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House of Assembly - Fifty-Fourth Parliament, Second Session (54-2)
2021-08-24 Daily Xml
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Bills

Appropriation Bill 2021

Estimates Committees

Mr COWDREY (Colton) (11:36): On behalf of the Deputy Speaker (member for Flinders), I bring up the report of Estimates Committee A and move:

That the report be received.

Motion carried.

Mr COWDREY: On behalf of the Deputy Speaker (member for Flinders), I bring up the minutes of proceedings of Estimates Committee A and move:

That the minutes of proceedings be incorporated in the Votes and Proceedings.

Motion carried.

Mr COWDREY: I bring up the report of Estimates Committee B and move:

That the report be received.

Motion carried.

Mr COWDREY: I bring up the minutes of proceedings of Estimates Committee B and move:

That the minutes of proceedings be incorporated in the Votes and Proceedings.

Motion carried.

The Hon. D.C. VAN HOLST PELLEKAAN (Stuart—Minister for Energy and Mining) (11:37): I move:

That the proposed expenditures referred to Estimates Committees A and B be agreed to.

The Hon. S.C. MULLIGHAN (Lee) (11:37): Once again, now two years in a row, we have had an Appropriation Bill being considered in the committee stage interrupted by a snap lockdown in the state in response to concerns about the COVID virus spreading throughout the community.

The DEPUTY SPEAKER: Member for Lee, are you the lead speaker?

The Hon. S.C. MULLIGHAN: I am, yes.

The DEPUTY SPEAKER: Thank you.

The Hon. S.C. MULLIGHAN: That has meant that, while we have had some interruption to the consideration of the Appropriation Bill, some of the circumstances were the same. It also meant that some of the issues the committee considered were the same as well. I can remember, with the government’s late budget last year handed down in November, there was ongoing concern from the business community about how much support would be provided by the state government to help insulate them from the worst impacts of the COVID restrictions.

At that time, the Treasurer rather glibly responded that the government certainly did not expect to save every business. Certainly, the language from the government has changed. They like to give the appearance that they are doing more to support business, but of course the grim reality for thousands of small businesses in South Australia is that they find ongoing restrictions, at varying levels, incredibly onerous and that they restrict them from being able to trade profitably.

There are thousands of business owners who continue to this day, even with the most recent easing of restrictions, to watch their livelihoods slipping away from them. Of course, last year in 2020, when we were faced by the pandemic and restrictions were being imposed at varying levels across different jurisdictions—some states in lockdown, some states subject to restrictions—the federal government came to the aid of the business community and to the aid of workers with their JobKeeper scheme.

You would not have to go very far in the community to find somebody who will tell you that the JobKeeper scheme was largely responsible for them being able to keep their job with their employer, or if you went and spoke to an employer, that they were able to not only maintain the employment of those workers but also maintain some semblance of their livelihoods as business owners and operators.

It is a very, very different environment now. What we are now seeing is the Prime Minister encouraging, in the strongest possible terms, all states and territories to get past a situation of snap lockdowns being called in order to limit the spread of the virus, to start opening up more than we have done in the last 18 months, and try to get the community back to normality. Of course, all of us would look forward to that, but it is the state and the territories that have the responsibility for managing the health outcomes of their communities. That is why the states and territories of all political persuasions have continued to impose restrictions, if not lockdowns, when they have deemed it necessary in the face of the coronavirus.

Although the federal government is encouraging the states to remove those restrictions or to ease up on those restrictions, or to perhaps be a bit more circumspect about applying snap lockdowns to their communities, we do not have the same level of support from the federal government. For example, we do not have JobKeeper anymore. Instead, what the federal government is doing is relying on its own health advice to determine where there is a hotspot and will only be providing commonwealth financial support for those people who are within that hotspot. That is greatly reducing the number of people who are able to access financial support.

Obviously, that is designed to reduce the financial exposure of the commonwealth to providing those levels of financial support. But I think everybody in this place realises that, regardless of whether you are in a declared hotspot or not, when restrictions are imposed on a community people feel the implications of those restrictions beyond the hotspots. The two industries that have experienced that the most, of course, that we are most aware of are those of the tourism industry and the hospitality industry, as well as, some people might be surprised to learn, some parts—not all, but some—of the retail industry.

There are some parts of the economy that are doing very well at the moment, and that has been attributed to the fact that Australians are not able to travel overseas with the same freedom that they have been used to. The same spends they would have conducted overseas on holidays and trips and that sort of thing have been thwarted, and hence they have more money to spend back here locally. Some of that money is pouring into increased economic activity in some parts of the economy. That is not true across the board, and there are some parts of the economy that continue to struggle.

When estimates was eventually reconvened after about a week's delay, once again, as it was back in November for the previous estimates process, this was the nature of the first questions from the opposition to the Treasurer: what additional support is being provided? The government has chosen to go down a path of providing sporadic financial support to businesses in the form of one-off cash grants, depending on the size and nature of the business.

Those cash grants could either be $3,000 or $1,000. Cast your mind back to last year: cash grants were $10,000 or $6,000 for a business qualifying against more stringent criteria. The scale of the financial support has not only reduced significantly from the commonwealth government but also reduced significantly from the state government.

It is worth bearing in mind that even though last year JobKeeper was being provided, and even though last year there were larger cash grants available from the state government, there were still thousands of businesses, and hence their staff, that found it very difficult to get through calendar 2020. There were many businesses that ate into their own financial reserves, that ate into their own savings, that perhaps even borrowed more money—which is a refrain I have heard very often from small businesses both in my electorate and around the state—and so they entered the period of 2021, as most of us did, looking forward to seeing COVID and the restrictions that it required starting to fade in our rear-vision mirrors.

That has not eventuated and those additional financial burdens that people were looking forward to paying off through the course of 2021 and onwards have not been able to be met in that same way. That means we have now had a period of more than 18 months when businesses have continued to struggle as a result of not having the ability to trade as they would normally trade, perhaps when they established their business or perhaps as they had been used to trading over the last few years, and also in the face of these restrictions have not received the same level of support they had in 2020.

At the moment, the government certainly has the financial reserves to provide additional support to the business community. In a way I have not seen before in the near two decades that I have been following state budgets and reading budget papers assiduously, this year the Treasurer has set aside $300 million in contingency funds. I cannot ever recall such a large amount of money being set aside in state government contingency funds before.

One would like to think that has been done for altruistic purposes, that such an extraordinary amount of money being set aside for one year in contingency provisions is being done on the basis that the government might need to respond financially to further pressures on the community—for example, providing more support to the business community or even just providing more support to our health system if it is required.

When the government announced a round of small business grants several weeks ago, it was explained by the Treasurer that that money would come from contingencies and that a maximum of $100 million had been allocated—only one-third of the contingency provisions. But it does not stop there because the government has also ensured that $200 million is available in the government's rebranded Jobs and Economic Growth Fund, or whatever it is called. I think this is the third naming of these business support funds being provided during the course of this government.

There is $300 million in contingencies and $200 million in this support fund, so that is $500 million altogether, and only $100 million has been allocated. All the while, calls for additional support from areas of the business community have continued. They have continued because not only did we have a snap lockdown but, just before that snap lockdown, the government reimposed restrictions requiring that the maximum capacity of venues be limited to one person per four square metres or, as those people in the hospitality industry know, about 25 per cent of maximum usual capacity. We then had the snap lockdown, and then, coming out of that, we had a 25 per cent capacity reimposed and then 50 per cent. Of course, it has only been in recent days that we have moved back up beyond that 50 per cent.

Most small business owners will tell you that it is simply not feasible for them to trade—to meet their costs of operating the business, of securing stock and making it available for sale or providing services—at 50 per cent, and it is certainly not viable at 25 per cent. Of course, having been given a demonstration by the federal government that there is a way in a public policy sense to provide ongoing support to businesses when they are struggling, when they are not able to reach revenue levels that they would normally reach, the call from the business community was clear: 'If you're going to keep these restrictions on, then you've got to give us ongoing financial support.'

One-off doses of, in the scheme of things, relatively modest amounts of money for businesses simply do not meet the need of the business community. When a business that might employ five or 10 staff is either locked down or placed into a period of restrictions of being able to operate only at 25 per cent, giving them a grant of $3,000 is certainly welcome—no-one, of course, will rebuff any financial support—but for the government to pretend that this is meeting the need of those businesses that are impacted, well, you do not have to take my word for it; it is simply not meeting the need of the businesses themselves.

That was certainly the message that was put by not only industry leaders like Business SA, the Hotels Association, the hospo collective, which has formed with more than 100 South Australian hospitality venues. In many cases it would not even pay a small proportion of wages for employees of that business for a week.

These businesses, almost without exception, I have to say, will do whatever they can to support their employees during these restrictions and lockdowns, not just because they do not want to lose them, because finding good staff is hard—although that is always a concern of these business owners—but also because they have a relationship with their employees. They care about their employees. They know their employees' families in many cases—their spouses, their children, their parents. They want to be able to continue remunerating their employees so that they can keep the lights on at home, and they can put the food on the kitchen table at home. That means that business owners, as I mentioned before, quite often are going into very significant extra indebtedness in order to not only keep their own heads above water but that of their employees as well.

So, a couple of weeks ago, the Leader of the Opposition, the member for Croydon, and I stood with small business owners and called for the government to put more effort into providing additional support. This is additional support above and beyond what the Treasurer advised the estimates committee was available for South Australian businesses. We were calling on the state government to provide additional support, but we were also calling on the state government to encourage the federal government to get back on the hook for supporting employees and the businesses that employ them.

If the commonwealth could possibly see fit to reinstate a level of support for workers and the state government could come up with a support scheme for small businesses, that together would ensure that South Australian businesses and their employees had the best possible chance of getting through this period of dealing with COVID with their livelihoods intact.

Unfortunately, that call has been rebuffed not only by the Premier and his Treasurer but also by the federal government. We were calling on the state government—aside from the federal government assistance—to dedicate a fund of $200 million for South Australian small businesses, not limited to hospitality and tourism but for all South Australian small businesses. They would need to have suffered a revenue decline of a minimum of 30 per cent, and their operations would also need to have been impacted by the restrictions that were imposed by the state government.

If they were able to do that, then the state government should sit down with industry leaders, who know their industries better than anyone else, and work out a way of compensating those businesses. I will not say entirely compensating them, but I will be honest and say only partly compensating those businesses for some of the financial impacts which those restrictions are causing to them and their workers.

So, based on the level of financial support which the New South Wales government has now rolled out for a number of months to its affected communities, take that precedent and apply it in a South Australian context. If a business suffers a level of restrictions of 50 per cent or more—so they are restricted from their operations by 50 per cent or more or, rather than one in two square metres or 50 per cent, they are required to operate at one in four square metres or 25 per cent—and their revenue has declined, they can make a case for accessing additional daily payments from the state government.

This will not meet all the need—of course, it will not meet all the need. It will not meet all the operating costs of that business, which is why we called for the federal government to also be involved and meet some of the employment costs of the workers themselves. If the state government could support the business itself and the federal government could support the workers, we are giving the South Australian business community the best possible chance of weathering the current difficult climate.

As I said, that money would be allocated towards a daily payment. That daily payment would need to be negotiated and agreed with those industry leaders according to the needs of their industry. Not all businesses will have the same needs. Businesses, of course, are different sizes with different obligations and have differing requirements around meeting those obligations.

There is no point paying money to a business that simply does not need the support. While there have been hundreds of thousands of businesses across the country that have been extremely grateful for the support, for example, from the commonwealth government with the JobKeeper scheme, we know now from reports in the national media just how many national companies have unfairly taken advantage of that scheme.

They have unfairly taken advantage of Australian taxpayers and they have claimed extraordinary amounts of JobKeeper payments. They have banked extraordinary profits, mostly as a result of being able to access those JobKeeper payments. In some cases, they have paid their executives bonuses in excess of $1 million a year, or they have managed to distribute additional largesse to their either private or public shareholders, all of this at taxpayers' expense. No-one wants to see that continue again and that means, of course, that there would have to be a lot of dedicated effort from the government in assessing small business's claims about getting access to this financial support.

If we cannot be certain about the future, if we cannot be certain about whether Delta is going to get into the community and proliferate, or if we cannot be certain about whether we are going to succeed at holding it out and making sure that we do not have to be subject to either stricter restrictions or further snap lockdowns, then an indication from the state and federal governments about certainty of government support will do a lot to ease the concerns of South Australian businesses.

There is nothing worse than not only having the uncertainty of the environment around you of what is going on with the coronavirus and whether restrictions will be imposed, whether consumer spending habits will change, whether the business has been irreparably damaged as a result, but not having any certainty about what the government may or may not do to support you only exacerbates that dreadful mindset to which so many South Australians have been subjected. So that was the first area of questioning when it came to the estimates committee.

Of course, no-one could advocate—certainly no-one in this chamber who would like to spend more time here, particularly beyond March next year, who has a concern about the state's finances—that there is a bottomless pit or that there is no amount of money that is too much to try to get the community through here.

That is why this call was only made on the basis that the government had already set aside substantial funds within its own budget metrics to provide for this level of support. The call from Labor, while far in excess of what the current Liberal government is providing and far more generous, is not excessive and is not unaffordable because we should keep an eye to the sustainability of the state's finances going forward.

The state's finances have irrevocably changed in the last two years, not just because of COVID but even before COVID. This government has made much of its first budget and how much it is allegedly investing in infrastructure spending and, as a result, how much additional money it is borrowing to do that. If you rewound the tape, Deputy Speaker, and you asked anyone in this chamber whether they would have expected that the state's debt levels would have doubled from $12 billion at the end of June 2018 to nearly $24 billion before COVID across the forward estimates, and increase again to $33 billion now, I do not think anyone would have believed you.

I make that point and spell out those figures for an important reason. We are not solely racking up a nearly tripling of state debt levels because of COVID; this was largely baked in before COVID. COVID is adding, of course, budget deficits and the need to borrow more money to cover those deficits on top of what was already a rapidly escalating debt position under the Liberal government.

As somebody who is, I was going to say, relatively young—perhaps I can look back on my youth fleetingly now—it worries me that over the next five years, over the next 10 years, there is going to be a significant additional burden on state finances and, as a result, on South Australian taxpayers as a result of our additional debt burden.

Even more worryingly, interest costs in the state budget are now projected to reach $1 billion per year—that is $1 billion each and every year—which is money that must, of course, be spent on servicing debt costs and is not available to be spent on employing more doctors and nurses, teachers and police officers, and all those other areas the community expects the government to fund. But that will only increase into the future, because what else came out of the estimates committee you will be interested to know, Deputy Speaker, is that that $33 billion of debt will not be the peak of it—there is more debt to come.

There is a $9.9 billion project that has been committed to by the state, and the forward estimates, this current year and the next three financial years, contain approximately a third of the funding that is required for that. This is a fifty-fifty funding arrangement between the state and the federal government, we are told, and of the approximately $6½ billion that is still needed to be found to deliver the remainder of that project, half will have to come from the state government. So there is an extra $3.25 billion, in rough terms, that needs to be found in additional debt. That takes us up to nearly $37 billion.

We also have a new Women's and Children's Hospital that needs to be built. We know that the minimum cost for that will be in the order of just under $2 billion, $1.9 billion. We are told finally, after this government has sat on a report from its own staff for nearly two years, that the initial estimate of costs for this new hospital will be $1.9 billion. There are not too many infrastructure projects, particularly hospitals, that I can think of which have had an initial cost and then the ultimate cost has been lower, so we know that we are up for, in round terms, at least $2 billion for this hospital. Only $885 million of that is provided across the forward estimates so there is, roundly, another $1.1  billion which is required in debt. We are now up to $38 billion that will be required. Then we have the Premier's basketball stadium, a $660 million commitment—only an initial cost for that project—and, again, this is money which will need to be borrowed.

So to deliver only the existing commitments before this government, state finances will have to grow their level of indebtedness from the current $33 billion to nearly $40 billion. Those interest costs will increase. When I asked the Treasurer about this, he initially did his best to evade giving a straight answer about the increased interest costs the state will have to suffer; however, if you look at the budget papers themselves, they say that a 1 per cent increase in interest rates attributable to government debt leads to an extra $250 million a year across government for those net interest costs.

It is going from, roundly, $1 billion—or for the total government sector, well over $1 billion—a year in net interest costs, and then adding an extra $250 million to that. How do we know that? If you look in the tables in the back of Budget Paper 3, the Budget Statement, they show that this year we are now projecting interest costs to be approximately $300 million a year higher for $33 billion of debt than what last year's papers projected interest costs to be for $33 billion of debt. The government is factoring in that there will be increased interest costs.

As the Treasurer was forced to admit to the estimates committee, the South Australian Government Financing Authority (SAFA), responsible for borrowing money on behalf of government to fund operations and projects, is already experiencing an increase in interest costs. At our current debt levels interest costs are already going up by $300 million a year, and now we know that in the period just beyond the forward estimates we have, roundly, an extra $5 billion that needs to be borrowed, so we will have increased interest costs going forward.

That means the level of debt burden imposes even further strictures on how money can be spent in the public sector. The only choice for government now, going forward, to try to maintain the state's finances—let alone improve the state's finances—is to ensure that expenditure growth does not exceed revenue growth. We have had a period when, out of necessity and in response to COVID, we have had a couple of financial years when expenditure growth has massively exceeded revenue growth. Not only has the level of expenses gone up, but the level of revenue has dropped at the same time.

That is principally, of course, due to a drop-off in national economic activity and the GST receipts we receive as a result of that. While GST receipts have recovered somewhat—quite significantly in the previous financial year and in the current financial year—we will need very significant increases in GST receipts going forward in order to make sure that the state has as much revenue as it wants in order to deal with this increased fiscal challenge.

Of course, as you would recall from the estimates committee, sir, South Australia cannot bank on an increase in its GST receipts going forward; South Australia cannot rely on national economic growth driving up GST receipts into South Australian state coffers. That is because at the end of 2018 and the beginning of 2019 this government, this Premier, and this Treasurer—Rob Lucas, in the other place—participated in discussions with the federal government as they set about rewriting what had been decades of stable and successful distribution of GST revenues across the country. The GST deal that was signed up to back in 1999 has now been unpicked.

The fundamental principle that underpins that GST arrangement—horizontal fiscal equalisation—means that every state and territory should have the financial capacity to provide services to its community of the same standard as anywhere else in the country. That fundamental principle has now been removed. South Australia and the other smaller jurisdictions, with the exception of the Northern Territory—South Australia, Tasmania and the ACT—are all now to be significantly worse off as a result of undermining the original GST deal.

A new GST deal was struck. The Premier and the Treasurer of this government were more than happy to play along with Scott Morrison and Josh Frydenberg, and it was only when federal MPs and the state opposition started raising this as a significant issue in the local media that, belatedly, this government wrote to federal MPs and said, 'Actually, don't support that legislation going through.' Too late; too little and too late. By then, the die had been cast and South Australia, along with the other jurisdictions, would now be materially worse off as a result of this new GST deal.

How was it described? When the opposition was asking questions about this in question time, the Premier said, 'We will not do anything that is contrary to the state's interest. We will not do anything that will leave the state worse off.' What happened? A deal was negotiated that left the state worse off and the Premier described it as a massive win for South Australia. The Victorian Treasury is tasked by the commonwealth Treasury to do GST modelling on its behalf. That has been the arrangement that has occurred for many years.

The Victorian Treasury did some modelling on how this GST arrangement, this changed GST deal, might affect states and territories around the country. They modelled six different scenarios, ranging from the current mining boom scenario in Western Australia—which of course we seem to experience on a regular basis in Australia, particularly as with global economic growth, or growth in key markets like China, demand remains strong for iron ore, etc.—to an average scenario where the GST relativities, as they are called, fluctuate depending on regular assessments from the Commonwealth Grants Commission. If we took a regular average across the last 10 years, what would South Australia's GST revenues look like?

On the first scenario, South Australia would be $258 million a year worse off, each and every year. Under the average scenario, it would be about $200 million a year worse off. That is what we can look forward to from the new deal that has been signed up to for the GST distributions to South Australia. In the medium term, we know that we have high interest costs coming and at the same time we have lower revenues coming. We will have at least $300 million a year of high interest costs and something in the order of $200 million a year less in GST revenue—a half a billion dollar annual turnaround in the state's finances.

I have not come across many areas of government in my time that do not constantly put pressure on cabinets, and on treasurers in particular, to provide them with more funding for additional pressures. You only have to look at the health system at the moment to realise how significant the task is of providing health services to an ageing population, and that is even without the impact of COVID really being felt by our health system. We are not having dozens, if not hundreds, of admissions to hospital because of COVID, the filling up of intensive care units and so on with COVID cases.

We know that the pressures for spending will continue to increase, particularly in areas like health. Of course, those of us with young children, or indeed others of us who are just interested in these matters anyway, are always interested in things like education spending. Those pressures in those key areas of government will continue to increase at the same time that we have higher cost obligations and less revenue to meet them.

As a prospective state Treasurer, that is something I find very concerning, and it should be very concerning to those people with an interest in state finances going forward. The burden of the cost of providing the services necessary to the community will only increase, and that is going to be a very difficult act to juggle in the future. At the same time, the budget made the bold commitment or the bold claim that, unlike in some previous years, no additional savings were being required of government departments as a result of this budget.

As it turned out in the estimates committee, that quite simply is not true. The Treasurer was forced to admit that that statement in the budget was wrong: additional savings have been required of agencies. Each year, agencies receive an allocation from Treasury to meet their annual expenditure on goods and services. Of course, given the different nature of departments, that amount of money differs between agencies.

Each year, much like for employee costs in public sector agencies, that amount is increased off a baseline, and 2½ per cent has been the standard practice of increasing an agency's goods and services budget. The Treasurer was forced to admit that they did not receive that full allocation of their goods and services budget for both the 2021-22 financial year and the 2022-23 financial year. In fact, that allocation had not been made and a much smaller allocation had been made.

All those agencies that may have planned how to spend that money will need to find savings in order to offset the lesser appropriation being made for that purpose. That is quite a bit of money—tens of millions of dollars a year. Surprisingly, the Treasurer could not furnish that amount to the committee but said that he would take it on notice and bring it back to the committee at a later stage. However, for the budget to claim that there are no further savings in this budget and then at the same time for it to be shaken out in the estimates questioning process that in fact savings requirements had been imposed on agencies is nothing short of disingenuous.

We also had the Office of the Commissioner for Public Sector Employment appear before the agency. This is an agency that has had a massive hollowing out under the current Liberal government. The commissioner, Erma Ranieri, used to superintend basically the human resources policy function for government as well as the enterprise bargaining negotiation process on behalf of government.

The current Treasurer, Rob Lucas, took a different view when he came into government. He cut that from Erma Ranieri and the Office of the Commissioner for Public Sector Employment (OCPSE) and took it back into Treasury. Now, as far as we can tell, it is really up to the commissioner to publish information on behalf of the public sector about public sector employment—numbers of people employed and so on—as well as come up with and promulgate policies about public sector management and employee management, staff management, to public sector departments.

The commissioner is also required from time to time to run chief executive recruitment processes. After speaking at a function several weeks ago, I was approached by somebody who runs a human resources consulting company and who was absolutely furious that an interstate firm had been recruited to provide those recruitment services for a new chief executive for a government agency, namely, the new Chief Executive of SAFECOM.

A Victorian company was awarded that contract. That is surprising, I think, because in this day and age it is very easy for somebody to advertise nationally, if not internationally, for a public sector chief executive position, and then providing all the services involved in the receipt of applications, the assessment of applications, the sorting of them, interviewing and recommending some to government, that they be accepted or otherwise, can all be done by South Australian companies.

There are South Australian companies that are excellent at this and have a long track record of providing these recruitment services to the state government with success. I will not name all of them, but certainly Morton Philips or Philip Speakman used to provide those services. Hender I think is based here in South Australia and Locher consulting is based in South Australia—South Australian companies, yet a decision was taken to award it to an interstate company.

It is doubly galling, of course, because a South Australian company had previously already recruited a head of one of the emergency services divisions for government, so it is not like local companies did not have runs on the board for this particular type of recruitment. I was grateful to have the opportunity to raise that again before estimates because I had hoped that by providing some sunlight on this episode, and some additional transparency about which consultants the government is using, it would continue to dissuade people from needlessly reaching out to interstate goods and services providers without looking locally first.

You only need to look at the record of this government to know that this sort of behaviour is endemic. Not only were the corporate liquidators imposed on our hospital system but there was not one phone call, not one offer. Even if you were of a mind to appoint a financial administrator to a hospital—even if, and that is a very big if because you would have to be a certain type of person to believe that those sorts of financial administrators are best to run hospitals rather than clinical administrators, doctors and so on—South Australia has a wide and deep talent pool of people who are experienced in this.

You do not even need to look at the large professional services firms or the major law firms to find deeply experienced, eminently qualified people to provide these sorts of financial administration services. You can look at some of the independent small practitioners who either operate solely or with small practices: there are many of them. Given that it is the Liberal Party that claims to be the party of business—of course that has been cast asunder in the performance over the last 3½ years of this government—if you were a Liberal politician you would like to think that you would have some contacts with those people who practise in those areas in the local Adelaide business community.

As I am aware, several Liberal politicians opposite do have those connections, so why they were all deliberately overlooked to provide a contract worth in excess of $40 million to those corporate liquidators, KordaMentha, to come in and run our hospitals I find absolutely gobsmacking. Bear in mind that a large part of that $40 million was spent on flights to and from Adelaide, and for hotel room nights for those staff of KordaMentha, who of course do not hail from Adelaide, do not have any local accommodation in Adelaide and most likely do not have any prior connection or familiarity with Adelaide. They were flown in from interstate at taxpayers' expense to provide these administration services. It does not end there, though.

We understand that the education department rushed over to Victoria several months ago and directly approached prefabricated modular construction supplier Sensum to project manage $600 million worth of the government's schools infrastructure program. Can you imagine what sort of a slap in the face it is to South Australian professionals when that sort of project management contract is awarded to a Victorian firm, and not only awarded to a Victorian firm but awarded to a Victorian firm without a process.

Even if you assume that the margin Sensum is going to be taking off the top of that is something in the order of 10 per cent—it might be less, it might be seven, it might be more, it might be 12 or 13—if you imagine that it is 10 per cent as a margin for managing those works, that is a $60 million payday going to a Victorian company for overseeing the construction of South Australian schools. How on earth can that be justified? The simple answer is that there is no justification; that cannot be justified.

There are South Australian companies, South Australian project management firms, South Australians with long and deep roots here, who know the schools and sometimes even have a deep familiarity with the schools, who could have provided those services. The justification that was provided to the media was, 'Well, it's a pretty good deal for South Australia. They are going to fly in here and open up an office.'

I had a look at the office that Sensum opened in South Australia and it was a very small office in McLaren Street, just off Hutt Street. For those of you who are not familiar with McLaren Street, I want you to picture in your mind a road barely five metres wide with a row of small cottage houses in an older part of Adelaide that has not yet been redeveloped for commercial or other purposes. It is a small residential street.

Sensum has come in, obviously struggling to find commercial premises that befit them skimming $50 million of taxpayers' funds as a margin for their work, and set up there. I understand they have subsequently moved. This is such a frustration to those industry associations that are constantly banging the drum for their members to get better access to government work and to see so much of it handed over to an interstate firm is absolutely gobsmacking.

Of course, it does not end there. Recent reports, as late as last week, show that the north-south corridor project—that $9.9 billion project that I mentioned before—with a contract for financial advisory services that is expected to last for more than five years, with a value of at least $10 million, has been handed to a firm based in Sydney.

Nothing could be more offensive to the corporate community in South Australia than suggesting to them that they do not have the skill or the experience to provide financial advisory services for the north-south corridor project. There are many very experienced financial advisory experts—practitioners in small firms, practitioners in the Big Four, practitioners even in some of the larger corporate law firms, who have worked on projects and deals of a similar scale to this. To not allow them to do that work is extraordinary.

What that means is that that money that will be spent on those services over the course of the next five years could have meant that a corporate advisory team in South Australia could have worked on that project and, in addition to that, used not only the existence of that contract and the length of that contract to continue to operate their business successfully but also used it as a base to grow their business and grow their practice.

We are forever complaining in South Australia about the lack of corporate head offices in South Australia. When you deny companies and experienced professionals who have sufficient skill and experience the opportunity to work on projects like this, you are basically denying South Australian practitioners and South Australian firms the opportunity to grow their practices and to become successful, thriving, larger businesses. That is a strong role for government procurement and one that continually gets overlooked by this government.

The question also came up in the estimates committee—we had much song and dance—about the state government's secret Productivity Commission. You will remember in the early days of this term of government that we had a bill brought before this place to establish by legislation the South Australian Productivity Commission, and not unreasonably we asked for some transparency about its operations and its membership. The government said, 'If you want us to be transparent about the Productivity Commission, we will simply withdraw the bill from the house and we will establish it administratively.'

I do not know whether it is because it has been established administratively or not, but I have to say that there are a lot of people in the community who are pretty underwhelmed with the output of the Productivity Commission. We had extensive debates in this place around fuel pricing, for example, and the Productivity Commission was asked to look at fuel pricing schemes and the two existing different fuel monitoring schemes in Australia—the Queensland model and the Western Australian model—to provide a robust assessment of these models and some advice to the state government.

We saw the report from the Productivity Commission and it was a table of different characteristics of a fuel price monitoring system and there was—and I was hitherto unfamiliar with it—the old one, two or three-tick assessment model, where the different Western Australian and Queensland models received one, two or three ticks depending on how efficaciously it exuded one of those characteristics. It was hardly a robust assessment that the parliament could bank on in making a decision between what was put forward by the Deputy Premier and what was put forward by the member for Florey—two different options, of course.

So that was pretty underwhelming, but the bigger body was not about fuel price monitoring but about procurement. We had a voluminous report provided. We had the government rushing out in response to that report and abolishing the State Procurement Board and abolishing all the policies of the State Procurement Board and the policies governing procurement as it related to public sector agencies—and then silence. There was no movement for month after month after month.

We are told that the repeal act getting rid of the State Procurement Act was finally commenced last month, but I have to say that there has been radio silence from this government on its new procurement policies. We heard a tiny bit from the Treasurer about needing to provide further and better particulars of government tenders on the tenders website.

Well, really! If the government has a tin ear to the plight of the small business community through COVID, do they honestly expect a small business operator, who would like to expand their operations and do so by accessing some opportunities to provide goods or services to the government, after doing a 12 or a 14-hour day, to go home, log on to the tenders website and scroll through reams and reams of information trying to find upcoming tender opportunities that might suit them?

Why is it that this government takes the view that the community must run to it in seeking support or in finding out information about its operations? Why can this government not do something to assist the community with regard to its procurement policies, get out on the front foot and engage with the business community about those opportunities going forward?

It was the former Labor government that established the Office of the Industry Advocate, Ian Nightingale. You will perhaps recall, sir, that in the lead-up to the 2014 election the Premier was quoted in an Adelaidenow article questioning Mr Nightingale's position and whether it would continue under a Marshall Liberal government. Fortunately, that veiled threat from the Premier has not been carried out, and Mr Nightingale continues. I will be the first to admit that there were significant improvements to be made in government procurement, certainly in my time as a minister. He certainly did make improvements, but further improvements since then have largely languished and there have not been further opportunities for South Australian businesses.

That was something we were hoping to hear more about when it came to questioning about procurement and also the Productivity Commission, both of which are superintended by the Treasurer. I think 26 FTEs in the Department of Treasury and Finance oversee procurement functions, if I am remembering accurately the evidence that the Treasurer gave to the committee. That was of course of great interest to me after seeing example after example of procurements heading interstate.

If I just jump back to talking about the Commissioner for Public Sector Employment, the commissioner now has a new capacity, which did not exist previously, and that is to undertake investigations of public servants. Previously, there had been a government investigations unit within Crown law. If there was something to be investigated—for example, the conduct of a public servant—then the government investigations unit would carry out that investigation and it would usually be one of the senior law officers of Crown law that would conduct the investigation and provide a written report to either the chief executive or, if warranted, the minister relevant to that particular complaint, and then any action could be considered. That was certainly the case under the former Labor government.

Now what we see is that this government has outsourced that function to non-government staff to undertake those investigations. The question has to be asked: on what basis? On what basis can this government agree to conduct an investigation into the behaviour of a public servant, an investigation, mind you, that does not warrant an examination by the Independent Commission Against Corruption or the Office for Public Integrity? On what basis can an investigation now be undertaken by somebody who is not only external to law enforcement agencies but external to the government themselves?

If someone came to you, sir, and put to you that you were to be the subject of an investigation and it was to be carried out by somebody who was not in the employ of the Office for Public Integrity, not of the employ of the Independent Commission Against Corruption, not a police officer or an authorised officer under the Police Act, and not even an authorised person within the public sector—for example, in Crown law—why on earth would you be answering those questions that might be put to you in the course of that investigation? How will that information, to be gathered by this private investigator, be managed? In fact, what protocols exist, for example, governing the access of a private third-party entity to government information, to government documents and government systems? How is that to be done?

So we asked these questions during the estimates committee, and the Treasurer blithely said, 'Well, there's been no change here. This is all the same.' He pointed back to, or tried to point back to, a previous government investigation by public servants into the conduct of other people employed under the Public Sector Act and tried to say that, because that investigation had required the use of an IT expert in order to interrogate IT systems, then that is exactly the same as what has been proposed now under the current Office of the Commissioner for Public Sector Employment.

Well, that is frankly wrong and deliberately misleading—that is not the same. I would not be surprised if the Public Service Association or other employee representatives take it upon themselves, when representing their members or representing a public servant who might find themselves the basis or the subject of such investigations, to consider their rights very carefully in participating in that investigation. It seems very clear to me and very obvious to me that the legal basis for the conduct of that investigation has significantly shifted now that it has been privatised under this government.

We do not have authorised senior public servants like senior lawyers in Crown law conducting these investigations; it is now being done by an unnamed panel of private contractors. That should send a shiver up the spine of public servants. What is there to stop the misuse of the existence of this sort of investigation by people making unreasonable or vexatious or onerous claims against others?

We know, of course, that unlike a senior member of Crown law who was previously responsible for these sorts of investigations, who has an inherent interest in getting to the bottom of the matter as quickly as possible so that they can return to their other duties, now we have a process where it is in the interests of a private contractor, getting paid presumably on a dollar per day or an hourly rate basis, to investigate as fulsomely and as lengthily as possible. That is a very poor outcome whatsoever.

The government, of course, despite repeated media articles about this and about these sorts of concerns, refuses to countenance any criticism of this or answer any claims that people's basic rights as employees at work are not being maintained through this new regime. This is something that we are watching very closely because our parliament's experience with these sorts of private investigations has not been good to date.

When the Leader of the Opposition was questioning the Premier about the operations of the parliament, for example, it has been the parliament over the last 18 months which has had to deal with a significant report about misbehaviour within parliament, including by members of parliament, including two very serious uninvestigated allegations of sexual assault and sexual harassment.

When a separate allegation was made, in fact, by a member of parliament, the previous Speaker's response was to hire what was initially an anonymous gumshoe private detective to come in and investigate this, raising all manner of legal issues around the appropriateness of someone like that being brought in to do this, let alone whether there were any issues of legality or privilege and so on. I note to date that report or its progress has never seen the light of day. So if the parliament cannot set the right example in these sorts of investigations, how on earth do we expect the public sector to set the appropriate example as well?

Jumping back to the GST issue, the federal Productivity Commission played a part in this. For those members who perhaps have not followed it with as great an interest, this all came about because Western Australia complained that they were receiving a diminishing share of the GST revenues, ignoring the fact that they were receiving billions of dollars a year in additional royalties from the resources that just happen to be located on their side of their state border. They were complaining that they were receiving less than their fair share of GST revenues.

Over time, the pre-existing GST distribution model would compensate for that. There may be a time lag, which of course is problematic and of course did warrant some investigation, but these sorts of things should balance themselves out over time. However, in an effort to try to push this issue down the road, initially the federal government asked the federal Productivity Commission to do a review into the distribution of GST to the states.

It recommended two outcomes, if a change was to be made. It recommended either an equal per capita share of GST revenues—for South Australia, that would mean losing about $2 billion a year, every year, in our GST share—or moving to an average relativity across the states, which at that point in time was estimated by the state’s Treasury, the Department of Treasury and Finance, to be risking about $500 million a year of GST revenues.

In the estimates committee, we asked the Treasurer why he told Paul Starick of The Advertiser, in an interview, that it was now the task of the next government, Labor or Liberal, to renegotiate that deal, when of course it had been so enthusiastically embraced by the Premier as a ‘massive win’ for South Australia. It seems that the Treasurer, heading towards the final days of his political career—and perhaps having a mind to thinking about his legacy, as some politicians reaching that time in their career do—thought perhaps it was time to place on record some concerns about the GST arrangements that had been struck in the recent past, while he was the state Treasurer.

He now is saying that this is not only a bad deal for South Australia but that it needs to be revisited. In fact, not only does his view now differ substantially from the Premier’s in believing that it is no longer a massive win for South Australia but he thinks that what should happen at the end of the 2026-27 financial year, when the temporary guarantee of no state being worse off from this runs out, is that the Productivity Commission review promised by the federal government at that point in time should be brought forward.

If the federal government does not agree to bring forward the Productivity Commission review to right now, then the South Australian Treasurer and the South Australian government will conduct their own review as soon, he said, as he can find somebody eminently qualified. I cannot imagine why Rob Lucas would be asking the federal Productivity Commission to hasten their review into the GST distribution arrangements.

This is the same body, with largely the same commissioners, that recommended we lose either $2 billion a year or $500 million a year. Why would we want to bring that forward? That is a turkey voting for Christmas, is it not? The worst possible outcome we could have for the state’s finances is the federal Productivity Commission being put in charge of this review and doing it as quickly as possible. Why would we want that sort of formal recommendation floating around the country in the current context? It just beggars belief.

The Treasurer says that if they do not accede to that review, and I am sure they will not, then we will have our own independent review, based here in South Australia. To be fair on the Treasurer, it is hard to find somebody who is eminently qualified in this. In fact, there was a national leader in providing advice to governments, federal and state, who was South Australian and who passed away only in the last 18 months. He was a former Treasury official. In fact, in this place, both the member for West Torrens as a former Treasurer and I as a former staffer to former treasurers, as well as the Treasurer in the other place, Rob Lucas, all put on record our condolences on his passing to this individual’s family.

He was Robert Schwartz. He was the national expert in GST distributions and horizontal fiscal equalisation. He provided his expertise not just to South Australian governments but also to federal governments of different political persuasions. I am sympathetic to the Treasurer for not being able to hasten his own inquiry, but really, asking for the Productivity Commission to do it—nothing could be more contrary to the state's interests than the federal Productivity Commission getting on and doing this inquiry.

The government basically has made its own bed and now must lie in it. This is a deal that was contrary to the state's interests and other governments, the Victorian Treasury and Saul Eslake, the respected national economist, have said that it would cost South Australia north of $250 million a year and there is no easy way out. What on earth do we expect a federal government to say in the lead-up to a federal election when the Liberal Party has been given an absolute electoral hiding in Western Australia?

Do we honestly expect, as a South Australian community, that Scott Morrison and Josh Frydenberg are going to risk putting Western Australia offside when their political stocks are already so low in Western Australia and in Perth by risking the current regime that has been installed to Western Australia's very significant financial advantage?

Bear in mind what Western Australia is getting at the moment. Not only are they getting a subsidy in the order of $1 billion to $2 billion plus per year in GST top-up payments from the federal government but they are also experiencing an extraordinary demand for their iron ore exports to the point where I think I am correct in saying that the price hit $200 a tonne, something I do not think we have ever seen in Australia before, delivering a windfall of billions of dollars of additional royalty revenue into Western Australia.

In the course of three years, we have had Western Australia convincing the federal government to overturn the GST distribution system, which has served our country well for 20 years, and what do they get out of it? Despite a pandemic, despite the restrictions on economic activity and business operations, they are billions of dollars better off in GST top-up payments from the federal government and, even more, many billions of dollars better off each year from royalty payments. It just goes to show you how badly handled this has been by the federal government and at the same time actively supported by this Premier and his Treasurer.

One thing we were expecting to come before the parliament before now was a commitment from this government to introduce a new tax on South Australians, yet another impost on South Australian motorists, and that was an electric vehicle tax. During the course of the estimates committee considerations, we asked several questions about electric vehicles in South Australia.

The government said that they were going to impose a new tax on electric vehicles because electric vehicle owners do not pay their fair share for the upkeep of roads. I could say that that is not quite right or I could say that that is slightly wrong or misleading, but I will say it for what it is: it is a lie. It is a deliberate lie in an effort to tell people that something is happening that is patently false and untrue.

Regardless of what they drive, the only money collected from motorists that goes into the maintenance of the roads is collected from three things: motor vehicle registration fees, driver's licence fees and fees a motorist might pay from time to time in expiation fees, road traffic offences. Electric vehicles pay registration fees and they pay driver's licence fees, so the claim that electric vehicle owners do not pay their fair share of the upkeep of roads is blatantly wrong, and a treasurer, a transport minister or a member of cabinet who would be considering this would have considered what the current legislative framework is and how our roads are currently funded.

So there is that basic, most egregious of lies, but there is an additional one placed on top of it, which claims that the fuel excises collected by the federal government are for spending on roads. That is just wrong as well, absolutely wrong. There is not one part of that, not one vowel or consonant, let alone syllable, which is correct. Yes, the federal government does collect fuel excise, but it is not hypothecated into the roads or even into transport spending. It goes straight back to Treasury, into general revenue, and the government may or may not make an allocation from time to time, from state to state, on transport-related spending, whether it is infrastructure or otherwise.

We have this preposterous idea that a state like South Australia should be stepping into the federal policy breach and coming up with a new regime of motor vehicle taxation, which has a mind to the fact that fewer motorists will be paying a federal tax to the federal government when they fill up their cars at the bowser in the form of fuel excise. Spare me! It was yet another excuse for this government to impose an additional tax on motorists and to ratchet up, once again, the tax burden on motorists.

The additional impost imposed by this government on motorists is extraordinary, absolutely extraordinary. The last Labor government brought legislative changes before the parliament to change the compulsory third-party insurance scheme. Those changes, Labor Party changes, have dropped compulsory third-party costs by more than $100 per year per vehicle.

This government has done the exact opposite thing with motorists. They have massively increased registration costs; they have massively increased administration fees, which all South Australians are obliged to pay when they register their vehicles; they have massively increased traffic fines; and now they are looking at introducing a new tax on electric vehicles.

This government think that electric vehicles are so important they apparently have an electric vehicle action plan. We are told by the Minister for Energy that the $80 million this government claims is spent on procurement of government fleet vehicles is going to be dedicated to electric vehicles. There are 6,712 vehicles in the government fleet, according to what we learnt during estimates. Have a guess how many of them are electric vehicles: 11, 11 out of 6,712. A further 35 are plug-in hybrid vehicles. So, if you are most generous, 46 out of 6,712 could be considered to be electric vehicles—not even 1 per cent.

Here we are, more than two years on from the government telling us they are going to introduce an electric vehicle tax, and where is the legislation? 'Well, we haven't got the legislation, because we've got to wait to see what Victoria does first.' Well, we have the legislation from Victoria, so what is the hold-up? The hold-up is that the government have been humiliated into not bringing this forward because once again they are punishing motorists. The Labor Party has dropped motor vehicle costs for motorists and the Liberal Party is massively jacking them up.

If you want to know by how much, you only need to look at Budget Paper 3, motor vehicle taxes on motorists. Motorists pay more than $100 million a year extra in tax compared to what they did at the time of the last election—and $100 million is no small beer. It is absolutely extraordinary how this government have come after motorists, and they have been caught out.

Not even the Federal Chamber of Automotive Industries supports this tax. Not even the biggest group speaking on behalf of the motor vehicle industry supports this tax, because, of course, the last thing electric vehicles need is a disincentive. What other states are doing is providing them incentives. Yes, you might argue that rolling out charging stations is terrific, depending on where they are, but that alone is not enough. I seek leave to continue my remarks after the resumption.

Leave granted; debate adjourned.

Sitting suspended from 13:00 to 14:00.

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