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Legislative Council - Fifty-Fourth Parliament, Second Session (54-2)
2020-12-03 Daily Xml
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Appropriation Bill 2020

Second Reading

Adjourned debate on second reading.

(Continued from 1 December 2020.)

The Hon. C.M. SCRIVEN (11:14): I rise to make my contribution on this year's state budget and reflect on what has, of course, been an absolutely shocking year for South Australia, and not just South Australia but the rest of the country and the rest of the world. Many people have lost their jobs and many have not been able to regain work since then. Yes, all of us have been inconvenienced, but that pales in comparison with the impacts on those people who have lost their jobs, and in turn that pales even more significantly in comparison with the impacts on those families who have lost their lives or their loved ones from the virus itself.

I am also pleased to add my contribution to the statewide recognition of how well the health response has been handled in this state. It has been exceptionally well handled under the leadership of the State Coordinator—the Commissioner of Police, Grant Stevens—and the Chief Public Health Officer, Professor Nicola Spurrier. The health response has been very good. We also need to acknowledge that the Premier made the decision that that health response and the restrictions that would have to be put in place and the management of those restrictions were to be left up to those leaders in the Public Service: the Commissioner of Police and the Chief Public Health Officer.

In separating himself from being responsible for the health response for the pandemic, the Premier, and by extension the Treasurer, became front and centre of the state's economic response to the coronavirus pandemic. As soon as those restrictions were imposed, businesses were necessarily shut down and restrictions were put on their operations, their capacity to trade and their capacity to employ people to generate their own livelihoods. Questions emerged about how the state government would support those people.

I must acknowledge and commend the federal government for their implementation of the JobKeeper scheme and also the changes to the JobSeeker scheme, which for the first time in many years made some headway in terms of that kind of support being possible to live on for more people. There are also some other schemes that have been put in place to support Australians, small businesses and their workers.

In comparison, the economic response by the state government has been somewhat lacking, and certainly extremely slow in delivering the few measures they have done. The Premier was quick to announce a stimulus package and then two weeks after that a further stimulus package, but it was disappointing to learn that less than a quarter of that had been expended, according to the Auditor-General, more than three months later.

We were promised by the Premier that it would be spent very quickly, that it would be spent over the six months in the period between March and September, but here we are in December and still less than half of that money has been expended. That is a massive disappointment, to say the least. What it has cost is people their jobs, and many people their livelihoods through their businesses.

I want to make it clear that Labor supports, and has always supported, strong economic stimulus to combat an economic crisis. We need only cast our minds back to a period 10 or so years ago to think about the response we had from the federal Labor government and the state Labor government at the time to respond to the economic crisis confronting us in the global financial crisis. The state budget in 2009 contained $4 billion of combined new operating and investing spending measures, but we entered that period from a position of strength.

In the years leading up to the GFC, the state Labor government had paid down all the general government sector's debt. We were accruing financial assets, such was the strength of the budget position. There was plenty of capacity to combat the global financial crisis and its economic impacts. But what was the response from the opposition at that time, the Liberal politicians led by the Hon. Rob Lucas? They consistently criticised the debt. They consistently criticised the deficits. Of course, the Liberal lines around debt and deficits were 'debt crisis', 'debt emergency' and 'bankrupting the state'.

Fast-forward to now as we enter this current economic crisis, and we do so on the back of two years of a Liberal state government, again led in the Treasury capacity by the Hon. Rob Lucas. They have spent those two years trying to align themselves with Labor's strong record of infrastructure delivery, running around cutting ribbons on Labor-delivered projects. In those two years, they radically increased state government debt by $10 billion, and that was before the pandemic began. They have made all sorts of promises about infrastructure projects in the future. They announced the infrastructure spending but then are very slow in spending it.

In this budget the Premier and the Treasurer are asking South Australians to forget the last 2½ years. They are asking us to also forget their rhetoric in the past on debt and deficit. They are asking us to forget the dysfunction and disunity of the past 2½ years, and they are asking us to forget that they have spent 2½ years delivering nothing of substance in terms of infrastructure.

I can recall a number of conversations over the last 12 months with key industry stakeholders, who all said roughly the same thing: the state government was doing precious little to support the construction industry. They are not building anything, they are not creating jobs, and they are asking us now to forget that they have already added $10 billion of debt to the books and delivered nothing to show for it.

As I said, Labor supports intervention to combat an economic crisis. The prudent use of debt and deficit is sometimes necessary. We did it, and we support this government doing it now that they are in power, but if we look at what they are promising to use this economic stimulus on, they are asking us to trust them that they will not behave in the way that they have in the last 2½ years and that, for the first time, they will actually start making good on the promises they made to South Australians.

The Joy Baluch Bridge duplication at Port Augusta was placed into the budget and money set aside by the former Labor government. In the first budget it was due for completion in June 2021. In this year's budget it is now slated to be due for completion in June 2024, three years late. Regarding the Festival Plaza project, once again funded by the former Labor government, the car park was due to be completed five months ago in June 2020, according to the Liberal's first budget, but that has blown out by two years. The plaza upgrade itself was due to be completed, according to their first budget, in June 2021 and it is now due two years after that.

The Tonsley rail junction, again funded by the former Labor government, is due now two years later than promised. The Springbank Road intersection upgrade is now also due two years later. The Golden Grove upgrade is now due a year later, in June 2021. The Gawler East Link Road, which was meant to open in June 2019, is now finally due for completion, despite a partial opening, in June 2023, four years late. The Port Road/West Lakes Boulevard/Cheltenham Parade intersection—which the member for Cheltenham and I know the importance of, as it services his electorate and where I stay when I am up here in Adelaide—is two years late.

There is very little in this year's budget for the state's South-East, an area that, yet again, appears to have been ignored by the Marshall Liberal government, adding to the strong opinion that this government forgets anyone south of the South Eastern Freeway, or as we say in the South-East, south of the tollgate. The Main South Road, Seaford to Aldinga, upgrade is a year late. The Dublin saleyards access upgrade project for the heavy vehicle industry is three years late. The Darlington upgrade project will not be finally completed for another two years. The train operation centre blew out by $3 million.

The North Terrace right-hand turn, of course, was axed. The Port rail spur, of course, was axed. GlobeLink, of course, was axed. The city tram extension was described in their first budget, six months after the last state election—after they complained about how the project was carried out—as being an $80 million project. It is now described in the latest budget as being a $121 million project, a more than 50 per cent blowout. The Port Wakefield overpass project, the one that the Premier and Rod Hook told us would cost $24 million, seemingly forgetting that trucks also like to use regional roads, is not $24 million anymore but $90 million—a 250 per cent blowout in the budget.

Aside from all the delays in those projects the real impact on the South Australian economy is thousands and thousands of construction workers missing out on the opportunity of working on those jobs, thousands and thousands of wages being paid, and thousands and thousands of opportunities for small businesses to be supported so that they can, in turn, employ people.

I wish it was just the delay that was the worst of these projects, but the fact is that nearly all of those examples have blown out in cost. The Festival Plaza project has blown out by more than $30 million, the Tonsley rail project has blown out by nearly $60 million, the Springbank Road project has blown out by $35 million and the Gawler East Link Road has blown out by $13 million. Main South Road is perhaps one bright spot, unless it actually means what it alludes to, and that is a budget cut, and is now $283 million rather than $305 million.

The Darlington project is quite fascinating. When the government first released a budget, six months after the state election, six months of all the briefings that the transport department was able to provide the new minister and the Treasurer, they said that it would cost $620 million. In their second budget they said that it would be $667 million, and now it is $754 million. You really have to say that it is not a bad achievement, taking a fully funded on-track Labor infrastructure project and blowing it out not once but twice. It is quite remarkable.

When we are asked to believe that they can deliver a $33 billion debt-funded economic stimulus package, you would be forgiven, would you not, for expecting that South Australians may be a little sceptical about this government's capacity to deliver. We are being asked to forget the delays and the blowouts in the infrastructure program that they have so badly managed, and we are now being asked to trust them that, finally, in their last 18 months, they are going to get their act together and start delivering jobs for South Australians. Of course, unfortunately, the $33 billion is not the last of it. There is more debt beyond that $33 billion that needs to be accrued.

It is the same with the Hahndorf traffic improvements project, the Main South Road duplication project and the Victor Harbor Road duplication project. It does not stop at $33 billion; that is just where it starts, and of course we will be looking in the rear-view mirror long after this Treasurer has gone. It will be for the rest of the state to work out how we are going to manage this.

As I mentioned, Labor supports deficits and going into further debt, as necessary, if it means that we can support our economy to get out of a crisis. It is the right thing to do to protect people's jobs and livelihoods. What we cannot support is a government that has removed a debt ceiling or a fiscal target relating to a debt from the budget papers. According to the Premier and the Treasurer, it is a blank cheque to continue spending—and do not worry about the impacts. Well, I am sorry, but that is not good enough.

Interest rates are low and, yes, this debt might be cheap—even cheaper today than it was last year—but are we not hoping for an economic recovery? Are we not hoping for strong economic growth? Are we not hoping that conditions will improve, that demand will increase and that at some point, perhaps, interest rates will necessarily increase to reflect that we have strong economic activity in our national and state and economies? Do we not think that those interest rates might bring with them a higher interest cost burden to the state budget?

And what does that mean? It means there will be less money to spend on our hospitals, which are already under pressure. It means there will be less money to spend in our schools, which still are not getting their full entitlement under the original Gonski reforms, and it means there will be less money to spend on all those other important areas of government that the public expects.

We are willing to give the government some leeway with this budget to give them the authority that they need in this parliament to get on with delivering some economic stimulus, but we say to the government that they have to break the last 2½ years of failure to deliver, failure to stimulate and failure to support South Australians. They need to actually get on with the job.

What we need to see in addition to this budget is a government that can actually deliver—that the government can actually put to work the money they are seeking the parliament's approval for and that they will actually get out and spend in the economy and support the jobs that South Australians need.

I am asking them to park their disunity and dysfunction and their inability to deliver and actually get on with the job of governing. It is what South Australia deserves and should be able to expect.

The Hon. R.P. WORTLEY (11:27): It is encouraging to see the government putting some money, albeit belatedly, into the state's infrastructure. It has been a long time coming, and the unfortunate aspect of this better late than never approach to addressing the state's infrastructure and economic needs is that the Marshall government is still not creating anything new for the long-term future of the state.

In almost three years of this current government, we have seen virtually no new infrastructure projects. The government has, of course, been quick to take credit for Labor projects; this is evidenced by the fact that the biggest funding in this state budget is the $8.9 billion towards the north-south corridor, an initiative of former Labor governments, dating back to 2010.

Nonetheless, I commend the government on recognising the need to complete this project, which will completely overhaul our north-south traffic system. You do have Labor's support in completing this massive infrastructure project.

Not only is that sort of indecision bad for our major traffic corridor, it is bad for jobs growth. Similarly, much-needed transport improvements, from Hove through to Klemzig and Golden Grove, have not eventuated. What is the government waiting for? People need jobs now. It is why Labor urges the re-establishment of an investment attraction fund to encourage business to relocate to South Australia.

Money also needs to be put forward to encourage South Australians to buy locally. If we produce locally and buy locally, the natural flow-on effect is that we create more local jobs. If we are going to have debt, we need to use it productively to create new jobs. When the federal JobKeeper subsidy ends in March, people are going to need work like we have never seen in our recent history. Demand will be huge, and this government will not have put in place projects or plans to create employment.

On the contrary, the government has made some very strange decisions to actually reduce jobs. By killing off the Adelaide 500 Supercars race, the government cut 435 full-time jobs with the stroke of a pen. It also culled 90,000 accommodation nights from local hotels, which of course meant those people are not eating in our restaurants or spending money in the local economy. This was rather ridiculously blamed on COVID-19. It does not take a genius to work out that if COVID was an issue the race would be back when safe and practical.

Perhaps the Adelaide 500 was being replaced with one or more other tourist events. No. Sadly, the government did not even have a contingency plan in place and now are being inundated with calls for some sort of replacement event. Even if replacement events eventuate, it will not be as a result of any proactive work from the government; it will be responding to demand. This government has a pattern of only getting things going when pushed to do so or finishing something someone else has started. They never seem to have an original idea of their own.

Actually, I stand corrected. They did come up with something of an original idea in this budget—penalising people doing the environmentally responsible thing by introducing an electric car tax. Industry sources believe the new tax, the first of its kind in Australia, will discourage ownership of electric vehicles. That means people trying to reduce carbon emissions will be penalised for doing their civic duty. On top of that, the new tax will create a precedent for distance-based taxes, which could be extended to all other road users. So the new idea the government has come up with is not to create new jobs or new wealth, it is simply to tax the dwindling money that is already in the economy.

In this government's short history, it has done very little to create growth. According to the Australian Bureau of Statistics, construction work in this state has dropped steadily from its peak of $1.6 billion in the June 2018 quarter. You do not need a great knowledge of economics to know that this high was a flow-on from Labor policies just three months after leaving office, and that trend has been heading down ever since.

COVID can be used for a reason for some recent economic problems—there is no doubt about that—but the downward trend was apparent well before that. On that note, South Australians have done an exceptional job in stopping the spread of COVID-19. We can rightly claim to have had a world-class response to the health crisis. All credit should go to those on the frontline, including police, emergency services and particularly health workers. The government also deserves some credit for that, no doubt.

Unfortunately, the economic response has been in direct contrast to the good work done on the health front. Businesses have closed and we have had a sustained period of high unemployment, and our long-term economic future is under threat. When JobKeeper and JobSeeker subsidies end, it will get worse because this government has not been proactive enough to create jobs. While the budget addressed some overdue and much-needed matters, it was largely disappointing. It lacked imagination and did not provide anything new to encourage South Australians as we work our way out of this pandemic. The people of South Australia deserve better, and we need a government that can produce a budget to create excitement going forward. They did not get it this time around.

The PRESIDENT: The Hon. Mr Hunter, we need to find the Hon. Tung Ngo or either of the Greens members.

The Hon. I.K. Hunter: Mark is coming.

The Hon. M.C. PARNELL (11:35): Before I commence my contribution on the Appropriation Bill, the question that is in my mind is: why don't people follow the whipping sheet? I am a lot further down the list than some other members who have missed their call.

The appropriation process, the state budget process, is, as others have said before me, one of the best indications of a government's priorities. How governments spend our money shows the community where their priorities lie. If governments spend money on things that we value, things that are important to the community, that is generally well received, but one of my eternal frustrations with the budgetary process is that massive amounts of money can be spent on projects with very little justification, and yet hardly a word is said about it.

I want to focus on two issues in my short contribution. One is the proposed expenditure of $8.9 billion on a 10-kilometre stretch of motorway in metropolitan Adelaide, and the second issue is the proposed new tax on electric vehicles. Let me start with the freeway, or motorway as I think it is being called. This debate over the last several years has been frustrating in its narrowness. The debate appears to have been narrowed down to: should we dig tunnels, or should we have a surface freeway?

The questions arise: can we save the Thebarton Theatre? What about the Queen of Angels Church? What will happen to the local businesses along South Road? But the question that very few people are asking is: why are we doing this at all? Why is spending $8.9 billion—that is billion with a 'b'—of taxpayers' money a good idea? I mean, after all, we know that there is no-one homeless, there are no schools crying out for resources and there are no environmental projects that need funding. Yet when the government looks behind the cushions on the couch, they find $8.9 billion for a short, 10-kilometre stretch of freeway. I think that shows how skew-whiff government priorities are.

One thing that has disappointed me over many years in relation to South Australia is that unlike other states we do not actually have an effective civil society movement questioning the building of roads. Certainly, in Melbourne and in Sydney—in Victoria and New South Wales—they have long-established groups that have opposed the construction of massive freeways and in particular private toll roads. Those groups have been active for many years.

In South Australia we have not had such a civil society organisation. In fact, when it comes to public commentators there are very few people who are prepared to put their head over the parapet and question the orthodoxy that building freeways is good for a society. In fact, one of the few critiques I could find was from someone who I had been known to disagree with in the past but I am on the same page with this time, and that is Matthew Abraham. He is well known to all members as a former presenter of the breakfast radio show on the local ABC station. He now writes columns for News Corporation papers, including the Sunday Mail.

I found Matthew Abraham's column from 17 August last year, so 2019. Basically, his article criticises the government process of commissioning business cases for various projects. He criticises that process and then goes on to say, 'Well, here is a business case: don't do it!' in relation to the north-south freeway. He says:

Can we just stop and take a deep breath, please?

This is meant to be a fresh new Government—

remember, he was saying this a year ago—

can't it come up with a fresh plan to fix Adelaide's congested road network before blowing $5.4 billion on just one road?

I mention that that $5.4 billion has now expanded to $8.9 billion. Abraham goes on:

Not only does this section weave past heritage properties such as Thebarton Theatre, it runs like a river of potholed asphalt through a canyon of small and big businesses.

Two big fat lies sit at the heart of the entire South Rd project. The first is that it is a 'congestion buster'—to use the latest mantra...But big new roads don't bust congestion, they attract congestion. Is Sydney any less congested for the untold billions it has spent on motorways and tunnels?

The second lie is it will be a 'non-stop motorway'. Maybe we journalists should stop parroting this line, direct from the Government's spin doctors.

He continues:

The money might eventually make it a continuous motorway but that’s not the same as non-stop.

The north-south corridor will be about as 'non-stop' as the non-stop South Eastern Freeway, the non-stop Southern Expressway or Sydney's non-stop Cahill Expressway.

Peak-hour truck crashes and multi-car pile-ups on mega-roads are frequent and often lead to tremendous delays.

Besides, the north-south corridor isn't being constructed primarily for motorists. It's a trucking route. That's why the Commonwealth kicks in such big bickies.

Once completed, South Rd will be a B-double magnet. Trucks will roll down the South Eastern Freeway and, rather than turning right on to Portrush Rd, they'll keep on rolling down Cross Rd to tap into all that pristine South Rd tar.

One way to bust congestion is to stop Adelaide from becoming so congested.

I will leave Matthew Abraham's comments there, because the points that he is making have been made many times before. When it comes to freeing up roads for freight, you need to look at what traffic is causing the congestion. We all know, because most of us spend most of our time in Adelaide, that the vast bulk of congestion is single-occupant cars going to work, taking kids to school, going to university—single-occupant cars. That is the bulk of the congestion.

If you were serious about freeing up road space for trucks, you would look at the problem—single-occupant cars in peak hour—and you would look at: how else could we transport people around? What other alternatives might there be? Public transport, for example. There is an idea. But, no, the government has this notion that freeways are the solution to busting congestion.

The Abraham article that I was referring to before goes on to talk about GlobeLink. Other members have referred to that. That is now an abandoned project, but that is not to say that there were not parts of it that had merit. The part of it that had merit, as far as I was concerned, were not the new airport—I mean, that had whiskers on it—but diverting freight around Adelaide rather than through Adelaide made eminent sense.

We know that the vast bulk of rail traffic and freight, for example, which winds its way through the narrow Hills alignment, is not actually bound for Adelaide, it is bound for places further on. Yet, because there is no way around Adelaide, all that traffic goes through our city. It is similar for road traffic as well, so much of it goes through Adelaide that does not need to.

What Matthew Abraham and others have said for a very long time is that traffic expands to fill the available space. Just like empty cupboards in your home soon fill—I do not know anyone who has an empty cupboard at home—the junk expands to fill the available cupboard space you have. It is almost a law of physics: traffic expands to fill the available space. What is my evidence for that claim? Travel to any major city with your eyes open and you will see that congestion is a live issue regardless of how much jurisdictions have spent on freeways and on so-called traffic solutions.

But if members are not prepared to take the anecdotal evidence acquired through their own experiences, I will give you a report. People like to see authoritative reports. One that I have quoted in the past is a very influential report. It is now 26 years old. It is the United Kingdom royal commission into transport and environment, and its chief recommendation was: stop building new freeways; they do not work. Twenty-six years ago, the royal commission in the UK said, 'Stop it! Just stop building these new roads. There is no evidence that they reduce congestion.' The New Scientist magazine at the time, back in 1994, said the following:

The (royal) commission derisively refers to the department of Transport's philosophy on roadbuilding as 'predict and provide'. Present forecasts are that road traffic will roughly double over the next thirty years. The [Department of Transport] argues that this justifies its £19 billion roadbuilding programme. The commission says that no practical programme of road construction can cope with this scale of growth, a fact that 'destroys the rationale of the predict and provide perspective'. Congestion will get worse however many roads are built.

The (royal) commission points out that building roads itself generates traffic. One estimate is that 40 per cent of the traffic on the M25, London's orbital road, was generated by the new road.

That experience is universal in cities, whether it is Los Angeles or Sydney or anywhere else, cities that have tried to fix congestion problems by simply building bigger and more roads.

I appreciate that I am a little bit on the outer as one of the very few critics. Obviously, I do not include my colleague the Hon. Tammy Franks, who coined the phrase 'South Road super waste' for another part of the project. I do despair sometimes in politics that there are so few members who are prepared to actually look at the bigger picture of our urban environment and how we can make it better. Freeways do not make urban environments better.

That segues into the second issue that I wanted to talk about very briefly, and that is the Treasurer's proposed new road user charge on electric vehicles. This is an item that did not have a very big number written next to it in the budget. It was a very small budget item that was not proposed to raise very much money at all. I do not think the Treasurer predicted it would get quite the backlash that it has, not just in this state but around the nation.

The Treasurer, at the time, whilst he did not name the other jurisdictions, predicted that other states would get on board with this idea and we know that New South Wales and Victoria are now talking about it as well. But the reaction in the community has been quite remarkable because I think the community is smarter than a lot of the policymakers in government. That is, most Australians recognise that if we are serious about climate change, the future of transport will not be the internal combustion engine. Petrol and diesel vehicles are on their way out.

I refer to that radical greenie Boris Johnson in London who has, just in the last few weeks, announced they are going to ban the sale of internal combustion engine cars from 2030. That is only 10 years away. You are not going to be able to buy a new internal combustion engine light vehicle (cars and small trucks) in the United Kingdom—ban them. Most jurisdictions now realise that the writing is on the wall and that the future will be electric.

That has a number of implications. The first implication, obviously, is in relation to climate change, the second is in relation to local air quality, and they are probably the main two aspects that conservationists in particular get excited about when we talk about electric cars. An electric car powered from a grid that is primarily renewable energy sourced will have a much smaller carbon footprint. People often say, 'But if all your electricity is coming from burning coal and you fuel your electric cars that way, well, there is still a benefit rather than burning petrol and diesel.'

We know that the electricity grid is slowly becoming a renewable energy grid, which means that all the appliances, including cars powered from that grid, will have a lower carbon footprint. We know also that there are no localised emissions from an electric vehicle, no particulate pollution, no sulphur dioxide or nitrous oxides or any of those other pollutants that we associate with air quality problems, so electric cars are recognised as a good thing. The question people are asking is: if that is a direction we need to head in, why is it that we are putting a new tax on something we want more of?

I have to say that I first studied economics in high school in 1976. I have a degree in economics from the late 1970s, early 1980s, at Melbourne University, and one thing I learnt very early on in my career is that the idea of taxing things we want less of and subsidising and promoting things we want more of was actually a really sound way to manage an economy. Why do we tax things we want more of? If we want more electric cars, why do we not yet have a proper system of subsidies and incentives for people to take up this technology? Why are we taxing it instead?

I know that the government and others who support an electric vehicle tax say, 'It will be at a fairly low rate and it won't actually raise that much money, but we'll get in early while there are hardly any electric cars around,' and somehow that makes it okay. What they have missed is the disincentive that that will impose on the market, because the market is not necessarily rational in terms of counting every dollar and people are not thinking, 'Yes, there is this new electric car tax, but it's probably less than other taxes I'll have to pay; therefore I'll still buy the electric car.'

The experts are saying that, once you have gone down this path of an exclusive electric vehicle tax, people will be nervous about the rate at which it will be applied, they will be nervous about its future and they will think, 'Why would I spend $10,000 more on an electric vehicle when it might be safer just to buy a regular petrol vehicle for now and I'll have a look next car. Maybe next car will be an electric car.' That is the way people are thinking. It is not about the amount of money it will raise: it is about the message it is sending to the industry.

I mentioned Boris Johnson before. Some nations are already at a point where electric vehicles are dominating sales. Norway is the classic example: more than half of the new cars being bought in Norway today are electric vehicles. I was in Sweden a few years ago. Government policy there favoured electric vehicles to the point where, if you own a taxi and you want to operate out of the airport, forget it unless you are electric. That was their rule: only electric taxies are allowed to service the airport. Tell you what, the taxi companies got on to that pretty quickly—electric vehicles—because the airports are a very lucrative market. A lot of jurisdictions are promoting electric vehicles; South Australia is proposing to tax them.

The other point I would make about Scandinavian countries like Norway and Sweden is that they do not have anything like the renewable energy potential that we have. They are not the sunniest places year round. They have snow, cold winters, cloudy days. Australia has massive renewal energy potential, yet because of a lack of government incentives and proper government policy you can almost count the number of electric vehicles in South Australia without taking your socks off. There are so few electric vehicles, and that is, I say, entirely a result of the vacuum in government policy.

The other point that the Treasurer and others make is that electric vehicles, because they do not use fossil fuels and therefore do not pay fuel excise, are somehow squibbing their responsibility to contribute to roads. There are a couple of things we have to say about that. The first thing is that it is a convenient myth, which the government and I think other groups like the RAA often portray, that somehow these fuel taxes are hypothecated to road infrastructure, fixing roads or building new roads. They are not: they are part of consolidated revenue.

We also have the situation where the money from fuel excise is raised at the federal level and most of the spending on roads is done at the state level. It is not hypothecated. The body primarily responsible for collecting that tax is not primarily responsible for building roads. Of course I know that the federal government, because it has a greater capacity to raise revenue, is handing large sums of money across to the states, but this is not a hypothecated tax.

I note the Australian Electric Vehicle Association put in a submission to the fuel excise, electric vehicles and federal-state taxation review that was undertaken at the federal level earlier this year. They made the point that, as I have just said, fuel taxes are not hypothecated to roads. They made the point that, as a source of revenue, fuel taxes have been in structural decline for a long time, and that is largely not as a result of fewer cars but cars being more efficient. The state fleet vehicle that I lease I think uses four litres of petrol per 100 kilometres. It is a hybrid.

I think the average six-cylinder car uses probably 11, 12 or 13 litres per 100 kilometres. Cars are more efficient. They are using less fuel and they are paying less fuel excise, even though there are more cars. The Electric Vehicle Association knew that there was going to be a need at some point to address a declining source of revenue from fuel excise. The question is whether, in the case of that declining revenue, it is appropriate to tax one type of vehicle—environmentally clean electric vehicles—to somehow make up the shortfall. Clearly, there are other approaches.

To their credit, a lot of the electric vehicle organisations and a lot of people in the community accept that road user charges may well be a legitimate form of taxation into the future, but what people are not prepared to accept is that it is applied only to electric vehicles. That is the problem. When electric vehicles become the dominant form of road transport, maybe a kilometre-based road user charge might be appropriate. It would apply to all road users. But when it is applied only to electric vehicles, it is seen as unfair and sending the wrong message to an industry that we are trying to grow.

The other obvious point that anyone who has studied transport economics would know is that, if we were serious about recovering from road users the cost of damage that they cause to roads, we would be charging trucks hundreds of times more in fuel excise than they are paying and we would not be giving most of it back, as they do for certain industries that get a rebate on their fuel excise. So it is not hypothecated, it is unfairly applied and, if we were to say that we want electric vehicles to pay a special tax, then that is unfair.

I would be very surprised if it gets through this parliament when the bill is eventually presented to us sometime next year. I think that should be a shot across the bow not just to this government but to the other states that are thinking about going down this regressive path. It is the wrong type of taxation to be introducing now, but it is something that we should keep an eye on into the future.

They are just two issues out of this current state budget and the appropriation of our taxes to projects that the government has deemed worthy. I think that these two example show that the government's priorities do need to be reviewed, and I look forward to seeing further debate, broader debate, about the nature of our cities, the way we think Adelaide should develop and whether as a society we really are happy for what I think is now a third of the physical area of our city to be devoted exclusively to cars.

If we can address that issue, if we can address the proportion of our metropolitan area devoted to cars, we will end up with a more compact and more vibrant community that actually functions better at so many levels, and where infrastructure is not so stretched and ultimately so expensive.

The Hon. T.T. NGO (12:00): There is no doubt that the next four years will be challenging for South Australians. Yet, South Australians have done what has been asked of them, with almost everyone putting the needs and lives of others in the community ahead of their own so that we can all beat this dreaded and potentially deadly virus together. I thank all South Australians for taking care of one another in this confusing and bleak time for the world.

I also recognise the tireless work of our officials—Mr Grant Stevens, SA's Commissioner of Police and State Coordinator, and state Chief Public Health Officer, Professor Nicola Spurrier—who have led the state while the Liberal government takes a break. Now it is for the government to reward that discipline and give our state vision, direction and leadership. We need ingenuity, energy and opportunity to help us all rebuild our economy and return optimism to our state after the ravages of the coronavirus pandemic.

We do not need recycled headlines from governments past and yesterday's news, although I commend the government for now seeing the value of Labor's infrastructure projects, so good they must be highlighted again just a few years later. Since March 2018, this Liberal government has used our former Labor governments to blame and shield themselves whenever the road gets rocky. Now, almost three years later, it is time to stop the blame game and step up to the plate. I truly hope for an injection of this government's own ideas for getting the state back on track. Although, that said, when left to dream, the team opposite us delivers a controversial, ill-conceived and self-defeating initiative.

When I look at the future for my own children, and the children of the many people I represent, I want them to stay in South Australia and be a part of the great community and place that many young families now call home, but I worry about the legacy of debt the Marshall government will leave for our future generations. The state does not want a government that leaves its promises for a future government to commit to and deliver, especially given the unemployment rates that are plaguing this government.

When I look behind the shine and glitz of headlines about tradie boosts and building what matters, I see a government that is good at trickery and illusion; a government that tells us all about the plans it has, the plans it has made for someone else to deliver and pay for. This is a budget that is good for the media and great copy and headlines for a day or two, but I look forward to the next Labor government returning to deliver a vision and direction for the state. However, given the state of the economy Labor will inherit, I foresee a great need for more economic stimulation to increase productivity and help pay down the debt which I believe will be left by the Marshall Liberal government.

The Hon. R.I. LUCAS (Treasurer) (12:05): I thank honourable members for their contribution to the second reading of the Appropriation Bill debate. I do not think there is any doubt that the government's budget, given the size of the spending projects and programs, has been warmly regarded by a much broader group of stakeholders than what might otherwise generally have been the case for any budget, whether it be a former Labor government budget or a former Liberal government budget.

As the budget speech outlined, it is what it is. All governments have significantly increased their debt and deficits. New South Wales and Victoria, in their recent budgets, they have budget deficits I think somewhere in the order of $140 billion to $180 billion by the end of the forward estimates period. I think the Queensland budget, brought down only this week, increased the level of their total non-financial public sector debt to a number close to $90 billion, and the commonwealth debt is close to a trillion dollars.

They are very large numbers but as the budget speech outlined—and I will not labour the point—the Reserve Bank Governor, the federal Treasury Secretary and virtually every economic commentator has urged stimulatory fiscal response from state, territory and federal governments, and all governments have responded in kind by significant increases in infrastructure programs in particular, and short-term stimulatory activity by way of tax relief and the like.

One point I have made for many years, I guess, but continue to make even within the construct of this particular budget is that this government has not and will not lose its laser-like focus on what is ultimately, in the short, medium and long term, the key criterion for driving economic growth and jobs growth in the state. That is, for a small regional economy such as South Australia's, the only sure-fire way of long-term sustainable economic growth is that the costs of doing business in our state have to be nationally and internationally competitive.

Short-term—if we can define two years as short term—stimulus activity and massive increases in publicly-funded public infrastructure all have a role to play, but, ultimately, long-term sustainable economic growth and jobs growth cannot forever be sustained by those sorts of spending programs over the medium and the long term. In the end, economic growth and jobs growth is only going to be generated by a healthy public sector but, more particularly, a private sector which is growing its job base and growing the business in terms of goods and services that it produces not only for the local market but for interstate and overseas.

We cannot see a long-term change to what we saw over the last 10 or 15 years, where in South Australia our economic growth was around about half the national average, our employment growth was around about half the national average and our population growth was around about half the national average. That is a sure-fire recipe for long-term economic decline such as we have seen for a number of decades.

This government unashamedly pursues the narrative of trying to ensure that the costs of doing business in this state are nationally and internationally competitive. Whilst hotly debated at the time but now widely supported by the majority of stakeholders, the comprehensive land tax reforms implemented on 1 July of this year—which, together with some other short-term stimulus activity will mean a reduction in land tax collections over the next three years of more than $230 million and a reduction in land tax collections this financial year of over $100 million—are all part of a long-term initiative to be competitive in the land tax area.

That is, a top land tax rate now of 2.4 per cent instead of 3.7 per cent means that many—not all but many—of the former critics of the government's proposals, having looked at them, are now taking a completely different perspective on them and, in contact with my office and other members' offices, are indicating their preparedness now to further invest in commercial property in South Australia.

I put on the public record a couple of major national investors who visited with me and with the government in the last month, who are indicating that they are now looking at investing in commercial property in Adelaide, as opposed to the western suburbs of Sydney and Melbourne. To be fair, that is a combination of a competitive land tax rate of 2.4 per cent instead of 3.7 per cent but also the final implementation, over three years, of the abolition of stamp duty on commercial property transactions in South Australia, together with what they see as the future growth prospects in South Australia under the new government, particularly in areas like defence, shipbuilding, space, cybersecurity and the like.

So that is on the land tax front. On the emergency services levy front, there is a massive reduction of $90 million in the emergency services levy. There is the abolition of payroll tax for every small business in this state under $1.5 million permanently. As a short-term stimulus, as you know, this budget abolishes payroll tax for every small business in this state under $4 million for a 15-month period from April this year through to June next year. But long term, there is the abolition of payroll tax for all small businesses in South Australia with payrolls of less than $1.5 million.

If we move into the area of utilities charges and the like, or government costs, my congratulations go to former Labor minister John Rau, whose reforms to workers' compensation we supported in a bipartisan way. We have now seen the premium rate of just under 3 per cent reduce this year down to 1.65 per cent. That is under pressure because of some decisions taken in the last year of the former Labor government; nevertheless, a premium rate moving from just under 3 per cent to 1.65 per cent is a massive improvement in terms of the competitiveness of workers' compensation costs in our state.

This budget continues the narrative, as I said. We have reversed the horrendous decision of the former Labor Treasurer and the former Labor government to artificially ratchet up the regulated asset base of SA Water. In reversing that particular decision, households in South Australia are paying on average $200 less a year in terms of their water bills. Businesses are paying on average $1,400 a year less in water bills. Some businesses, high-volume water users, are paying up to $1 million a year less in water costs this year compared to last year.

There is budget cost to that, which we have had to absorb willingly in this particular budget. That is, we have reduced dividends and income tax equivalents coming from SA Water into the budget of somewhere between $200 million to $250 million a year, so close to $1 billion over four years. That is a reduced cost for business, it is reducing the costs of doing business in the state and it is reducing costs for households. It was a nice little earner for the former Labor government. That is why they did it. They artificially ratcheted up the asset base. They forced every household and business in the state to pay massively increased water costs because they wanted the money to come into the budget for them to spend.

Again, it is a key component of the cost base of business being reduced. The job killer in South Australia over the last 10 years or so has been electricity prices. My credit to my colleague the Minister for Energy and Mining on the reforms that have been introduced in terms of grid-scale battery storage, household battery storage, together with the further encouragement of the renewable energy industry. Allied with a key policy differential between the government and the alternative government is supporting what will be a key piece in terms of the jigsaw puzzle of keeping prices down in South Australia—that is, the interconnector from South Australia to the Eastern States through the Riverland. We are hopeful that in the next month or so the national regulators will take the next step in improving that second interconnector into South Australia.

The Labor Party in South Australia are trenchantly opposed to that. They want to see us continue to be subject to the vagaries of lightning strikes on the interconnector or bushfire impacts on the interconnector or rogue union strike action in Victoria on the interconnector, as we have seen over the last 20 or 25 years on occasions, which in essence completely islands us from the national market and from the Eastern States. It removes the protection we have that when we need power desperately we can import it from the Eastern States. Equally, as we have on a majority of occasions now a surplus of renewable energy, it gives us the capacity to export energy to the Eastern States to help keep prices low in the national market but also to provide system security for us all within the national market.

It just seems common sense to anyone other than obviously the opposition that having two interconnectors to give you the insurance or the protection against one of them going down for whatever reason is clearly a stabiliser in terms of the national market, a stabiliser in terms of the security of supply in protecting against blackouts but also a stabiliser in terms of price security. It is a key component of providing long-term reductions in electricity prices. As the minister has highlighted, already in the first two years the average household bill for electricity in South Australia is $158 this year cheaper than in the last year under the former Labor government.

Right across the board, prices are being reduced for households and for businesses. The people of South Australia understand that point and acknowledge the point that there have been significant reductions. As we have highlighted on any number of occasions, the average two-person, two-child household in the metropolitan area is paying about $800 a year less per household this year compared with the last year under the former Labor government. That is a very significant delivery on the promise we made to lower costs in South Australia.

The second point that I would make is in relation to the issue that the Hon. Mr Parnell raised. This was in relation to the north-south corridor. This particular project is a no-brainer in terms of it being the most important economic infrastructure project in South Australia at the moment. It was recognised by the former Labor government, although they fell out of love with it towards the end of their period. It is recognised by this government. It is recognised by industry and stakeholders.

The Hon. Mr Parnell misunderstands—or does not understand, rather than misunderstands—the importance of this particular project. The Hon. Mr Parnell says, 'Instead of spending the money, we should spend the money on public transport.' For the life of me I am not sure how we are going to put the massive amounts of freight that we move from north to south or from country areas to the port or whatever it is on the back of buses running up and down the current South Road.

The Hon. Mr Parnell has a constituency and good luck to him, but it is clearly not a constituency which looks at how we actually grow jobs and grow the economy in South Australia, how we move freight and move freight quickly, and how we reduce the costs for industry in South Australia so that they can compete and compete better.

As we look at reducing the costs of doing business in our state, economic infrastructure projects with positive BCRs—benefit-cost ratios—are few and far between, sometimes, in terms of public infrastructure. This particular project has a very significant positive benefit-cost ratio, and I am sure that will be confirmed, in the final business case, by the middle of next year. So it is an essential piece of economic infrastructure. It has been recognised by state governments, Labor and Liberal, over the years and has been recognised by federal governments, Labor and Liberal, over the years, which is why the federal government is partnering with the state in terms of delivering this particular project.

The final point the Hon. Mr Parnell raises is in relation to the new road user charge for electric vehicles. Let me put a marker down in this particular speech, and that is that after the Hon. Mr Parnell has left this particular parliamentary arena, he having already indicated his intentions to retire, and after I have left—I having already indicated that I will be leaving, health willing and God willing, in March of 2022—the road user charge for electric vehicles not only in South Australia but nationally is a no-brainer and will be delivered, irrespective of the views and the plaintive cries of the Hon. Mr Parnell and those who might succeed him.

As I said, this is not just a Liberal government initiative. Comrade Tim Pallas, the Victorian Labor government Treasurer, is even further advanced than we are in South Australia: he has outlined the specific details of their road user charge in Victoria. He and I are in furious agreement that this is inevitable. It is a no-brainer.

It will be delivered at some stage within the states and territories or nationally, and there is a huge incentive for state and territory governments, as has been discussed at the Board of Treasurers for many, many years, as I have indicated before; that is, this is an opportunity for state and territory governments to take control of a revenue source, a funding base, which, albeit very small, as we have indicated in the budget speech, over the forward estimates period, will be in the long term a significant revenue source as it replaces fuel excise, currently collected by the federal government at the federal level. If state and territory governments foolishly do not deliver on this particular initiative it will be delivered by a federal government and a federal parliament, and again the funding source will be controlled by federal governments in terms of its application.

What I will say is that it does make sense—this is why this issue has been discussed at the Board of Treasurers—for there to be national consistency in the implementation of a road user charge. As I indicated in the budget speech, that is the reason we had been in active discussion with at least, as I said in an understatement, one or two other jurisdictions in the consideration of the details of the implementation of the road user charge. In the coming weeks, if not days, there will be further indication at the federal level of a growing tide of support for the implementation of a road user charge for electric vehicles.

In relation to the road user charge in this particular budget, the reality is that this government has already committed to I think $18 million or $18.3 million worth of infrastructure and supports, a significant part of that being on charging infrastructure throughout the state. The two issues that are most often raised in relation to whether people pick up the currently increased cost of an electric vehicle are, first, the increased cost at the moment.

It is cost prohibitive for many South Australians, unless you are at the high end of the income-earning market in South Australia. That is why there are so many doctors and other wealthy professionals who are the current owners and users of electric vehicles. A lot of people who are in strugglesville cannot afford to purchase an electric vehicle, so they pay the massive fuel excise on their ageing vehicles, because that is basically what they can afford.

The two issues that inhibit the take-up of electric vehicles are, first, the prohibitive cost at this stage of the initial purchase price, but the second issue is a concern about charging infrastructure throughout the state; that is, what is the duration of the trip that you can get? So this government is tackling this one area, and that is where I reject the view of the Hon. Mr Parnell, who says that this government does not have any policy in relation to this; that is not correct.

An electric vehicle plan either has been released or is soon to be released by the minister, but an important part of that is already funded in this budget, and that is supporting the development of charging infrastructure right across South Australia. You need to get those structures in place. We are putting our money where our mouth is. There is $18 million worth of funding commitment in this particular budget.

As I said, even if this legislation for a road user charge were to be implemented from 1 July next year, Treasury is estimating that on the current number of vehicles that we have in South Australia we would be collecting no more than about a million dollars a year. So we are spending more than $18 million and we might collect no more than about $3 million over the next three years from the road user charge.

Most of the research is showing that, of the two, the biggest component is the up-front cost of the vehicle. There is a lot of research, which I will be happy to put on the public record at another time, from eminent groups indicating that they believe that within about five years—so around 2025-26—with technological improvements and the like, we will see the cost of electric vehicles plummeting much, much closer to the cost of an equivalent vehicle in Australia.

That will inevitably occur, as happens with any new technology. For those of us who have seen all the whiz-bang things like televisions, electrical equipment and the like, there are massive costs in the early stages and then plummeting prices as the technology improves, competition increases, etc., and all of the experts—and this is not my estimation, but all the experts are feeding into the governments, not just us but the Victorian Labor government as well, and others, that we will see a much more competitive price for the vehicle.

That is the big driver in terms of people, because a lot of people will want to pick up the option of an electric vehicle if it is competitive for them to do so. The price will come down. If the cost of an electric vehicle at the moment is double the price of a vehicle that the rest of us might be driving, it is not the role of taxpayers and the government to subsidise that to the tune of $30,000 or $40,000 or $50,000 in terms of the purchase price.

Some governments have token or marginal reductions in registration of $100, or whatever it is, and this government may well look at those sorts of alternatives, but given the large-scale difference between the up-front cost at the moment, a marginal registration reduction of $100 or a couple of hundred dollars is not going to move the dial. What is going to move the dial will be technological improvement and the cost of the vehicle from the manufacturer actually plummeting or dropping significantly.

As I said, it will be a debate for early next year when the legislation is introduced but, as I said, let me put the marker down now: whether the legislation is successful or not, a road user charge for electric vehicles will be implemented in South Australia and nationally. As comrade Pallas and myself and other commentators have indicated, it is a no-brainer, it will occur, it has to occur in terms of being able to replace the fuel excise in terms of helping to fund both new road construction but also essential road maintenance in the future.

With that, I thank honourable members for their support of the second reading of the Appropriation Bill, because in the end it will allow us to continue to pay our hardworking public servants for all the hard work they do, and continue to do, and we thank them for it.

Bill read a second time.

Committee Stage

Bill taken through committee without amendment.

Third Reading

The Hon. R.I. LUCAS (Treasurer) (12:34): I move:

That this bill be now read a third time.

Bill read a third time and passed.

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