creating clusters around specific interest groups. This is an important reform.

We need to get this state going again. Eleven years of a Labor government have not been kind to the people of South Australia. We now languish at the bottom of the league table in terms of Australia. Well, quite frankly, it is not good enough. It is not good enough, and it is completely and utterly unacceptable. People say to me, 'There's not a lot of difference between left and right; there's not a lot of difference between Labor and Liberal.' Let me tell you that there could not be a bigger, starker difference between what the Premier stands for and what I stand for, what the ALP stands for and what the opposition stands for—absolutely it is black and white.

The Labor government is focused on more spending, more deficits, more debt, slower growth and our kids moving interstate or overseas because they do not have a future here in South Australia. Under a Liberal government, we will have a focus, first and foremost, on getting our economy moving, getting a more productive public sector, getting off the back of business and, of course, creating a future for our next generation. The government's strategy is very clear. It wants to have a government-spending led recovery in our economy. Well, guess what? They have had that position for an extended number of years and it is not working. South Australia is at the bottom of the pack and we are going backwards. We have had a 3.75 per cent contraction in our domestic economy for the first three quarters of this year. It is not working.

By contrast, the Liberal Party knows that to get our state going we have to get off the back of the productive component of our economy, we have to cut them a break and support them in every way possible. That is my commitment if I become premier next March. We are going to get the state going, not through increased spending and increased debt but by a focus on getting off the back of the productive sector and getting our business community moving.

The Hon. I.F. EVANS (Davenport) (11:44): Let me congratulate the Leader of the Opposition on an excellent budget reply speech, setting out the next steps in the vision of the future Liberal government of how we would structure the state and, in particular, address the productivity issues in this state. I think the idea of a productivity commission for South Australia is an excellent initiative. It will get people talking about the real issue, and that is why South Australia is less productive than the other states in Australia.

It is time to reflect on this budget—the last full budget before the state election. The state finances were bad when we had a full-time treasurer and they have become worse with a part-time treasurer. After 11 years of this government, what do we have? We have the largest debt in the state's history, the largest deficit in the state's history and the worst credit rating in Australia. At the same time, the government is collecting the highest taxes in Australia and the highest WorkCover levy in Australia, and South Australians are suffering a high cost of living compared to the rest of Australia.

When independent economic commentators looked at this budget, they looked at that question and asked, 'How can a state with the highest taxes in Australia, the highest WorkCover levy in Australia and the highest cost of living in Australia end up delivering the highest budget deficit in its history and the highest debt in its history?' What did the independent commentators say? This is not the opposition: this is the independent commentators.

The Financial Review said that the Treasurer was 'like his counterparts, [chasing] rainbows into the forward estimates courtesy of optimistic rebounds in revenue and promises of cost cutting'. TheAustralian editorial put it bluntly. It said, 'Truth be known, after almost a dozen years of Labor government, South Australia has squandered its opportunities to reset the state economy.' That goes to the very question of why the leader has announced a South Australian productivity commission. It is about this government having wasted what will be 12 years to reset the economy. A productivity commission will be a good tool for this state to create the debate and set the scene for how we can reset the South Australian economy.

Perhaps the most telling comment of all was from Judith Sloan, economic commentator—formerly of Flinders University, now in Melbourne—who, at the end of her analysis on the South Australian budget, simply posed the question, 'Can Australia afford two Tasmanias?' That is how she characterised South Australia's performance under this particular Labor government. You need to look at this budget in the context of what was promised, and the point about this budget and this government is that you simply cannot believe what they say.

There is hardly a promise they have made that they have not broken. Just go back to the 2010 election. The then treasurer, Mr Foley—and he was two treasurers ago—came out on behalf of the South Australian Labor Party and told the South Australian public that, going into the 2010 election, all the government had to do was find $750 million worth of savings over the forward estimates and, if they kept public sector wages to a 2.5 per cent increase, most of that would come from that particular measure. All they had to do was find $750 million worth of savings and they would be returning surpluses.

That was what was promised back in 2010. Now we know that this government is cutting $949 million out of health, $250 million out of education and $150 million out of police. They have announced something like $3 billion worth of savings measures over a period of budgets. Go back to what you were told before the election and ask yourself this: now they are telling you this before this election, why would you believe it?

Why would you believe that you are going to go from the highest deficit in history—a $1,300 million dollar overspend just this year? Why does anyone think that in three or four years' time there is going to be this miraculous recovery to a $661 million surplus—a $2 billion turnaround in a matter of three or four years? Why would anyone believe that, given the performance of this government on making announcements and then breaking them?

I just say to the South Australian public and those who follow politics: go back to Mr Foley's statement. Go back to his statement before the last election and ask yourself why you would believe any promise this government made after they went to the last election making enormous promises, which have all been broken. You only have to go back to the interim treasurer—the now Minister for Health. We had Mr Foley; he got dumped. We had the Minister for Health; he got dumped as treasurer and now we have got the Premier. But let us just go back to last year's budget and the opening of the last year's budget:

South Australia will be a very different place in a few years...

The expanded Olympic Dam mine—the largest open pit mine in the world—will be operating...

They could not deliver that deal. We accept there were lots of pressure points about that bill, but this government came into the parliament and said 'It is all happening.' The budget was built on it. They sent a very strong message to the business community that it was a done and dusted deal. They oversold it. They could not deliver on the promise. They built into their budget all of the employment statistics, all of the payroll tax growth, all of the revenue measures they promised on the back of that deal, and it fell through. You cannot believe a single thing this government says about the budget. They will promise one thing before the election and cancel it just after.

This Treasurer—the current Premier—is now the third Treasurer. This Premier is just like Treasurer Swan. They keep on promising surpluses and keep on delivering deficits. Just have a look at the record. Just have a look at the most recent three or four years.

Go to the 2011-12 year. They promised a $424 million surplus; they delivered a $258 million deficit—that is around a $670 million difference. Go to this year—the 2012-13 year that is just finishing. They promised a $304 million surplus; they are delivering a $1,300 million deficit—that is a $1,600 million difference, just in this year. This is the same Treasurer who says, 'Don't worry about it. In three years' time, we are going to have a $661 million surplus.' Why would you believe it? It is farcical for anyone to think you could believe that.

Then you go to the 2013-14 year. They promised a $480 million surplus; they are predicting a $911 million deficit—that is a $1,400 million turnaround. In the year after, they originally predicted a $840 million surplus; they are now predicting a $431 million deficit. Add those together—a $1,600 million difference, a $1,400 million difference, a $1,300 million difference—and you are talking well north of a $3 billion error or miscalculation or downgrade in those particular surpluses.

Why would anyone believe this government when they say they are going to get the budget back into surplus by $661 million in a few years' time? Of course, built into those figures is their capacity to cut $950 million, in round numbers, out of health, $250 million out of education and $150 million out of police—that is already built into those figures. If they cannot deliver on that, then, of course, those future surpluses will actually get worse.

The Leader of the Opposition is quite right when he says the problem with this government is they cannot control their expenditure. Having budgeted for expenditure, what is their result? Just look at this year alone. This year alone, this government, in the financial year we are just about to finish in a couple of weeks' time, are predicting to overspend by $626 million—a $626 million overspend just in this year.

To put that into a mental picture, they have overspent an Adelaide Oval redevelopment right there, just in this year. The $626 million is the Adelaide Oval redevelopment, and they have overspent that in this year. So, the Treasurer-cum-Premier is running around the state of South Australia saying, 'Woe is me, the revenues have dropped.' As the Leader of the Opposition said, 'Have a look at the revenue figures. They are actually going up.' But have a look at what they have done on the expenditure side. They cannot manage money. How do you overspend by $626 million in one year? But they have not done it in one year; this is a habit for this government. Go back to the 2009-10 year, and they overspent by $599 million. Go back to the year before that, the 2008-09 year, and they overspent by $670 million.

Do you know who is paying for this, Mr Speaker? It is all those parents out there and all those small businesses out there, all those families out there that are getting hit with the highest taxes in Australia, the highest cost of living in Australia. They are the ones who are paying for this over expenditure. That is why the cost of living is so high. When the government overspends by $623 million they go to households and charge them more in rates and taxes, driver's licences, speeding fines, and to the business community for payroll tax, land tax, stamp duties. That is why we have very high taxes in South Australia and a very high cost of living. The lack of control of the government's expenditure becomes a problem.

This government has run six deficits in seven years. In that seven-year period they have overspent—just on the operational side of the budget—by over $3,000 million, or $3 billion. Let us put that in perspective: $3,000 million is five Adelaide Oval projects. This government has overspent, just on the operational side, on running their departments—this is not capital works, this is not South Road or the desal plant or other capital works, this is just on the operational side of the department—and has run its budget deficits to the tune of $3,000 million, or five Adelaide Oval projects.

The only time they got a surplus was back in 2009-10, the election year, and the only way they could get a surplus that year was because they got $2 billion extra in revenue—an extra $1 billion dollars from the commonwealth government. They got over $1 billion extra from the commonwealth government, and even then they could only produce a $187 million surplus.

What they want us to believe—and this is why the Financial Review said they were chasing rainbows—is that they are going to go from the biggest deficit in the state's history to the second biggest deficit in the state's history and then, within three years, be at the biggest surplus in the historical record of this budget. It goes back 19 years and records every surplus for 19 years. If we look way back for 19 years we cannot see a surplus that is more than $661 million. This government wants us to believe that it is going to go from the worst deficit in history to the second worst deficit in history and then to the highest surplus recorded in the budget historical document, in 19 years. They think they are going to turn that around, and they want us to believe it.

This is exactly what Wayne Swan did: promise surpluses, deliver deficits, and then have these miraculous revenue figures that build a surplus some way off in the future, saying 'Trust me.' Well, the reality is do not look at what they are promising, have look at what they have delivered. What they have delivered to South Australia is higher taxes, a higher cost of living, the biggest deficit and biggest debt in history.

Let us have a look at how South Australia is going against other states. If we look at the other states and how they compare to South Australia, South Australia has a bigger deficit than New South Wales, Tasmania, Victoria and Western Australia combined. Add their budget performance together: New South Wales, Tasmania, Victoria and Western Australia combined have a lower deficit than South Australia in this year, 2012-13, 2013-14 and 2014-15. The problem with that is this: they have 16 million people to deal with that deficit, and we have 1.7 million people. So the deficit ask on South Australians, ultimately, the job, is 10 times harder for South Australia. That gives us some context in regard to where we are with the deficit.

Let's put the debt in some perspective. This government has delivered one surplus in recent history. It was in the 2009-10 year, which was the election year, and it was $187 million. They are budgeting, of course, for the debt to go to $13.75 billion in round numbers, so a touch under $14 billion. It is the highest debt in the state's history. What does that mean? It means this: if they could reproduce the $187 million surplus—if they could reproduce it, and they have only ever done it once in recent times—it would take them 73 years of surpluses to pay off the debt. If they could reproduce that surplus every year it would take 73 years to pay off the debt. That is assuming that they do not spend it on anything else and that there is no other expenditure pressure, of course. If they could reproduce the $187 million surplus it would be 73 years.

To put it in layman's terms, for those on the street, this Saturday there is a X-Lotto draw and I have bought a ticket, and it is for $4 million. To pay off the state debt, someone would have to win the $4 million X-Lotto every week for 66 years. That gives you an idea of how much debt the government has got us into. The leader touched on the interest payments—$952 million a year in interest, which is what it is growing to. That will be more than our police budget. The police budget in that year will be around $867 million and the interest will be around $952 million.

Our interest payments at that point will be $108,000 an hour. It will be $108,000 an hour just in interest payments. These are staggering numbers. You really have to ask how and why South Australia is in that position. As the Auditor-General said about the health accounts, it is poor management, and that is exactly right. This government keeps on promising but they cannot deliver, and it is because they cannot manage money. They simply cannot manage money.

The debt, of course, is going up to $13.75 billion, so the government said, 'What we'll do is introduce a debt cap.' When they introduced it, they said that they would introduce a cap on government borrowing that would never exceed half our annual revenues. Well, guess what? Within 12 months the debt cap was broken. That promise did not last 12 months. Already that debt cap has been broken. The target was set at 50 per cent and it is now predicted to be 54 per cent of revenues.

This government deliberately went out and trashed the AAA credit rating. The state—the business community and governments of both colours—worked very hard for 12 years to get back the AAA credit rating after the Labor Party lost it in the State Bank disaster of 1992. Having got it back in 12 years, this government, as the Premier said, went out and deliberately made decisions to lose the AAA credit rating. South Australia now has the worst credit rating in Australia. Even Tasmania has a better credit rating than South Australia, and that is an independent assessment of the strength of the budget and the amount of political will within cabinet to deal with the financial issues.

When Kevin Foley was trying to get back the AAA credit rating he said it was all about investment and jobs, and when Premier Weatherill said he was going to trash the AAA credit rating he said it was all about jobs. Let's be frank: the reality is that, under this government, since the 2010 election where they made a promise to increase jobs by 100,000, they have borrowed $5 billion extra and they have created about 21,000 jobs. In other words, we are borrowing as a state $234,000 for every job they create. For every job they create we are borrowing $234,000. So, we are borrowing $234,000 to create $85,000 or $90,000-salaried jobs. Work it out for yourself: how long can you do that?

The brutal reality is this: this government is going to promise everything before the election. You have to ask yourself one simple question: why would you believe it? I can remember that Adelaide Oval was going to be $450 million and not a cent more, and it is north of $600 million. The Royal Adelaide Hospital was going to be $1.7 billion and it is adding $2.8 billion to the debt. The problem with this government is very, very simple: you just cannot believe them and you just cannot trust them.

Mr HAMILTON-SMITH (Waite) (12:05): Well may we be proud of our democracy; well may we be proud of responsible government. Sadly, as we see this budget in these closing years of this failed Labor government, we look back on what can only be described as irresponsible government. Gone are the grand and lofty ideals of the founding fathers of this state and this nation, who built everything that we have. Beset we are with a government both in this state and federally that have done nothing but squander the wealth of the nation and of the state, that are interested in nothing more than their own survival, that are not investing the taxpayers' money in the future of our children and grandchildren but in nothing more than their own re-election.

This is a budget which is about getting the government re-elected. It is not a budget that is thinking about our children's jobs and our grandchildren's future. It is squandering all that has been built up over recent decades and simply throwing it away. The leader and the shadow treasurer have done a very good job of explaining the mess that this government has created in dollar terms, debt terms and deficit terms, and I do not intend to go over that, but I intend to make some simple points. That is, a government has a responsibility to the people who elect it to think to the future.

Sadly, there is a dynamic that has developed in Australian policy which sees Labor governments come into office and deliver ruin, which sees Labor governments come into office and take massive surpluses, squander them, tax the public and the productive sector of the economy into oblivion, waste the money, and which invariably leave office leaving nothing but wreckage in their wake. Then the story goes: a conservative government comes in and has to fix the mess.

We have been through this before, this cycle, many times in South Australia. We saw it with the State Bank. Labor bankrupted the state. It took eight years to put it back on its feet. As soon as the patient was resuscitated, the people of South Australia again elected in 2002 this rotten government. And what have they done over the last 11 to 12 years? Repeat the entire cycle. Gone are the surpluses, restored is the debt, back are the deficits. And what we have to show for it? As they skulk from office, hopefully, next March, as they vanish down their burrows they will leave behind nothing but a mess for the government that is formed after March 2014 to fix.

We have seen it all before, and the same story is unfolding in Canberra. We have got two civil wars going on: Syria and the federal Labor Party in Canberra, and they both seem as bloodthirsty as one another. The net result is that lost in it all is the future. Labor in Canberra and Labor in Adelaide are simply delivering what Labor delivers, which is ruin. It has been 11 years of wasted opportunity. During those good years we could have built up surpluses that could have paid for a new hospital, that could have paid for South Road investments, that could have paid for the electrification of rail. Instead, those surpluses were squandered and there is nothing to show for it. So we have had to borrow to do things that South Australians might rightly have expected to have been paid for from their hard-paid taxes through surpluses.

This government under its current Premier has stepped away from the policies of the previous premier and the previous treasurer. At least the previous premier, the former member for Ramsay, and the previous treasurer, the former member for Port Adelaide, remembered the State Bank. They understood that Labor's Achilles heel was its financial mismanagement, its debt, and the wreckage it left after the State Bank.

Under the premiership of the current Premier, the strategy has changed, and it is quite a cynical strategy. It is one of emptying the bank, spending all that is there in the way of deposits and surpluses, but going further: going out to borrow and build up debt to promise things for an election so that there is nothing left in the kitty should they lose. They are basically betting it all in the hope that, if they cut enough ribbons between now and March, they will be re-elected. Then they will sort out the mess, they argue, after March.

Of course, they will be leaving nothing but a burnt landscape behind them should government change in March. In that respect, they are not thinking about the future of our children and our grandchildren, and they will stand condemned for it. Under this Premier, who is also Treasurer, it has been a budget strategy of running up debt, increasing deficit and leaving nothing behind after March 2014. As I have said, they have bet it all.

Let's look at the quality of some of the decisions the government has been making. First of all, there is the question addressed by the Leader of the Opposition about productivity. In the time of the life of this government, the last 11 years, our productivity has headed south; our industrial relations have become rigid and less productive, and businesses have suffered as a consequence; capital costs have risen; infrastructure is either not being built or has become so expensive that it is now project-cost prohibitive; and we have gone from being one of the lowest-taxed states in the country to the highest-taxed state in the country. At the same time, a federal Labor government has been making crushing decisions that have added to those problems.

Our productivity in the 11 years of state Labor has deteriorated to the point now that it has affected projects such as Roxby Downs and the Olympic Dam expansion and the Arrium development in Whyalla—you name it, projects everywhere. We have Holden today making stunning announcements, calling on the workforce to reduce their remuneration in order to survive. We have Nyrstar on the ropes and a package of support measures taking shape. We have all sorts of problems, small businesses closing everywhere, because our productivity is headed south; our competitiveness as a state is no longer there. Under this government, that is what has been delivered.

A lack of productivity stands as one of the poorest of decision-making outcomes in the life of this government, but there are others. Look at the hospital, the hospital we never needed to have—far more expensive, billions of dollars more expensive over the 30 or 35 years that it will be paid off, than having rebuilt the hospital where it is in its current location at the existing RAH site. Now what we are finding, as predicted by the opposition, is that all sorts of other investments are now having to be made to accommodate that flawed decision: the medical school has relocated, and now we have the AMA coming out and saying that we should now relocate the Women's and Children's Hospital.

We have moved an effective and working health precinct around Frome Road to a new location, and now we are having to invest hundreds of millions of dollars more to accommodate that decision—hundreds of millions of dollars that might have been better spent on better health outcomes or other improved outcomes across the economy. It is a fatally flawed decision, and one of many.

Of all the infrastructure challenges we had before us 11 years ago to make the economy more productive, did we really need trams to be one of the first priorities? Did we really need rail electrification for passengers to be the first priority? Did we really need the South Road Superway in its current location to be the first priority for the upgrade of South Road and for the building of productive infrastructure?

I put to you that, if you had something such as the opposition is going to create, Infrastructure SA, something that could competently and properly plan what our infrastructure needs are and fund them appropriately, projects such as moving the hospital, rail electrification, trams and the South Road Superway would not have been the top priorities. What might have been—

The Hon. J.D. Hill interjecting:

Mr HAMILTON-SMITH: Well, what might have been top priorities might have been things that make the economy more productive—says, the former minister for health, the bloke who on the back of an envelope with a former head of the AMA sunk this government by committing it to a new hospital which will waste over $13 billion in the life of repayments because of his own egotistical stupidity. He could have left the hospital where it was; that was the plan. Honestly, that bloke, the ex-minister, the member for Kaurna, will go down in history as the fellow who sunk a torpedo amidships of this government with his stupid new Royal Adelaide Hospital.

There he is, the member for Kaurna. He will be gone soon but his legacy will be paid off by our grandchildren and, as a result of his decision, roads will not be built in the regions, a port will not be built on the west coast, various productive infrastructure investments will not be made, because we will be busily paying for his silly hospital—the hospital no-one wanted but him and that no-one needed—that will drain millions, in fact billions, out of the health budget for years to come. Long may he squeak.

Let's have some more, member for Kaurna. You are the bloke who did it. You convinced your cabinet colleagues and aren't they now sorry about it! Wouldn't they now wish that that commitment was not on the books of account. You did it; that is your legacy. I am sure it will be a nice hospital but it will be a hospital, as has been proven, this state could not afford and did not need—a complete and utter waste. It is your legacy.

There are so many flawed infrastructure decisions that this government has made. Whether or not the government has noticed, this economy faces some challenges. As I mentioned a moment ago, the CEO of Holden is out at Elizabeth this afternoon asking the workforce to take very significant pay cuts in order to keep the business alive. On the watch of this government, we have lost Mitsubishi and other major manufacturers, and we now have Holden at risk. This opposition is strongly and steadfastly standing beside Holden—and I will have more to say about that later in the week—unlike this government which, on its watch, has allowed it to come to this.

As well as that, we have Nyrstar up in Port Pirie facing a very serious challenge, and board decisions that will be made in February will determine whether Port Pirie and Nyrstar have a future. We have also had prevarication and delay on naval shipbuilding such that we still do not know what is happening with submarines and naval shipbuilding more completely. We have not even had the agreement on the River Murray yet signed off by all governments involved in the negotiation of the agreement that Labor claims to have created.

There are some very serious challenges facing this state. That is why it is so disappointing to see a budget with not an ounce of vision. What this budget needed to do was invest in growing the economy because if you grow the size of the economy, if you grow the size of the cake, then you will generate the revenues that we need to deliver better services. What is in there for exports? What is in there for economic transformation? What is in there in a meaningful way for infrastructure, ports, roads in the regions? What is in there for ring roads around the city of Adelaide? What is in there to complete the task of upgrading the north-south axis through the city? What is in there for a further vision for the metropolitan area and city west? The answer is: virtually nothing. In fact, they have cut money significantly.

The budget for regional development and primary industries will spend $79.7 million this year. We spent $97.6 million last year. It is a staggering reduction in investment in our regions. Grants will be cut right across the board. Funding of food and our productive regional economy has been slashed, and it does not end there. When you look into the fine print of the budget, you find that last year Labor spent $88.2 million on mining, and this has been cut to $81.3 million in the year ahead—a reduction of nearly $7 million.

So, the budget is out there, saying, 'Oh, we are going to do this little thing, and we are going to do that little thing,' but when you look at the budget overall, in food and mining, as I have just mentioned, there is an overall reduction of expenditure—an overall disinvestment. These two areas of the productive economy—primary production, value-adding to food; and minerals, petroleum and gas, which is the area that we are touting as the future—the government, in this budget, has disinvested.

Savings initiatives will see $2.3 million in geosciences surveys cut by another $1.6 million, and $1.2 million will be axed from the PACE program. So, the rhetoric does not match the actual performance in this budget. In manufacturing, innovation and trade, again there is a disinvestment. Last year, we spent $94.2 million in this portfolio area; this year, it is $82.4 million, which is $12 million less.

We can explore all of this in budget estimates, but you cannot go out and say that you are talking about reinventing the economy and you want to grow primary production, minerals, gas and petroleum, manufacturing, innovation and trade, and then disinvest from those sectors of the budget and pull money out. Instead, what this government has decided to do again is spread the money around the services—all of which is welcome; we love to see money spent on services. But, you have to have the revenue coming in.

Ask anyone who runs a business: you have got to have money coming in and money going out. When the money coming in does not match the money going out, you are running a deficit—you are running up debt—and that is what we are doing. So, you have dished out more money on services, but you have not got the money coming in, because you are not investing in the economy.

In this budget, you needed to be investing in food production; that means infrastructure and other investments in the regions. You needed to be investing in helping mining to continue to grow; it is facing challenges. You needed to be investing in tourism, not only in the city, but in the regions. You also needed to be investing in services exports. Services is a productive sector of the economy, particularly sectors such as education and health where, in a number of areas, we can actually export our goods, products and services. But you are not investing in those areas. And you needed to be investing in a smarter economy, so that we can manage this transformation into the future, so that we can grow the economy and so that we can generate the revenues we need to delivery better services. But you have not done that; you have not done that at all.

I just want to congratulate the Leader of the Opposition for his address today. The opposition has confirmed a number of sound policy announcements that is has made, and has added value by indicating three new directions: first of all, the need for a productivity commission—

Members interjecting:

Mr HAMILTON-SMITH: —because we need to fix the mess that you have created. You have made it one of the most unproductive economies in the country; we are going to fix that. A productivity commission will cut the waste—your waste—on consultants, and actually point us in the right direction.

The Leader of the Opposition has also signalled that we will not be taking the axe to the public sector, and he has signalled that any changes we might make are unlikely to be very different to those already announced by the government, if you listen to his address. But, we will see what sort of a mess we are in after Christmas.

Members interjecting:

Mr HAMILTON-SMITH: You have already gone hundreds of millions of dollars south just in the last six months to a year; we will see how bad it is then. He has also pointed to the need for significant reshaping and restructuring of the Public Service to make it more efficient, so we do not have stupid situations like one CEO reporting to five ministers, so we don't get stupid decisions as we got from the member for Kaurna, like building a new hospital we never ever needed, so that his colleagues and future governments can pay it off for the next 30 years.

The Hon. J.D. Hill interjecting:

Mr HAMILTON-SMITH: If he wants to chirp in, I am happy to respond. Mr Deputy Speaker, it is a very disappointing budget for our children; it is a very disappointing budget for our grandchildren. It is a budget that does not invest in the economy; it is a budget that simply ratchets up debt and deficit and borrows for the future. It is a very poor effort after 11 years.

Mr GRIFFITHS (Goyder) (12:25): As I understand it, South Australia has had some level of self-government for about 156 years or thereabouts. There are probably about 800 people who have been honoured to come into this room with an opportunity to have an influence on the future of the state, to make laws, put budgets in place, set priorities, determine where infrastructure will go and what level of services there are going to be.

As a person who had always been an outsider looking at politics, when I was asked if there was a level of interest in running one day, I was automatically excited by that, because I wanted to be a decision-maker. I wanted to be a person who could come in here and represent their community, to espouse the needs of the area for which they were honoured to be elected, and a person who could equally have an opportunity to influence the future of the state.

For me, it is not an ego opportunity but an opportunity to use the skills that I have learnt in my life, the people I know and the issues that I know about in my area, the things I have read about and learnt and spent a lifetime building up an intellectual capacity to understand, and to come in here and make a difference. That is what we are all here for: to make a difference.

It is interesting to see the level of diversity and the debates that occur across the chamber. One side holds one position and the other side argues against that and we put counterviews forward. There are a lot of arguments from time to time, but quite often there is a level of bipartisan support in particular instances, and that is how the parliament should run. The budget, obviously, is a bit of a different situation. It is a chance for both sides to stand up and talk about their vision for the future or to critique and level concerns in certain areas and put forward alternative visions.

The debate might take a while, but it is important, because when this sort of debate is reviewed by people out in the electorate at every level of society it will inform decisions about who they want to actually be in charge for the next four years, and beyond that, too. It is important that we get it absolutely right.

I came in here with my eyes open. I have to say that. I had worked in local government for a long time, with acts of parliament, and I had to have negotiations with different levels of bureaucracy and on occasion with ministers. I had represented a decision-making body. I had attended and spoken at public meetings and had been criticised, and congratulated on some occasions. So I know it is not an easy role, but it is one that demands the absolute best of people, and that is why the parliament has to be made up of people who want to make a difference.

In the seven and a bit years that I have been here, I have been frustrated about the level of financial control that has been in place. As a person who worked within an area where budgets had to be set, you had to consider the capacity of the community to pay and you had to look at what the community's needs in services and infrastructure were, but you had to ensure that you met your budgets. That is why the Leader of the Opposition, the shadow treasurer and the member for Waite—not just now, but on previous occasions—have espoused the frustration felt by people like me. I am symptomatic of the wider cross-section of the community who believe that budget control should be there.

It is not until you hear about the level of expenditure overrun that you open your eyes up to what is frustrating. The member for Davenport (the shadow treasurer) talked about over $600 million in additional expenditure occurring in the current financial year from that which was originally budgeted. That is in a budget figure of a bit under $16 billion. As a percentage you can sort of accept that, but as a dollar figure it is absolutely disgraceful, because it adds into a level of liability and debt that we as a society are going to be responsible for paying, not just for the next two years, but potentially—when you consider it on the performance in recent years and what the $14 billion debt will be and the additional liabilities which can push it out to the enormous figure of nearly $30 billion—it will be a generational cost.

It is for those young people who are excited by their future but, when they start to hear some of the information, they will start to ask questions. It will be the young people who will determine the results of future elections, and they are going to be judging upon what the cost and implications to them are. No matter what party you are a member of or what political beliefs you have, it is important that you espouse those.

I stand here today as a person who is really concerned about the cost of living pressure on ordinary people. In my electorate office, as I travel around the community, I talk to people at events about issues. They raise with me what the real cost is, and for them it is a constant one. It is not just every time the bill comes; these are people that are financially planning. As the Leader of the Opposition talked about, there is an understanding that it costs to receive services and they want those services—there is no doubt about that—but they want to ensure that as an individual, a unit, a family organisation, a business structure or a community group they have the chance to live within their means and that means asking, 'What am I prepared to sacrifice to pay my utilities bills?' It comes down to that.

I have had people on the phone to me crying about the fact that they have a water bill and they cannot pay it. They are concerned about what their next electricity bill is because they know they cannot pay it unless they make some really serious sacrifices in other expenditure. For them, that means in rent, food or a level of fun with their family that they miss out on to ensure that they meet those obligations.

These are good people who have contributed over decades. They are responsible, they want to meet their obligations, they want to contribute to their community and society, but they are worried about what the implications are going to be financially for them when they get their next bill. They try and stretch things out, they try to manage it and they try to live within their fortnightly payments on what they earn, but it is becoming exceptionally hard.

I come in here and see the level of overspend that has occurred for a long time within individual departments that have a ministerial control mechanism sitting up the top. No matter how long that person has been there or what their background is, there is an expectation that they have to meet the budget restrictions put on them as part of an overall state budget within their individual department. When they do not meet that—and consistently do not meet that—that is where accountability should exist, and that is where the community has to stand up and say, 'We are sick of it; we want to see a change. We want to see people in there who understand things, people who can put policies out there and be visionary, and people who actually understand what the day-to-day pressures are upon real South Australians—not necessarily just the high rollers, but the real people who are out there who are good people and who struggle continually.' They want to see a change.

Indeed, I wake up every morning buoyed and strengthened by the fact that there will be a change because it has to happen. When you see the collectiveness of this, that in the last seven financial years, as mentioned by others, there have been deficits (other than the 2009-10 financial year) and the cumulative effect of that is an overspend of about $5.6 billion, it is just mind boggling. The accountability that should exist within this chamber will be evident within the community's voting preferences in March next year—the day on which everybody is held to account.

There have been a lot of accusations made about what is going to occur within the Public Service. Other members have spoken words which have been misconstrued. The Leader of the Opposition has put it very strongly, though, about his belief, that from a state perspective, the Liberal Party sees the public sector as one of its greatest strengths, and it is a public sector that will be focused on outcomes for people. It will be a public sector that has very important roles to fill but it has to ensure that it is prepared to accept the needs of individuals and business, and it is prepared to put in place policies, rules and laws that will give those businesses and individuals a chance to be successful.

I am so concerned when I hear comments back from community members who talk to me about some people continuing to give no for an answer too easily. We have to open our eyes and look at an opportunity to say yes. Yes, I understand we have to assess what the level of risk might be with that, but what is the opportunity that is also attached to it? There are always two sides to an equation and from a public sector perspective—and it totals nearly 100,000 people with over 80,000 full-time equivalents—it is a major employment group within South Australia. It is important that those people, the same as us and equally across all sectors, wake up thinking about what is the best job they can do today; how they can help people; how they can make things better; how they can make it work; how they can be cost effective; and how they can prove to themselves, primarily more than anything, that they are doing a good job and they are making a difference.

When the Leader of the Opposition talks about the public sector productivity commission that he wants to implement, it is all about improvement opportunity. It is not just a collection of words that make no difference; it is actually a very strong commitment that is going to be made to try to put in place a public sector that controls, implements and influences so many different areas so it is focused on an outcomes opportunity, because that is what it has to be.

I have looked, over previous years, and I have seen the reviews that have been undertaken. It has been a combination of things like the Smith review. There have been full-time equivalent caps put in place on apartments. There has been an audit commissioned from the previous member for Port Adelaide. There have been savings targets by departments. It seems to me that none of them have worked. That is the great frustration to me because there continues to be additional numbers, that is, people and dollars, and it is those two numbers that are actually making it very hard.

It is not the revenue situation, as we have heard from the government. Indeed, as we put it, the revenues have continued to increase and GST revenue has continued to increase, and there is over 3 per cent factored in for this current financial year and future years in growth opportunity in GST, but it is about how expenditure is controlled. That is where I think it is a poor performance over a prolonged period of time that has actually come back and the payback is going to be within about eight months; that is when it is going to count for all of us. It should be better and Steven Marshall, the member for Norwood, and the Liberal Party will do all they can to ensure that it works.

I attended, with a full contingent of probably about 140 people, a post budget breakfast at which the member for Davenport spoke. It was actually a great presentation but it was for a sad story. That is the problem. It emphasised to the collection of people there and to the media players there, who have had the chance to report on it, that the budget can be a collection of wonderful words, and I understand that the Treasurer, when he stands up and speaks for 30 minutes about visions, pushes the positives, but it is not until the reality actually comes up to you that you start to lose some of the truths.

The Leader of the Opposition talked about page 155 of Budget Paper 3 and the figure that was buried in there about car park taxes—I think that was his quote. That is an example of where the detail contained within this thick wad of documents actually puts out what the future vision is going to be over the next 12 months and what the implications are going to be of those sorts of policies and financial positions that will be put in place over the next four years. It is when you look at the collection of those numbers and words that you start to be concerned, and there are a couple of things on this that I want to enforce.

I am a believer in a responsible government that creates an opportunity to promote (in our case) a state. For me, the AAA credit rating was always the key. It comes back to my own personal fiscal nature of being quite cautious. I always saw having a AAA credit rating as being a great promotional opportunity for South Australia. It demonstrated a government that was in tune with the people, in tune with business and in tune with the need to ensure that it provided services infrastructure, managed it well and had a strong financial base to work upon.

The downgrade has been so frustrating and, indeed, devastating to some and I respect that because we have gone from a AAA credit rating, the crest of the peak, the ultimate of what we were aspiring to in the depths of despair that was the early 1990s, and to have reached that within 12 years was, I think, a credit to predominantly the Liberal Party (when in government), which made some exceptionally hard decisions, and was continued on in the early years of the Labor government in getting there too, but it has been lost. It has been lost on the basis that there were going to be efforts to maintain it which involved of the sale of really important assets and infrastructure. For the forestry people and the people of the South-East to have been told that the sale of their forward rotations was on the basis of attaining the AAA and then it is lost is the ultimate kick in the pants that they as a community can ever experience.

I was part of a group who met with those people many times. I was part of a group who were on the steps of Parliament House when there were hundreds of people who had travelled from the South-East to show the level of frustration they had and the impact the decision was going to have upon them. The decision was still made. Yes, there was a local committee that worked on it and it tried to get some positive outcomes, but there is still this capacity that has been taken away from a community, that has been sold off to somebody else, and you do not know if the same level of commitment is going to be there. So, the horror story in that case has come true.

The sale of SA Lotteries was also espoused on the basis that it had returned good money to Treasury, there is no doubt about that, and it returned money to the public hospital system. It had done so on the basis that, since being implemented in, I think, the late 1960s, it was there and it was going to be a sure level and there was always a level of support and interest for people in it, but it has gone again, and it has been sold, I think, in another relatively short-sighted view that has been taken upon it because of the need for cash that existed.

The need for cash existed because it had all been poorly managed and spent and overspent with no ministerial control and no direct responsibility accepted for it. Instead of talking continuously and saying, 'Yes, we going to have surpluses in future years,' the difference is the delivery of a deficit.

It is not until you hear of the implications of the difference between an expected surplus and the reality of a delivered deficit—and it is up to the $1.6 billion and $1.4 billion and $1.3 billion the member for Davenport quoted with the collective being $4.3 billion—that is the difference between the original projection of a surplus and the reality of the deficit. In about five years' time, $4.3 billion is taken away from the state, which results in an increased borrowing level and an increased liability level and it impacts not just in the forward estimates but across future generations.

Those of us who want to have an opportunity to serve in this chamber for a few years, and those of us who want to influence policy for young people, are frustrated by this. From a policy perspective, when we look at opportunities to excite people and make them believe in their future again, unfortunately we see too many opportunities for that being taken away because there are no dollars. There are no dollars here because of the people who sit to the right-hand side of you, Mr Deputy Speaker, who have determined to spend it in areas and not be responsible for it.

I am a great believer in the Leader of the Opposition. I have seen in him a strength of character that is so impressive that I believe other South Australians will vote overwhelmingly in support of him next year. He is a man who, through his own efforts, has risen dramatically from first being elected three or so years ago to becoming Leader of the Opposition and, indeed, a future premier because of his capacity. It is not a capacity that is easily earnt. It is a capacity which has been created through hard work and which will show people what he can do.

As a candidate in support of him in some efforts prior to the last election, I said with all honesty that I was pleased that I got in four years before him because I was worried about how good he was. I am not so worried about how good he was then but I am very impressed by how good he is now. It is how good he is going to be, and how impressive he is going to be as a leader of the community, that I think is going to make South Australians, when we look at history in future decades, reflect upon his time here, when he had the opportunity to stand up to the immediate right of you, Mr Speaker, to make important announcements, give the policy direction and set in place a framework that will give South Australians a belief in the future. That is what I think all of us are excited by.

It is important that the collective team is there for him—and we are. There are people in here who have come from a wide variety of backgrounds who have all come together because of one philosophical belief—to create a strong South Australia. We do not do so from the basis of the personal reward for us; we do so on the basis of what the reward will be for the people. It comes down to financial responsibility, and it comes down to a capacity to put in place policies that are going to work.

The policies will be announced between now and 15 March next year. They will convince people of the fact that it is time for a change. That is an old saying, and I understand that—that it is time for a change—but it really and truly is. After 11 years and three months, there are South Australians out there, no matter where they come from—and I spoke at a meeting last night, which I will say was a Liberal Party branch meeting—who have given me strong feedback about the level of discussions they are having with others who have no involvement in politics and no preconceived conceptions about it but who are ready to see a change.

From a financial management point of view it is important that this budget be debated quite seriously, and that is why I am looking forward to the estimate sessions that start next week because that is where the real detail is going to come out. It is not just about the finances or the expenditure, but it is particularly about the policies and their implementation—what the cost is, how well it is being managed, and what the future implications of it are going to be.

I look forward to the contribution of other members. As a person who is a bit of a detail guy and who likes to read budget papers, I hope that I manage to store in my head a lot more of the information and the figures I have read and heard from other people because it is important that we get it right. We cannot afford to muck around. It is absolutely the key factor of how good a government or an opposition will be but, importantly, it is about how good the state is going to be.

Let's make sure that the next budget presented after the next election is the one that drives opportunity because, sadly, I do not believe that this one represents that. It represents another kick in the bum for people who are out there struggling, and it does not give them the hope they need.

Mr PEDERICK (Hammond) (12:44): I rise today to give a budget reply speech for the eighth time in this parliament from opposition and, hopefully, after the next election, it will be a long time before I do it from the opposition benches again because, frankly, this state cannot stand any more time with this Labor government running it. We are watching the federal debacle with what is going on with Julia Gillard's—and I was going to use the word 'team' but I do not think 'team' is the word at the moment, as they are working out who is knifing whom.

Mr Gardner: I think 'fiasco' is the term.

Mr PEDERICK: 'Fiasco' is the term to use, thank you member for Morialta. We see a fiasco in how this state has been run over the last 11 years. Just to make the point, we look at the debt ceiling which will be the biggest debt that this state will have ever had in its history—$13,750 million. You could say $13.75 billion, but I think when you put it in terms of $13,750 million, it shows the reality that this state's finances are headed to hit that in 2016, that is, if we can believe the budget figures, because they chop and change from budget to budget, and from Mid-Year Budget Review to Mid-Year Budget Review.

The general government debt ceiling will be breached at over 54.2 per cent in 2016. If we look at the total state liabilities that will occur in that year when we have the massive blowout, we look at $28.8 billion, which is over $30 billion if we work in our failed WorkCover scheme and the public sector workers compensation schemes—$30 billion—which is essentially equivalent to double our state budget at the moment, so how can this state keep having all these blowouts? It is just out of control. We look at the deficit coming up in 2012-13 of $1.314 billion, and it is deteriorating by $701 million in four years to the budget years of 2015-16. Supposedly in 2016-17, the surplus will be $661 million, if we can believe the figures.

As other speakers have indicated here today, we still have six deficits in seven budget years and, if we consider the estimate of last year for the 2012-13 budget deficit, which was going to be $867 million, this state is $447 million worse off this year. We look at economic growth figures for the state and, even though we are only three quarters of the way through 2012-13, the state final demand figures showed then a drop by 3.7 per cent. However, the state final demand was forecast to grow by 1.2 per cent in 2012-13. Gross state product at 1.25 per cent is less than half the national gross domestic product growth at 3 per cent this year.

If we look at what has happened in our employment sector and the pain inflicted on small business, everyone is not making decisions; they are waiting for the two elections to happen, and the jobs growth is essentially zero. Where is it now? In the budget, the Premier originally forecast 100,000 new jobs by 2016. Well, when is that going to happen because we are not seeing too much of that happening at the moment.

The interest has been talked about by other members today. The interest blowout will head to $952 million, which is $2.6 million per day that we will just be paying in interest by 2016-17. If we look at how that interest bill rates in the scheme of things—the police budget is just under $870 million in 2016-17. If the interest bill was a department, it would be the fifth largest department in 2016-17, under this failed government forecast. We can look at the superannuation interest which is over $400 million every year, and the interest repayments are growing an average of 30 per cent per annum.

Look at what is happening as far as some of the tax issues that were outlined in the budget. The car park tax remains, though in the budget papers it is not called the 'car park tax', it is called the 'transport development levy'. What sort of development is that toxic tax actually aiming at? It is not going to develop anything. It is going to make Adelaide a ghost town. All of the people in the regions, all of my constituents, they have to travel into the city. They have to drive in, find a park, do their business, do their shopping, whatever they need to do—whether it is to see people about business, whether it is to see their accountant or whether it is to shop for goods that are not so easy to get in the regions—and they have to get a park.

Yet here we see the government putting in place another tax which will put up the cost by $25 million a year across the board to people who want to park in the city. Well, I know exactly what will happen. People just will not bother coming in here. They will find other alternative ways to shop. They will see what more products they can find in the regions or they will shop in the suburban areas, and there will be more buying online. They will not bother coming in here. It is just a destructive tax.

If we look at the tax revenue growth over time: in 2013-14 it is 2.6 per cent; 6.5 per cent in 2014-15; 7.5 per cent in 2015-16; and 6.2 per cent in 2016-17. So there is tax revenue growth across the board, yet still we see a government that cannot manage its finances and cannot manage its forward estimates.

We see in savings targets indicated by the government that the government is looking at $140 million over four years worth of new savings outlined in this budget, but we see $1.3 billion worth of new spending. No wonder the budget has blown out. What we see hidden in the budget also is there is over $406 million worth of savings in revenue measures to commence after the election. I wonder where they will hit. Probably health—and probably country health.

We see the Public Service, where the government has outlined that it will target almost 5,000 people in the Public Service for a reduction, and that is over the forward estimates period, and that will include around $169 million worth of targeted voluntary separation packages payments in 2½ years. That is looking at a target of close to 1,500 people involved there, and we look at 58 early executive appointments terminated at a cost of $9 million. And so the total cost for termination works out to just over $115,000 per head.

Julia Gillard was in Adelaide the other day with the Premier proudly spruiking about the Gonski agreement, but will it mean extra funding? Will it mean better outcomes for our kids in the public schools? More and more people are turning to private schools because they are frustrated with the lack of management and the lack of outcomes in the public sector schools. Don't get me wrong: there are some very good people in the education department, but they are frustrated by policies and the way the finances are handled, the way staffing appointments are handled, and it just creates an issue where people cannot understand how some decisions are made in the education sector.

Mrs Geraghty: Because people keep talking down our state schools, that's why.

Mr PEDERICK: Absolutely. I think our state schools are great, but there needs to be better management about how these schools are run. I have two schools in my electorate, now that the Government Whip has fired me up, whose principals had long-term arrangements with their schools. They did one term this year and they have gone—they have decided to go elsewhere, because under the government's policy they can. At the school where my kids go at Coomandook, the principal was given a six-year contract and he did one term and told everyone that week—

The Hon. J.M. Rankine: Why?

Mr PEDERICK: Because he got a contract at Tailem Bend. So, there you go. Where are the continuous education outcomes for our children when we have people who just cut and run when they initially enter a six-year contract and then they leave? This is happening right across the state. I believe people should have some freedom of choice, but why are they only given that one term? The same thing happened at Lameroo in my electorate. The principal was there last year, but did one term this year and has gone elsewhere, so work it out. So when these appointments happen like this, when the flawed hiring process goes ahead, it means that other teachers have to step up, the deputy has to step up, as they have done, and they are doing a good job—

The Hon. J.M. Rankine interjecting:

The SPEAKER: I call the Minister for Education and Children's Services to order.

Mr Gardner: Warn her, sir.

The SPEAKER: That will be next.

Mr PEDERICK: Thank you, Mr Speaker. This pulls teachers out of the classroom, and temporary relief teachers have to come in and backfill the situation right throughout the system. So it does impact on children's education, because they do not have the continuum they deserve of a decent education because people are always backfilling roles and people are being pulled out of classrooms—

Mrs Geraghty interjecting:

The SPEAKER: I call the member for Torrens to order.

Mr PEDERICK: Thank you, Mr Speaker, for your protection. There has to be a better way so that our state schools can function better.

I look at the Department of Primary Industries and Regions. As a farmer coming into this place, I am extremely frustrated with the budget outcomes with respect to primary industries. For instance, if we look at the targeted full-time equivalent Public Service cuts for primary industries in this budget, another 120 people are to go. We see the primary industries funding cut by $11.5 million. We have seen over the last four budgets $80 million cut from primary industries. We see just in the one budget line of Agriculture, Food and Fisheries a $7 million cut.

It is just out of control how this government targets the very sector that is growing the economy in this state and making it work, especially when they suddenly realised, when the Olympic Dam expansion fell over, that they needed to rely on the next sector, which is the sector that has been helping this economy for as long as we have been here in South Australia (since 1836), and that is agriculture, which will have a final outcome of finished food demand of over $15 billion, but this government does not recognise the contribution of agriculture.

The government talks about premium food in this state—clean, green, premium food—but where is the support? It is out the window. We see that the Primary Industries and Regions South Australia operating expenses are to be cut in forward estimates by $16 million. It is interesting that I note in the budget that $930,000 has been lost due to our proposal to oppose the biosecurity levy. More and more the government wants to impose costs, but, thankfully, when the government tried to introduce it in a budget bill we stood our ground and opposed that levy. I seek leave to continue my remarks.

Leave granted; debate adjourned.


[Sitting suspended from 13:01 to 14:01]


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