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Legislative Council - Fifty-Second Parliament, Second Session (52-2)
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APPROPRIATION BILL 2012

Second Reading

Adjourned debate on second reading.

(Continued from 17 July 2012.)

The Hon. J.A. DARLEY (11:54): I rise briefly to speak on the Appropriation Bill 2012, although my comments are really directed to budget measures. In relation to land tax, it is regrettable that the budget offered no relief for the 2012-13 period, particularly given that South Australia continues to have the highest rate of 3.7 per cent for properties over $1 million in site value or properties within an ownership that exceeds an aggregate of $1 million in site value. In addition, South Australia's site values, which the Valuer-General reviews each year, are closer to market value than any other state whose valuations vary from two-yearly to five-yearly intervals. The only concession for taxpayers this year is that, due to the depressed state of the real estate market, most taxpayers should receive some small relief as a result of reduction in site value by the Valuer-General's annual review of valuations.

Having said that, I am encouraged by recent comments made by the Minister for Finance who says that land taxes in South Australia need to be reformed. Minister O'Brien is reported as saying that he is of the view that reform in this area is well overdue and that, 'I will be looking with interest at recommendations that come out of the inquiry that is currently underway with the Australian tax system.' Those comments, as reported by the ABC, were made during budget estimates last month. I will be paying close attention to any further developments in this area and I certainly hope that the government acts sincerely on this issue of land tax.

We know that reforms that have occurred to date have done little or nothing to help those individuals whose site value or aggregate site value exceeds $1 million. Whilst this may sound like a lot of money, it is important to bear in mind that, in South Australia, we have a lot of asset-rich but cash-poor individuals, many of whom are self-funded retirees and pensioners, who are struggling to meet their land tax liabilities. I do not think the answer is as simple as to suggest that they sell their properties in an effort to minimise their tax liability.

A couple of related issues concern the restoration of the first home buyer's grant and stamp duty exemptions. In relation to the first, I must say that I am not convinced that a grant is the best way to provide assistance to first home buyers. From past experience, it would appear that the cost of housing increases to absorb these sorts of grants. Perhaps a better approach would be to provide an exemption or reduction in stamp duty on the purchase of a home or an apartment where the property is to be the principal place of residence of the owner, subject, of course, to government affordability. In relation to the stamp duty exemption for off-the-plan purchases of apartments in the City of Adelaide and more recently Bowden and Gilberton, my concern is that this measure could further exacerbate the problem of oversupply of apartments, which could ultimately have the effect of further depressing prices.

Another issue that I will make brief mention of relates to the 1 per cent across the board for public servants. Again, I am left to question whether this is the most effective way of dealing with the Public Service and whether this approach will lead to a satisfactory outcome. As anyone who has any experience in the Public Service would know, there are some agencies of government that are more than adequately resourced, yet the services they provide are much less important, if at all necessary, than other agencies whose services are under stress due to inadequate resourcing.

There should be, for want of a better word, a more scientific approach to reviewing the Public Service. This could take the form of an operational audit of each department and agency which would include a review of all activities undertaken by the agency and an assessment as to whether the activity is still necessary. As part of that review, consideration would be given to whether or not the activities are being implemented in the most effective and efficient manner and whether or not cuts could be made without affecting core activities of government and, in particular, front-line services.

Lastly, I note with some concern that the Gamblers Rehabilitation Fund remains unaltered at $2 million, whilst the income from gaming machines continues to increase. As I have said in the past, it is disappointing that more funds are not being put towards addressing gambling addiction in this state. I do not think anyone can dispute the disproportion between funding for the Gamblers Rehabilitation Fund on the one hand and income derived from poker machines on the other. Gambling addiction is a growing epidemic and there needs to be more of an emphasis on effective rehabilitation. With those words, I support the second reading of the bill.

The Hon. T.J. STEPHENS (11:59): Thank you for the opportunity to contribute to the debate on this bill. The financial management of this government leaves much to be desired. Labor's poor governance has had an adverse impact on hardworking South Australians struggling with a dramatic rise in the cost of living. The truth of the matter is that under Labor, South Australia is headed for financial disaster. There was a time when South Australia was seen as the commonwealth's most progressive state.

A rising cost of living is a primary issue. Labor's poor economic management is hurting families. I am sure that most taxpayers would be horrified to know that the state debt has been consistently rising since 2002. It was around $2 billion back then. This was early in the Rann government's term and, notably, when the Hon. Mr Weatherill entered into parliament, straight into the ministry. State debt had come down under Liberal governments from over $11 billion in 1992-93, its all-time peak around the time of the State Bank disaster.

Not since the ensuing financial crisis endured by hardworking South Australians has the public debt been as high as it is in 2012. Astoundingly, it is now back past $9 billion and is forecast to get back to $13 billion in 2015-16. It is frustrating to think that all the hard work the Brown, Olsen and Kerin governments did, particularly my colleague the Hon. Rob Lucas, to claw back the debt has now been for nothing.

Additionally, with the AAA credit rating gone—this is according to the Financial Review analysis—our increase in annual interest payments will be over $22 million per year. Just imagine what we could do with $22 million per year in regional communities alone. That is on top of the current $9 billion in debt. The Budget and Finance Committee was recently told that further costs would be incurred next year when a large chunk of the state's $4.7 billion state debt came up for refinancing.

The Hon. Rob Lucas mentioned in the committee that it was clear that financial markets had lost confidence in the government's ability to manage its budget and meet its savings targets, and it means that South Australian taxpayers are already paying higher interest rates on refinancing government debt as it falls due. The state paid $290 million of interest in 2008-09; it is now predicted to pay $705 million in the financial year 2014-15.

I wish it ended there, but South Australians will be staggered to know the full extent of the state's financial concerns. Add the net state debt to unfunded WorkCover and superannuation liabilities, as well as other future capital spends such as the new RAH and Adelaide Oval, and by 2015-16 the total public debt will be around $27 billion. It is a Labor tradition to spend more than it earns. A deficit budget here and there and no-one seems to jump up and down too much, but one day we will wake up and see that the government credit card is maxed out at $27 billion.

In 2009-10 there was a surplus of $187 million. That was the election year. It is interesting that the only surplus the government could deliver in the six-year period happened to coincide with the state election. It is plain to see that this government is untrustworthy.

The Labor government has been blessed with opportunity. It had millions of dollars gifted to it in unbudgeted revenues. In 2002-03 to 2011-12 the government will have collected a massive $5 billion more than expected. Just imagine the mess we would be in if the Labor government had not been saved by unforeseen extraordinary revenues.

The government is directly responsible for the cost of living pressures many South Australians are now under. We are now the highest taxed state in the nation, and you would think that with such a high amount of tax coming in the government would have no problems paying its bills. The reality is that there is a flow-on effect of higher costs to households and families. Let us take a moment to examine some of the extra costs the current government has burdened the taxpayer with:

$407 million in interest paid in 2011-12 for the superannuation liability, that is $11.9 billion unfunded;

the extra $2.5 million interest per year due purely to the loss of our AAA credit rating;

a 316 per cent increase to land tax under Labor governments;

stamp duty charged at 27 per cent above the Australian average; and

a trebling of the average water bill since 2002, including a 176 per cent increase since the desal plant was announced.

The list goes on.

I entered this place in 2002 and, from the outset, I stated my belief that small business was very much the engine room that drives the economy. It is the Liberal Party's pledge to support small business; the same cannot be said about this Labor government. The business world is not immune to the flow-on effects of the high costs inflicted on it by Labor. We have the worst compensation scheme in Australia. WorkCover's unfunded liability is around $1.15 billion. When the Liberal Party left office it was around $55 million.

More trading on public holidays has significantly increased wage costs for small business, particularly in hospitality. Labor collects about $1 billion in payroll tax per year. Of course it follows that business must recoup these costs, so the poor old consumer cops it again. Therefore, it should come as no surprise that South Australia has the worst real estate figures since 1985, the worst business confidence, the worst retail sales figures and the worst export performance and, to top it off, the world's highest electricity prices.

When the Liberal Party came to office on 11 December 1993, superannuation for the Public Service was unfunded. The Liberal government designed a scheme to ensure that it would be fully funded by 2034. Under Labor it has now increased by over $8 billion to $11.9 billion. You could not be excused for failing to see the pattern here. Prudent financial management by pragmatic Liberal governments, followed by the excessive spending and failed administration by Labor governments. It seems that this has all caught up with the current government and, as a consequence, the state is suffering.

In the words of the Treasurer, the 2011-12 state budget had the lowest net spending on new initiatives in nearly a decade. Our spending is restrained. This all seems to be a common thread amongst Labor governments. Let us remind ourselves that the Rudd/Gillard government took a very healthy Future Fund of around $100 billion and turned it into a debt of over $200 billion, and it is rising by $100 million a day. Of course there is that unforgivable promise on the eve of the election: 'There'll be no carbon tax under a government I lead'.

The Queensland government had an $85 billion debt, a $2.1 billion deficit in one year on top of Ms Bligh's broken promises. To turn back to South Australia, we are heading to a public debt comparable to the one absorbed by the state in crisis over the collapse of its bank and, sir, you guessed it, broken promises. Around the time of the last election the government pledged $450 million for the Adelaide Oval, and not a penny more. It is now $85 million more as the current taxpayer contribution is $535 million.

There is a trend associated with Labor governments: they run budget deficits, increase public debt and mislead the public. How deep does the rot run? The reality is that, after selling the Lotteries Commission and the forests, debt will continue to increase. Labor is selling assets when they promised they would not. We all remember the Mike Rann pledge card—no more privatisations. Sounds a bit like Anna Bligh's pledge, and we all saw what happened when the voters got to applaud her government earlier this year.

The government has announced what it calls a combination of administration efficiencies within the South Australian Tourism Commission, where the commission will supposedly save $3.6 million over four years. It is hardly believable this can be achieved, given that it is on the back of the chief executive being removed from his job for budgeting reasons and the commission's failed attempt to privatise Adelaide's main travel centre.

The state's health budget blowout of around $100 million has kept minister Hill very busy of late. After the Liberal government left office in 2002, health took only 25 per cent of the state budget. Now it takes 29 per cent. It is a commendable thing on which to spend money—around $4.6 billion this year—but the harsh reality is that, at the current rate of spending, in just two decades the whole state budget will be needed just to cover health, and it is clearly unsustainable.

Recent developments have shown that minister Hill has little respect for the long-held financial management traditions of the Westminster system. My colleague Liberal opposition leader Isobel Redmond has called on Premier Weatherill to sack health minister Hill. As she said, using public servants to pursue political ends during the caretaker period of government is a blatant breach of the ministerial code of conduct and the caretaker conventions.

Minister Hill was quite happy to admit to doing this. He told parliament the reason he had sought briefings from the Department of Health on the Liberal Party's Royal Adelaide Hospital project during the caretaker period before the 2010 election was 'blindingly obvious': so that we could find out the cost of the propositions the Liberal Party were putting to the public of South Australia (that is from Hansard of 2 May 2012).

Premier Weatherill needs to reassure South Australians that he will not allow the Public Service to be politicised as we approach the 2014 election. Public servants are not an extension of his multimillion dollar army of spin doctors. Government funding of public servants for political purposes during an election campaign is another example of Labor's scant regard for financial prudence. Honourable and competent governments have public servants operate at an arm's length from political activity.

The future is grim. Labor's policy platform needs to be funded. Given the disastrous size of the government's debt and the announcement by the Treasurer in the Mid-Year Budget Review that the return to surplus would be pushed back until 2014-15, it seems the government needs to increase its revenue. The fact of the matter is that it already has. Unindexed, since the time the Liberal Party vacated the Treasury benches, state taxes have risen by over 85 per cent. Over the last year, every household would have noticed their water and power bills increase.

As an alternative government, we must dispel the falsehoods of this government's record: that of mismanaged funds, South Australia being the highest taxed state in Australia, and the soaring high cost of living. Reportedly, we have electricity costs that are the third highest in the OECD and higher water costs than ever before.

People are taking more notice of a poor government in tough times. Being in office during an economic boom made this poor government look better than it truly was for most of its tenure. Now it seems that during an economic slowdown, the Labor government's failings are becoming more and more evident.

When I entered politics, my dream was, and still is, for everyone to aspire to and be able to gain satisfying employment, thereby achieving their potential and living the lifestyle they wish. When the State Bank collapse happened, my first concern, as a small businessperson, was for my future and the future of those who worked with me. As an employer, I have always felt a responsibility towards my employees and I am acutely aware that any future success is only as a result of a team approach. As a businessperson at that time, I was concerned about the economic direction in which the state government was taking us. Interest rates of 18 per cent were a reality and I, like many others, feared for the long-term sustainability of my business. Ten years later, I continue to be deeply concerned.

When the government announced '100,000 new jobs for South Australia under Labor over the next six years' in its election campaign in 2010, I was sceptical of its ability to deliver. This scepticism was well founded, as two years later we can see that fewer South Australians are working full-time. One may assume that this is why the government has felt the need to employ 20,000 additional public servants since the Liberals left office: 13,000 of those are employed outside core areas. Let us not forget that, by its own admission, the Labor government is borrowing to pay public sector wages.

Is the government trying to cushion the blow of its seemingly unattainable job creation target by having an excessively large Public Service? This is not to discount the work of our conscientious public workforce, but economic efficiency is what makes the world go round in modern times and the government should be leading by example in this area. Clearly, it is not.

Perhaps the greatest crime of the current government is that it is letting down future generations. What makes matters worse is that we have a rapidly ageing population. That means that the burden of funding services falls on fewer and fewer people. We have a responsibility to educate our kids. After all, it is our young people who will be charged with the responsibility of maintaining and enhancing a prosperous economy in a time of rapid change and challenge. They will need the skills in their tool bags to contribute to the economy and the community in which they live. Therefore, I propose that this government has let down the next generation on a number of counts.

It is a dark time for the South Australian education system. There is much that my colleague the shadow minister for education, David Pisoni, has said with regard to this matter. Much of this alluded to the government's inability to use public funds in a way that would allow South Australia to keep up with other states in terms of increasing the funding of educational initiatives.

No-one can argue that a very important progressive tool is education, and therefore even the most conservative of thinkers would agree that good governance includes spending a significant amount of money on this portfolio. Having said that, the question of whether or not the current government is spending efficiently and making prudent decisions in this important area needs to be raised.

Much has been said about the introduction of the new SACE. Much of the ideology behind the implementation of the new SACE is questionable, and in a survey conducted by the private and public sector education unions, 88 per cent of participants did not think the new system was better, educationally, for students.

This is not the time to debate the pros and cons of the new SACE. What is important in this debate is to outline how much this hugely unpopular Labor initiative costs. The government spent about $70 million on the implementation of the new SACE. That is just a start. Other glaringly obvious examples of financial waste include: the Royal Adelaide Hospital blowout. Before the election it was going to cost $1.7 billion. The debt going on the books is now $2.8 billion, and apparently climbing. The project to pump the sand down to the southern beaches was announced as a 22 kilometre long pipe costing $17.6 million. It is now a nine kilometre pipe, costing $26 million. Labor's initial forecast spend on Shared Services was $60 million. Recently this was reported to have reached $130 million spent on Shared Services, an agency that is shrouded by controversy and incompetence.

No-one can argue the fact that Liberal governments have been well-considered economic managers. The fundamentals of a sound economic system are good governance and decision-making. Basic economics says the benefits must outweigh the costs. We have had a decade of good times and all we seem to get is bad news. Labor does not even seem to know where its own priorities lie. A self-confessed green government, Labor has abolished the $11.7 million renewable energy fund. This carbon tax, the most expensive in the world, without doubt, will apply more pressure on the cost of living.

As current chair of the Select Committee on Department for Correctional Services and former shadow parliamentary secretary for police, I take a particular interest in the management of these portfolios and I do not like what I see. The government has decided in its wisdom that the recruitment of an additional 313 police officers will now be extended over a six-year period instead of a four-year period, saving the government more than $50 million in operating expenses. South Australians who have found themselves on the receiving end of a criminal act will certainly attest that this is money not well saved, whilst criminals will revel in the decreased likelihood that a police officer will be on the beat to catch them. This is not the area of the budget to look for savings.

Neither is the area of correctional services. We are now in the middle of a $5.7 million slashing of the correctional services budget over four years from the 2010 budget. I am sure that those in this place would agree that, once we catch the criminals we need to try, where possible, to provide counselling and rehabilitation, but when this fails the protection of innocent members of society must be paramount. Sadly, the prisons are already full and the government is using bandaid measures, such as shipping containers to create makeshift cells. Whilst I acknowledge that using old shipping containers may act as a good deterrent on potential offenders, it is a stopgap measure in place instead of a new prison facility which the system is in desperate need of.

This government has mismanaged its funds to such a level that it has had to slash spending in critical areas that compromise safety and confidence in the South Australian criminal justice system. There is so much waste in other areas that Labor cannot adequately protect its constituents by providing funding to the crucial departments of correctional services and police. When the government does initiate a promising idea, it does not seem to be done properly.

In the 2009 budget, the $557 million Mobilong prison project was scrapped. It was to include a $315 million, 760-bed men's prison; a $40 million, 40-bed forensic mental health centre; and a $96 million, 150-bed women's prison. Furthermore, even though the project did not go ahead, it still cost the government over $10 million in compensation to the three tenderers, even when there was no legal obligation to make the payment. This is a government that flippantly spends from the public's purse.

In 2009, correctional services minister Koutsantonis announced an $18 million expansion of the Mount Gambier Prison for 116 beds, a sound initiative in light of my previous comments. Mr Koutsantonis has now announced a $23.9 million upgrade of the Mount Gambier Prison for 112 beds—$6 million more for four fewer beds. This further highlights the financial management incompetence of a government that has an announce and defend style.

The government tries to get a cheap headline and then needs to defend it when it cannot deliver. The Hon. Mr Koutsantonis often finds himself in tricky situations. He was caught out announcing more than his government could deliver when saying there will be no forced redundancies under the Holden assistance package. He then had to retract his exaggerated claims. Labor turns good news into bad news. The only ones who should be made redundant are the current Labor ministers.

All members bring with them their own particular background. I am proud to say that I am a Whyalla person. I was born and bred there and lived there for more than 37 years. Coming from a regional area, I feel I have some knowledge of the circumstances of those who live in those regions. Therefore I would like to take the opportunity to speak on some of the issues facing my constituents living outside the Adelaide metropolitan area.

In South Australia we are not surfing the wave of a mining boom. Western Australia is, Queensland is, and to a lesser extent New South Wales is. There is certainly potential for South Australia to go down the same track; however, the Labor government of the past decade has not taken advantage of the opportunities as well as the other states. The Western Australian and Queensland successes have meant that Australia is often referred to as a two-speed economy. The multiplier effect of a healthy mining industry is extensive. It can provide extra tax revenue to put into government services or, indeed, help pay off debt Labor has accumulated.

Of course, the mining boom has not arrived in South Australia. The industry has been growing steadily over the past few years, but its growth could have been much stronger. The South Australian Chamber of Mines and Energy argues that, if Port Bonython had been developed as a bulk commodities port, at least another four iron ore mines could have been operating. It is time for Labor to play its part in helping the state's mining boom become a reality.

The case can be made for public funding to build a port, rail line, road upgrades or a desalination plant which will support income-producing businesses in regional areas and beyond for decades. Labor, under Rann and Foley, was firmly focused on maintaining its coveted AAA credit rating. They would always remind us of it as soon as they could not afford to do something they had promised to do. Indeed, they had the same excuse for cancelling the new prison in 2009. The government argued it did not have a financial role to play in providing infrastructure for the resources sector. Well, the AAA credit rating is history and we are still a relatively fledgling mining state.

A good government should be conservative in what it funds; however, supporting the resources sector is an obvious direction to take. Wise investment into a burgeoning industry is likely to lead to greater wealth in the public coffers through increased royalties. It makes good economic sense to those of us who aim to be progressive.

Where there is a gap between what is needed and what private business is willing to fund in these turbulent economic times, the government should be forward thinking in its policies with an eye to building infrastructure that can enhance prosperity in South Australia. Instead of being proactive in nurturing a mining boom, Labor has provided little vision in the regional mining sector and the wider South Australian community.

The primary industries sector in regional areas has also felt the brunt of poor fiscal management over the past decade. Several examples include:

the lack of assistance in areas such as Murray Bridge and Jervois in not providing support to secure 120 regional jobs;

the high dollar is hurting business, and we have seen the loss of South Australian dairies on the lower Murray swamps when there has been no water and no government support, I might add;

the lack of control and mismanagement of branched broomrape in regional South Australia. We have seen 10 years of investment into this important program and $45 million: $2.6 million annually from the federal government, $1.9 million annually from the state government and, over that period, we have seen somewhere around $70 million of contributions made by primary producers to help combat this parasite. In the worst case scenario, a whole region of hundreds of thousands of acres in the Murraylands could become affected. This could have a drastic impact on South Australia's primary agricultural and livestock industries' viability. The government has announced that, despite this significant investment, the pests cannot be eradicated and is now in a transition to adopt risk management measures;

$80 million is being taken out of agriculture over four years; and

we have seen more costs imposed on regional industries such as fisheries and aquaculture and have not received a reasonable explanation of how they are derived.

I am as supportive of the Liberal Party's plan to restore the South Australian economy as I was the first day I addressed this chamber. Our plan to rebuild jobs, reduce debt, to return to standards of excellence in community services such as health and education and to restore confidence in the institutions of government is as vital to the wellbeing of our state now as it was 10 years ago.

While experiencing the frustrations of opposition for a decade, I have tried to contribute positively to parliamentary debate. Largely, the Labor government have ignored the Liberals' proposals. On occasion, Labor pilfered our good ideas and then mismanaged their implementation. To take desalination, it was initially a Liberal idea to build a 50-gigalitre desal plant that would supply 25 per cent of Adelaide's water supply. The government fervently opposed it at the time, when we could have built it for about $400 million. By the time the drought took hold, they realised it was a popular policy, yet the same system would now cost $1.4 billion. The Labor government went from saying we did not need a desal plant at all to saying we needed one twice the size of the system we initially proposed.

Given our current position, a $400 million, 50-gigalitre water insurance policy by the Liberal Party holds up pretty well against a $2.2 billion project the government oversaw. It cost Labor more than five times the cost of the Liberal plan—and then it rained. One thing is for sure and that is that water ratepayers in South Australia will be the ones paying the total cost of the desal plant through a tripling of water prices.

The Hon. Mike Rann presided over the poor governance I have alluded to in this speech. Premier Weatherill gave former premier Rann a golden handshake of around $200,000, including a car, staff and a furnished office as well as an annual pension worth three-quarters of his former salary. Was this a sound financial decision? I think not. It seems we have a new Premier that will reward the old premier for his many failings. It seems this government may have gone from bad to worse.

The cost of living is something that affects us all. The financial pressures on our state's community are growing and it is notably harder for its members to make ends meet. Whether it is in households or in the business sector, in regional areas or in metropolitan cities and suburbs, the cost of living is the most demanding challenge facing us today. State governments must aim to set the benchmark in undertaking prudent and effective financial management.

I have outlined a number of failings of this Labor government in providing sound financial management to all stakeholders in South Australia. Labor deficits, Labor debt and Labor's broken promises have led to Labor's failure to deliver the best platform possible on which all South Australians can prosper.

The Hon. J.M.A. LENSINK (12:25): I rise to make some remarks on the budgetary situation. I got a bit of a history lesson. I have been back through the budgets since Labor first came to office and the number of broken promises and changes to programs, which I think has led to a lot of inefficiency.

I would like to commend our leader Isobel Redmond for her excellent contribution on 17 June this year in the House of Assembly. I am not going to cover the same ground as she has, but I do wish to make some remarks. We did not need to be in the position that we are in in this state; things could have been done a lot differently. Quite frankly, this Labor government has had warnings along the way about the way it has been treating the budgetary situation. It has been incredibly undisciplined.

The government had the initial benefit of growing GST revenues, particularly in its first term in office, and growth in property taxes. It has progressively introduced taxes which, in the current difficult economic times, are strangling our economic growth. Labor's style is tax and spend, throw money at problems when you have money, and appoint your mates to senior positions in government, regardless of their ability. There are quite a number of Labor operatives who now occupy senior positions across the Public Service, and that practice of appointing people on mateship instead of merit means that incompetence rules supreme.

This government has never kept an eye on expenses. In 2005, for instance, it budgeted for 67,626 public servants when in fact there were 69,486 in the actual figures, a figure which seems light now, given that we are up past 90,000 public servants. The government has only ever delivered one single budget surplus. It has consistently underestimated its revenue, particularly in its first term. Former treasurer Kevin Foley was able to crow about how clever he was when it actually had nothing to do with him: it was increasing GST revenues and property taxes.

However, in 2012, the chickens have come home to roost. After the last election—which many believe the Labor Party did not expect to win—they were not particularly worried about the budget bottom line because they knew there would once again be the old pattern of the Liberal Party having to clean up the Labor Party excesses. They are having to make their own cuts.

In our fortnightly budget and finance meetings, which are chaired by the Hon. Rob Lucas, we find that a number of departments are having to make significant funding cuts. It is certainly our view that, if the government had never let the belt out that far, it would not have to be delivering the pain now, but Labor is undisciplined and cannot help following that pattern.

There have been many things announced in budgets over successive years which have since been axed. It is a very inefficient way to run government. It also calls into question issues of sovereign risk. Can you really trust anything that this government ever announces in any budget, because it may well be scrapped when the government finds that it does not have the money or when it decides to change its priorities? I think a lot of the announcements that have been made have been purely for vanity and also to give the government some form of headline, a handy front-page story—whether it is the hospital one year or the public transport infrastructure another year—and hang the consequences.

The only area in which I would actually commend them for the level of funding, but probably not the implementation of it, is the significant increases in the child protection budget, but I am very sceptical that they are being spent in a proper way and in a way that necessarily protects our most vulnerable children. A number of us in this place are particularly concerned about whether the reforms are actually taking place on the APY lands and are very keen to get more information on those.

If we go back to 2002 after the election when Labor took office, they started breaking their promises within months of the election. There was an increase in net debt and superannuation liabilities which was to set the trend of their years in office, and they only managed to achieve a surplus through what the Financial Review described as an 'accounting fiddle'.

Another trend we are seeing is cuts to country areas. While metropolitan hospital funding was increased by 7.1 per cent, it only increased by 2.4 per cent in country areas. There were also capital upgrades to schools which had been set by the previous Liberal government which were cancelled, such as in Ceduna.

Much of the funding for public hospital upgrades was actually a continuation of a Liberal program, including significant works at the Royal Adelaide Hospital, and many years later they decided they were going to make that announcement about the new 'Marj' and we were left with those sunk costs. Had they had a strategic plan which would have guided them (which they should have done through the Menadue report), they would not have had to expend money on certain works at the Royal Adelaide Hospital and those funds could have been spent elsewhere.

They also introduced the now axed thinkers-in-residence program, and I cannot really think of anything that has come out of that program that has had a long-term benefit and an impact for the people of South Australia. It has really just been a fanciful vanity project for the former leaders of this government.

They also closed three regional ambulance communication offices, started hiking up crown land leases by up to 400 per cent, and there were cuts to PIRSA of 12 per cent. Considering that this was in light of what was a relatively healthy budgetary situation and given that primary producers really are a hugely significant part of our state's income, it was very short-sighted.

They also cancelled HomeStart funding for aged care providers and increased all government fees by 4.2 per cent across the board, plus $200 million extra in the forward estimates. They cut 100 traineeships and crime prevention programs, and placed the extra tax on licensed premises, which was a direct breach of a written promise to the Hotels Association. As we have seen in the recent budget, they once again imposed a new increase on the hotel sector.

The 2003 budget was one of reannouncements, and the government had become so cynical at this stage that the member for Mitchell, Kris Hanna, had quit because he said the party was being run by bullies. The former treasurer also announced that he had the moral fibre to go back on his promises. There was another round of tax increases under the guise of saving the Murray—$30 for every household and $135 for every business, school or club in the state. At the same time, they were pulling $10 million in funding out of the Lower Murray irrigation scheme.

We started to see the cranking up of land tax burdens through a combination of increasing land and property values as well as bracket creep, which was to deliver those windfalls in subsequent budgets but placed a greater burden on investors and tenants, particularly as in South Australia land taxes are calculated through an aggregation system.

The property market in South Australia was not growing at the rate reflected by the tax take so the state government was, in effect, shovelling in more of people's hard-earned money. The escalation of South Australia to become the highest taxed place in Australia was at that stage well underway and, as I said, is now strangling business. There is a new tax on apprenticeship training of $160; increases in vehicle registration, gas prices, ambulance fees, stamp duty on mortgages of non-owner occupied homes; and new levies for the fishing industry, which is another new trend towards cost recovery for industry. We do collect taxes in this state, and theory has always been that general revenue is there to fund certain services which are for the benefit of the state, but cost recovery is a new novel concept introduced by this government, which is really just a way for the government to raise more taxes.

We have also seen delays in stages 2 and 3 of The Queen Elizabeth Hospital, which I think is a hospital this government takes for granted. It is located in Woodville. I visited the hospital recently with the member for Waite, Mr Martin—

The Hon. J.S.L. Dawkins interjecting:

The Hon. J.M.A. LENSINK: My colleague the Hon. John Dawkins reminds me that they were happy to have a select committee into The Queen Elizabeth Hospital. The hospital is currently in the process of being downgraded by the government. The people who run that hospital are a very excellent group of specialists, who are pioneers of stroke treatment. I note that the former treasurer wrote a rather interesting piece in his Sunday Mail contribution about how important The Queen Elizabeth Hospital is and how he had had a change of heart about it and what an important role it has played in the life of many, many people, from birth through to death.

The people who work at that hospital work under a cloud because they are not sure whether this government even intends to keep that hospital open. It has certainly been downgraded, and there are concerns about whether it is going to have a future role with the government's so-called spine hospitals of the Royal Adelaide, Flinders and the Lyell McEwin Hospital; that the other two will just continue to lose services until they are effectively a lower category of need.

Again, Country Health did not receive parity of funding compared with metropolitan areas. There were more cuts to education's capital works budget and delays to Murray Bridge and Renmark hospital capital works. Funding for regional theatres was axed, and the $20 million funding, which the Liberal government had been providing for regional housing in recognition that there is often market failure in that area and the need for housing in regions is significant, was cut. We also saw cuts to the Regional Development Infrastructure Fund.

There were several announcements in the budget: money for the Venture Capital Fund, which I suspect no longer exists; funding for high performance computing facilities, we never heard what happened to that; and we had $131 million for two bridges over the Port River, at least one of which was supposed to be an opening bridge and never happened; funding for a broadband telecommunications task force (Lord knows what on earth that ever produced); and the first announcement from this government about the prisons—and we all know what happened to that.

There was supposed to be $32 million for a new women's prison and $46 million for a youth detention centre—and I will have more comments on the youth detention centre later. Allegedly, there is funding for new housing for teachers and police stations, and funding to attract skilled and business migrants—that has certainly gone with changes to a department that was running those programs. I am not convinced that the department was doing such a fantastic job, but at least they had some positions and at least they had some focus on working out what our skills gaps needs were and attempting to work with business in order to match those to potential skilled and business migrants.

The 2004 budget was an anti-jobs budget. There were claims of $250 million in capital works to stimulate the economy when most of that funding was, in fact, in forward estimates and, therefore, was unlikely to ever be spent. In the 12 months leading up to that budget, the number of jobs in Australia had increased by 180,000 while South Australia had actually lost 14,500, and it was the impact of increasing taxes biting our economy: $563 million more was being collected than in 2001-02. All government fees and charges went up, with speeding fines going up by 40 per cent.

The alleged $250 million in capital works included $14 million on trams which was not additional trams but actually a blowout; deferred expenditure on the Marine Innovation SA bioscience incubator, the Adelaide Women's Prison, and there were some 19 projects shelved. Exports were dropping because of cuts to regional services, especially infrastructure, roads and the decreasing health budget which drives people out of regions. So-called tax cuts of $350 million were over four years so were a fiddle for a headline and included taxes which had been abolished through the GST agreement, which was something put in place by the previous Liberal government and the federal Liberal government and which the ALP had, in fact, opposed.

I picked some of these items out because I have no idea whether they ever happened or what outcomes we received from them. In the 2004-05 budget we had $3 million for a fund to establish nature and culture-based tourism but I do not think that has ever materialised into anything. While $3 million in the scale of things in a budget of some many billions might not seem like a lot of money, it is a lot of money for many communities where it could do a great deal of good. There have been budgets which have wasted all sorts of funds and things have dropped in and out of the budget when they could have been used to do something useful.

We also had the announcement that the Britannia roundabout was going to be fixed. That was eight years ago and still nothing has happened. Again, $10.2 million for workforce and migration to achieve the population target of two million by 2050 (and I am going to refer to the population issue towards the end of my speech) but those funds, I am quite sure, have been axed and, in fact, have not been effective. There was $6.8 million for natural resource management and $5 million for the Living Coast strategy—both those amounts of funding, I am quite sure, were slashed in the 2010 horror budget which will I speak to in more detail later.

There were some tax cuts which actually delivered more taxation revenue relating to property taxes. As the values were increasing this drop in the threshold meant that what would have been cuts for individuals have indeed evaporated.

In 2005 we certainly had the rivers of GST and property taxes flowing in to the tune of $42 million every day, which equates to $2.2 billion per annum. At that stage, we were going to have a tram going to North Adelaide, and it is interesting that this government has chopped and changed so much on transport, a portfolio which never knows whether it is coming or going—and we certainly know that the buses are not going and the trains probably are not really going either at the moment. However, the fact that it has never had a transport plan, it has never put out a transport policy means that that department has never had good leadership and so it has just been all over the place.

The Menadue review into health, which is a child of former member for Elizabeth the Hon. Lea Stevens had been abandoned by that stage by the new health minister; there was $9.5 million for a wine innovation cluster; and $8 million for the Mawson Institute of Advanced Manufacturing—those areas I think were neglected and never came to fruition. The Hon. Dennis Hood spoke about the entry into the electricity market. After the Rann government was first elected to office and entered the electricity market, the way it managed that transition effectively messed up the market. They like to keep blaming the arrangements that came into place under the previous government, but it is because they messed that up completely that, in that year, 23.7 per cent increases in prices took place. They tried to bribe everybody by giving $150 in one-off funding to pensioners and self-funded retirees.

We saw the trend in that first term of children leaving the public school system for private, which has continued. Those children have not returned to the public system. In 2006-07, for some unknown reason, the budget was delayed from being delivered in the usual May to September period, and again we saw broken promises after the election.

The first broken promise was not to increase public sector numbers; the second was not to seek savings in health and law and order; and the third was not to decrease teacher numbers. We saw again an increase in TAFE fees and their being doubled, cuts to the food plan, cuts to the tourism marketing budget and the road backlog went up to $200 million. The government also pinched the interest that schools were earning in their accounts.

We saw another one of these white elephants that this government is fond of, that is, the GP Plus centres, which sound all very well in theory. In fact they are a government subsidised way of competing with what are often good private GP centres which are well attended. If one is to go to the GP Plus centre at Elizabeth and drive past the previously existing GP centre, the private GPs' waiting room is overflowing—you almost have to take a number when you get there—whereas the GP Plus centre is plush but there is hardly anyone in there. Some of the services, I think, such as the SA Dental Service, are very valuable, but to think that a government can set up one of these centres and employ general practitioners in competition with a service that is operating perfectly well is just a nonsense. It is one of these things that all sounds lovely but, in practice, it is quite impractical.

We also saw the return of the Modbury Hospital to public management. That, again, because it is not one of the spine hospitals, is being downgraded and we have since seen the removal of maternity services from that hospital. Again, I think the people who work at the Modbury Hospital are concerned that they are being downgraded to a low acuity of care, and that can also lead to dangers for patients, because if you do not have the fully-operational intensive care services running there, sometimes patients have to be transferred from Modbury to the Lyell McEwin Hospital. That puts them at risk because it is extra time that they have to spend in an ambulance without the capacity for full ICU services.

We also had another one, and this was really the beginning of the crazy announcements—the big announcements that were designed to capture the front page of the paper. This was the new prisons project at Mobilong. I remember being mocked in the House of Assembly for having put out a release a couple of days before saying that there would be nothing in the budget for the prisons because we had seen the first announcement several years before and it never happened, but I am quite happy to say 'I told you so.' Yatala was supposed to be closed as well as the women's prison at Northfield, and we now know that that farce never took place and the GFC was subsequently blamed.

The new youth detention centre is really only proceeding because there was so much exposure of the shocking conditions at the Magill Training Centre, otherwise I am sure that would not have taken place either. We also had the bizarre decision to extend the tram to City West at some considerable cost, and there was $11 million in the budget to change our fleet to alternative fuels. I note that Fleet SA is now being privatised, so I suspect that that money has either not been spent or is a complete waste.

We had an announcement about 20 new park rangers, who were young recruits. I understand that those positions have now been filled, but I would like to point out that we have also lost a lot of experienced park rangers along the way, especially in the investigations unit which protects our protected species and fossils in the Far North of the state. I think that the experience that we have lost from that area far outweighs the number who have been recruited in this particular promise.

Certainly, Friends of Parks—and I know my colleague the Hon. John Dawkins is well versed with Friends of Parks—are particularly upset, as are many Friends of Parks across the state, because the number of people who are dedicated to assisting volunteers with those parks is so small and they are spread across so many regions, because in actual fact the number of rangers has been decreased significantly. We also saw the announcement of Shared Services and ICT services which were supposed to deliver $700 million in savings; and that has been an unmitigated failure.

In 2007 the centrepiece was the new hospital announcement. As I said, having continued investment in the current Royal Adelaide Hospital, this decision beggars belief. It was a piece of vanity. It was supposed to be $1.7 billion; we now know it is more like $2.8 billion. This hospital decision is going to bleed this state for generations. It was never in any of the recommendations of any of the reviews, and I think it was a Hollow Man moment. People might recall that TV show which depicts what takes place in ministerial offices.

You can just imagine the conversation: 'What will make us popular?' 'What about a new hospital?' 'A new hospital?' 'That's a great idea. Who's popular now that we can name it after?' 'Ah, well, the governor, she's pretty popular, let's call it the Marjorie Jackson-Nelson Hospital.' The people of South Australia know that that's a stupid decision. The people in regional South Australia particularly know that that is a stupid decision as they see that their services continue to be undermined and lost. And the people of Adelaide certainly know that that was a stupid decision, and they voiced their opinion on that at the last election and elected the excellent member for Adelaide, Rachel Sanderson.

In his contribution, then leader Martin Hamilton-Smith tabled a number of economic indicators, and that was in his address on 19 June 2007. He showed very effectively how our share of the national economy was in decline. I think he really issued that we had been warned, that there were signs showing that South Australia was slipping, and that we needed to do more to assist our economy.

While he did not have a crystal ball, he has a lot of common sense, and in those times prior to the GFC he made the point that in good economic times the strategy should be to pay down debt. If you listen to any real estate or financial adviser at the moment, people are being urged to put money towards their home loans to get their debt down. It is a really good time to pay off debt. You put cash away for the bad times, and it is much more effective to do it in the good times than when you get desperate, as this government has with its current forestry sale.

But they did not do that of course. They just kept spending like there was no tomorrow, and they did not invest in infrastructure, which would have supported economic growth. So, we are being hampered on two fronts. We have got a lot of debt and there is nothing that is going to support that future economic growth There was some payroll tax relief but our threshold is still very high by national comparisons.

In the 2007 budget we had more attacks on regional, rural and peri-urban areas through cuts in education to small schools, to their workers compensation in schools, to school grants programs, teachers and through efficiency dividends in the education system. We saw cuts to the DPP. As I have said, we had the classic strategy of announcing something that either the government had no intention of delivering or that it had not done its due diligence on and so in subsequent budgets had to pull it.

There was the Mount Bold expansion, which was a ploy to counter the Liberal Party's policy that we should have a desalination plant. The Mount Bold announcement was flawed from the beginning, as it either relies on additional water flowing from the Adelaide Hills catchments (which is not going to happen) or from more volumes pumped from the Murray Darling system. Honourable members will remember that this was being announced at a time when the whole of Australia was in drought—or at least the south-east of Australia—and in the context of state and commonwealth negotiations (which even today have still not been concluded), which would have affected the amount that could be taken from the Murray.

It was the beginning of the rhetoric about mining, particularly with BHP's expansion of Olympic Dam (this is back in 2007), and the indenture was signed only last year. There was at that stage a proposal that the Olympic Dam expansion might provide an opportunity for potable water to Eyre Peninsula and the Upper Spencer Gulf cities, which we now know was another thing which has also been squibbed. In many of these budgets we have also seen pet funding projects of the former premier, and in this case we had $5.2 million for the Carnegie, Mellon and Cranfield universities (which have not attracted their own students into those programs; they have had to be propped up to the great irritation of other universities) and $3.8 million for the film industry.

In 2008 we see that most of the headline announcements have all been scrapped, for example, the public transport revolution that we were to have—the rail line electrification and tram extensions to the western suburbs. The only one which has proceeded is the very expensive extension to the Entertainment Centre, which was $162 million, including purchasing new vehicles, which again makes our country cousins much more cynical to see that amount of money spent on something which is really never going to provide an economic benefit to justify it.

We now know that the government has wasted some $30 million on preparation for the Gawler line. You have the concrete pylons which have been placed there and which now are a safety hazard. Other pet projects of the former premier that took place at the height of the popularity of environmental concerns include $7.7 million for green power and carbon offsets (about which we have submitted an FOI trying to work out what on earth that was spent on) and $2.4 million for green buildings, which are really unnecessary in the context that they are all required now, anyway.

The government did concede that we needed a desalination plant at that point, and, on the pet project front, there was $43 million for the film and screen hub at Glenside, which is a very wasteful amount, indeed. In 2009 the government suddenly decided to blame things on the GFC and so it cancelled the prison project. We also saw a bizarre decision to double the size of the desalination plant to 100 gigalitres, which is incredibly expensive. We now know that it is not going to be required. We have also seen cancellation of some of the rail projects.

The last Foley budget was in 2010, which was a 'slash and burn' after the election. I spoke in that year of my concern about what was happening in the environment department, which was losing some 30 per cent. The 2011 year was the first Snelling budget—lots more gloom and poor planning. However, we did see $200 million being thrown at some supposed sustainable industry centre at Tonsley. We are still not to know what is taking place there except that TAFE will be moving there. There is continual pruning of the Public Service, and the sale of SA Lotteries.

I will not talk in great detail about the 2012 budget because I think honourable members have, and my leader has, in some detail, except to say that the forests decision is something that is impacting on the South-East in a very great way. I go down there fairly regularly, and they are very pessimistic. Housing prices are depressed and a lot of people do not know what is going on. To have duped them by saying that it needed to be sold to retain the AAA credit rating and then not proceeding with that is, I think, dastardly. I seek leave to conclude my remarks.

Leave granted; debate adjourned.


[Sitting suspended from 13:01 to 14:17]


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