State Budget

The Hon. T.J. STEPHENS (15:41): I rise to make a few comments on the impending budget tomorrow. A few weeks ago in this place, I touched on the need for the government to cut spending and red tape in order to encourage economic growth. There, of course, is another benefit to cutting spending: getting the budget back in the black and reducing the state's debt burden. Doing all of this will allow taxpayer dollars to once again be spent on services or infrastructure or, better still, to be returned to the taxpayer.

The problem with the budget being in the red, in addition to a significant level of debt, is that it breeds further debt. As I have mentioned previously in this place, the formula of cutting spending and taxes to encourage growth thereby increasing revenues is a proven one. The Labor way of borrow and spend and then crudely increasing taxes is outmoded and short sighted. It fails to take into account macroeconomics and implies that government is the chief driver of the economy.

It is time for the government to recognise that its previous method was wrong. Yes, we do now have football in the city and eventually, I hope, we will have a hospital, but what is the point if the state is bankrupted; if the South Australian economy is stifled to the point of stagnation? Mine is not a lonely voice, many in the business community share my concerns, as does Mr Daniel Wills of The Advertiser, an ever-reliable source of common sense within the fourth estate. In his article entitled, 'Budget black hole is an opportunity for the state,' Mr Wills calls on the government to rein in spending and to admit to the real reasons as to why it needs to happen.

The Treasurer and the government have gone to great lengths to establish the premise that the reason for the budgetary crisis in South Australia is the tough federal budget which has cost South Australia $900 million, but Mr Wills explains that this is simply a smokescreen. The real reason is the previous budget handed down personally by the Premier with:

…South Australia spending $1 billion more than it earned. As tax revenues flatlined, spending continued to grow.

I further quote:

In a single year, departmental bosses spent $600 million more than was allocated in their budgets, enough to fund the Adelaide Oval or Darlington Interchange upgrades.

This confirms that the deficit cannot simply be blamed on infrastructure projects; there is a systemic issue here. Irresponsible spending has reached such a level that the government cannot even pull the budget out of deficit through the selling of assets. Mr Wills goes on:

The deficit was the largest and fastest growing of any state. Debt was headed towards $14 billion despite jackpots from the sales of forest harvesting and the state lotteries. South Australia's budget was already in a structural mess well before the federal Treasurer Joe Hockey stood at the dispatch box a month ago.

The Liberal Party has been saying this for years, but continually we were hounded down by the government. The government uses the reasoning of kickstarting the economy through infrastructure builds, etc., but the economy has not been kickstarted. The job creation was temporary and now the budget is in such a parlous state that there is no other way out except for brutal cuts. If Labor does not make these hard decisions now it can only end with the bankruptcy of the state.

This Labor government has failed to prepare for tough times and has worked on assumption after assumption: firstly, that the Olympic Dam expansion would drive economic growth; secondly, that massive and inefficient infrastructure builds would create jobs and kickstart private sector investment; and thirdly, that the rivers of gold from the commonwealth would go on forever.

The notion that the commonwealth is to blame is ridiculous. The government is reliant on a handout to balance the books and this is a problem in itself. As Mr Wills explains, Victoria is a state that similarly does not have the revenue streams of the mining states, yet because it has kept spending at a sustainable level, the budget is in surplus and the planned cuts by the commonwealth can be absorbed thereby insulating the Victorian economy.

Tough budgets are always going to have opposition, and Mr Wills references the 2010 budget delivered by the Hon. Kevin Foley who endorsed the cutting of at least 4,000 public servants. When the unions revolted, the Hon. Mr Foley was dumped and his plan was conveniently forgotten. The government cannot be this gutless now. The time has come for an austere budget. The government must finally take the blame for the current crisis and not buck-pass and spin its way out of trouble as Labor so often does.