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Legislative Council - Fifty-Second Parliament, Second Session (52-2)
2013-11-27 Daily Xml
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PUBLIC FINANCE AND AUDIT (DEBT CEILING) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 10 April 2013.)

The Hon. R.L. Brokenshire: Debt's out of control.

The Hon. R.I. LUCAS (00:53): Debt's out of control, yes. This bill seeks to limit the Treasurer's or government's capacity to borrow money if the borrowings would result in a net debt greater than $14 billion. The member for Davenport advises that in the bill there is no penalty for breaking the $14 billion debt level; however, the $14 billion debt level is indexed by CPI commencing on 1 July 2014. Without running through all the details of the member for Davenport's calculations, he indicates that under the provisions of the bill it would actually allow the debt figure to increase to $14.618 billion, which was an increase of $600 million in—

The Hon. R.L. Brokenshire: It's massive.

The Hon. R.I. LUCAS: Massive; well, you're not Mike Rann, so you can get rid of that particular phrase. However, it is a $600 million increase in the $14 billion debt figure; and I am not sure whether that is really the intention of the Hon. Mr Brokenshire. Putting aside that particular technicality, the member for Davenport has indicated that the Liberal Party does not support this particular provision. The Liberal Party accepts that the intent of the Hon. Mr Brokenshire is right; that is, the state's debt levels are too high, and we do need governments and parties that are prepared and willing, over a period of time, to reduce the extent of the net debt figure in South Australia.

As we have indicated on a number of previous occasions, when the last Liberal government was first elected the auditor-general reported net debt at $11.6 billion. When the Labor government was elected in 2002 that $11.6 billion had been reduced to just over $3 billion. In the space of 12 years of disastrous financial mismanagement, that $3 billion figure is now heading to $14 billion. The solution we put to the Hon. Mr Brokenshire and the people of South Australia is to—

The Hon. R.L. Brokenshire: Change the government.

The Hon. R.I. LUCAS: —change the government. Do not pass a debt ceiling amendment bill piece of legislation which still allows a $600 million increase in the net debt, anyway. The simple solution to the problem of ever increasing debt—and the record demonstrates the fact, as I have just put on the public record in terms of the performance of the last Liberal government—is that if you want to tackle the debt issue in South Australia you change the government. You get rid of a group of financial incompetents led by a premier and ministers who have no comprehension of debt, deficit or, indeed, what you would do about it, and you elect an administration led by someone with a business background like the member for Norwood. You elect someone and a team with the capacity to manage the finances of the state in a reasonable fashion over a period of time to tackle both the debt and deficit problems.

For those reasons, whilst we support and congratulate the Hon. Mr Brokenshire and his focus on the issue of the problems of the state's ballooning net debt, we do not support this particular solution.

The Hon. R.L. BROKENSHIRE (00:55): In closing the debate, I thank all honourable members for their contribution. I particularly thank the Hon. Rob Lucas, the former treasurer, shadow finance minister and possibly finance minister in five months' time. It was no surprise, sir, that the Hon. Rob Lucas' solution was: if you want to fix this very scary debt issue that is now before the state of South Australia, the simple solution is to change the government. I guess that is what his simple solution would be, and it may well be that that is a solution.

However, notwithstanding that, I just want to summarise by saying that as much as I know the Liberal Party's structure and its focus on a strong economy, fiscal management, balanced budgets, preferably surpluses in recurrent budgets and definitely no extreme core debt, Family First is putting this up because we are in a precarious situation.

When we were having a debate on these matters and the sale of assets recently, the Premier said on FIVEaa that I was a hypocrite. After listening to the Premier for a while, I flatly rejected that and reminded him that we now encounter a situation where on two occasions we have had the equivalent of State Bank disasters. In fact, I reminded the Premier that his government, and former Labor governments over the last 20 years—and it is only 20 years; 1993 was when we had the huge State Bank debacle mark 1. Here it is, 2013, and we now have the equivalent of the State Bank debacle mark 2. There are a few differences between the two. The first is, as the Hon. Rob Lucas rightly pointed out, that at that point in time with the State Bank debacle mark 1, the core debt was about $11 billion. Today, with State Bank mark 2, the core debt, on the government's figures, is projected to be $14 billion.

There is going to be some miraculous recovery, and I want to break this story ahead of the next two or three weeks when the Treasurer and Premier comes out. I will say to The Advertiser and The Australian and all the media: be ready for the big press release that will say, 'Tight fiscal management under this Treasurer and Premier has reinstated the vibrant and vigorous economy of South Australia. It's all under control. Don't you worry about that, because the Treasurer, Premier Jay Weatherill, has fixed it. Mike Rann mucked it up, but Jay Weatherill came in and had the bold and futuristic vision to actually take on Treasury and Premier and he has actually fixed it. It will all be fixed before Christmas and we will have a Christmas present.' That is what the message from this government will be, mark my words.

Well, sir, I say what an absolute joke. What a gross misrepresentation of the truth and what a fantasy this government and this Treasurer and Premier will be living in if indeed that occurs. As a South Australian citizen, I am incredibly concerned about the state of South Australia.

Mr Raymond Spencer, whom I admire as a very successful businessman (and I give credit and thanks for the fact that he is heading up the Economic Development Board), came out the day after I was in The Advertiser recently, where I expressed my concern about this incredibly high debt. This will be an election based on what an economic adviser to then president Bill Clinton said: 'It's about the economy, stupid.'

Irrespective of the whitewashing that may occur, the reality in fact is that the next state election will be front and centre about one matter, and one matter only, and that is the fact that this government has failed the South Australian community that lives in this state today and future generations—not just one generation, but future generations of South Australians—on where the debt is up to and the hamstringing effect that that will have on this state into the future.

Mr Raymond Spencer actually said that we should double our debt. I understand what Mr Spencer is saying. In a perfect world, if our debt was being spent on growing our economy I would agree that there is potential for an increase in debt. But on two successive occasions I, as one of 1.7 million (or thereabouts) South Australians, have experienced a situation that I stood by when I debated with the Premier a few weeks ago that this Labor government and former Labor governments have put this state for the second time into a most precarious situation.

There is debt and there is debt. I want to say that there is good debt and there is bad debt. The $14 billion that this state government has in the forward estimates is core debt, which they admit is there; it might have been $13.8 billion, but let's round it off and if we round it off to the highest or the lowest based on the decimal of 5 per cent it puts us at $14 billion. At least 50 per cent of that core debt is bad debt. It is bad debt because it is based on lack of management over a 12-year period.

I am no economist. I do not have a bachelor of economics like the Hon. Rob Lucas, the former treasurer and the possible finance minister next year. I do not have an economics degree like my leader in the Family First Party, the honourable, very intelligent and clever Dennis Hood. I am just a mere and humble farmer. I am also a South Australian with three adult children, personally having a significant debt but wanting to grow, as my forefathers have, an economy and an opportunity for this state.

Mark my words: even at 1 o'clock on Thursday morning, and at any other time of the day, night or whenever, I will fiercely debate the fact that this government has failed this state economically. If you fail the state economically, you fail the future of South Australia. The bad debt is far too bad. Many South Australians right across the state say to me on a regular basis, 'I'm worried, Robert, about the debt of this state; I'm worried about the future; I'm worried about the growth opportunities.'

I do not support footbridges for $43 million that were misrepresented even to us who had to support the proposal after discussion, because the damn footbridge does not even do what was shown on the glitzy IT that they put up. The footbridge does not even go straight into the opening of the Adelaide stadium; it actually just goes over the river.

We are in a lot of trouble, and one thing I am going to do as a member of parliament between now and the next election is with every second and every piece of energy that I have, I am going to tell every possible South Australian that this government has failed South Australia on the fundamental thing that provides the protection of the environment, a future for our children, and the opportunity to provide proper services. Members should go to a school like I did today and ask them how they are paying for their power. There are schools in this state now that are struggling to pay for their electricity.

I am not going to stop reminding every South Australian that we are in trouble, and that is why I support this debt ceiling limit. Those poor South Australians, who vote only once every four years, are tied up for as long as it takes to address this debt, and it is going to hurt—it is going to hurt big time.

South Australia is not America. We do not protect the world, we do not send armies all around the world, we do not have to put billions and trillions of dollars into protecting the peace of the world by looking after Third World countries and looking after people's needs—that is not us; we are just a small player. To look after Australia and to look after our own people, we actually have to ensure that we live within our means and that we show some intestinal fortitude in how we manage our affairs.

There is no South Australian, including my own family, who is not subject to scrutiny, and that scrutiny is called the bank. I deal with the bank for our family a lot. I am not going to go into it publicly tonight, but I deal with the bank all the time because we cannot grow our business without the support of the bank, but the bank will not let our business grow unless we have sufficient equity, sufficient cash flow, sufficient balanced recurrent budgets and a business plan to look after our family's business. They are elementary basics. It is time Treasury and the Auditor-General actually showed responsibility with this.

I do not apologise for introducing this bill about a debt ceiling. I challenge any member, particularly government members, to show me any South Australian who is not disaffected by this debt increase at the moment, particularly the bad debt component. I challenge government members to show me any South Australian who is genuinely prospering because I am not meeting them—and I live in the real world. I do live in the real world because tomorrow night when I get home I will be weighing up my milk income, my grain income and my livestock income against my input costs, and it is hard work. It is hard work, even when you have a supplementary income as a member of parliament.

Surely the least that should happen is not only what may or may not occur on 15 March next year, as the Hon. Rob Lucas is saying—a potential finance minister and the current shadow minister—that is, maybe a change of government. We need more than that. We need some checks and balances. We may have the same government back in for 16 years, or we may even have them in for 20, or 24 or, if I live long enough, perhaps even 28. They are all scenarios that are possible. We need to realise this.

There is no guarantee that there is going to be a change of government at the next election; in fact, I foreshadow that it will be a very tight election. Indeed, if there is not a change of government at the next election, if, God willing, I live long enough, it may well be that as a government it beats Sir Thomas Playford's record as premier. That is a possibility—a real possibility. Part of that possibility may even determine tomorrow's voting, but I will not go into that now.

Irrespective of all the scenarios that may or may not occur, we need a debt ceiling limit. There is $14 billion and a lot of that is either bad debt or debt on things like the football stadium, which I know my colleague thinks is fantastic. We have had chats about it, and he is more in tune with this than I am, as are the majority of people, and I congratulate my leader on that. Maybe I am out of tune, but I think it is $500 million that should have and could have been spent elsewhere. In fact, if that $500 million had been spent on AAMI Stadium, we would have had a fully-roofed stadium and a fully weatherproofed stadium in summer, winter, autumn, spring. Now they are going to put that into high-rise and subdivide it and make money. That is all history.

I conclude with this: the South Australian community need to put pressure on who is in government at the time, maybe Liberal, maybe Labor. How do they do that? They do it simply by this: they cannot afford to wait every four years to vote a government in or out because they have made a mess of the economy. What they want is that, if the government of the day needs to borrow more money, they bring it into the parliament and the parliament then assesses the business plan of the government and either passes it or refuses it.

Can I finally say this: in the five years or thereabouts or maybe six years that I have been in this chamber—a chamber that I am on the public record for not always saying I agreed with when I was in the cabinet because it made life difficult at times, but having served in both houses—how important is this chamber and therefore by having this debt ceiling limit bill and allowing this chamber to be the check and balance on the government of the day, it puts that government under scrutiny and will force them for once to be very careful with the money they spend and/or borrow.

A lot of it is borrowed: nearly $14 billion just on the core debt. I will not go any further with all the other debt, but there is $14 billion on the core debt. They will actually have to show to the parliament through the Legislative Council on behalf of this great state of South Australia, why they want to borrow more, so to me it is a no-brainer that we support this bill.

Second reading negatived.

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