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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2008-10-30 Daily Xml
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Ministerial Statement

GLOBAL FINANCIAL CRISIS

The Hon. CARMEL ZOLLO (Minister for Correctional Services, Minister for Road Safety, Minister for Gambling, Minister Assisting the Minister for Multicultural Affairs) (14:20): I seek leave to make a ministerial statement on behalf of the Hon. Kevin Foley MP, the Deputy Premier and Treasurer in the other place.

Leave granted.

The Hon. CARMEL ZOLLO: As read by the Deputy Premier and Treasurer, it states:

I rise today to update the house of a direct impact of the continuing global financial crisis on the state's finances. Members will recall that I advised the house on 14 October that the state's net operating position since 1 January 2008 had weakened by a total of $280 million as a consequence of the global financial crisis.

This was due to the higher nominal interest expense associated with the deterioration in our unfunded superannuation liabilities, a combination of loss of earnings and discount rates, and downward revisions to some revenues based on the anticipated flow-on effects of the financial crisis on the real economy.

Despite the unprecedented actions of central banks and governments in recent times, the global financial instability and volatility continues. For the financial year to date, the Australian stock market is down 26 per cent and global stock markets are down 35 per cent. I have previously stated that I would report back to the parliament with a full financial statement before the house rises for the end of the year.

The timing of this was originally based on the proposed COAG meeting of 17 November, at which time this state's share of Commonwealth Special-Purpose Payments and the National Infrastructure Payments would become clearer. It has recently been widely reported that the Prime Minister will be attending a G20 meeting on the global financial crisis in Washington on 15 November.

The commonwealth has since advised us that it is increasingly likely that the COAG meeting of 17 November will be postponed, although we await confirmation. To this end, I can advise that the financial statement will now be incorporated into a mid-year budget review when we are in receipt of the commonwealth's Mid-Year Economic Fiscal Outlook and the Financial Settlements agreed at COAG.

As I have already advised the house, I have asked the Department of Treasury and Finance to provide cabinet with a full range of options for the deferral or, in some cases, the cancellation of capital projects not considered essential to service delivery in the current financial climate. In these very uncertain financial times, I also want to provide certainty to the local infrastructure market whenever possible.

This has become particularly acute in relation to the time line for the new prisons and secure facilities project. I emphasise that the time lines for the procurement process for this project remain unchanged. Bidders are required to submit fully-costed proposals to government in December, including their estimated construction time lines. The government project team will then assess bids and announce a preferred bidder in April 2009.

The final contract will be announced in July 2009 as per existing time lines, and construction will commence thereafter based on the winning bidder's construction program. However, today I can advise the house of the government's decision to announce new commissioning dates for the prisons and secure facilities project. The new commissioning dates are:

2013-14 (previously 2011-12) for the new men's and women's prisons;

2013-14 (previously 2010-11) for the forensic mental health centre; and

2011-12 (previously 2010-11) for the secure youth training centre and pre-release centre.

The overall budget impact of delaying this project will improve the government's net lending outcomes over the period 2009-10 to 2011-12 by $359 million. It should be made clear that the revised prisons time frames are certainly not a precursor to deferring the government's other PPP projects such as the six new super schools and the Marjorie Jackson-Nelson Hospital. As I have stated previously, the timelines for these projects remain on track.

The government recognises that the revised prisons timelines will result in demand pressures on existing facilities. The government will address this through constructing additional cell capacity. Treasury and Finance advise that the additional cell capacity of 160 beds will require an investment of $30 million across 2010-11 and 2011-12 plus associated operating costs. These will be permanent new structures within regional facilities that will provide enhanced capacity into the future if and when the state takes delivery of the new prisons and secure facilities.

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