The Hon. Rob Lucas MLC

The Hon

Rob Lucas MLC

Treasurer

Speeches

Supply Bill 2016

Monday, 7 November 2016

The Hon. R.I. LUCAS ( 16:17 :15 ): I rise on behalf of Liberal members to support the second reading of the Supply Bill. The Supply Bill, as members will be aware, is a mechanism each year to provide appropriation of just over $3 billion to enable the continued payment of public servants and public services until the passage of the Appropriation Bill some time later in the year—and given that the budget has been put back we understand until now early July, although that might not impact on the final passage of the Appropriation Bill through the parliament, the Supply Bill nevertheless makes provision for the ongoing delivery of public services in South Australia; therefore, it is unexceptional and we support it.

The Supply Bill is one of the few opportunities, particularly for members of the Legislative Council, to speak on any issue that might in any way directly or indirectly be funded by the public purse: a dollar here or a dollar there as part of our 2016-17 billion dollar annual budget is funded in some way by the Supply Bill. It has traditionally been treated with great flexibility. On occasions, I think some members have sought to restrict the length and breadth of the debate, and certainly I support the notion that it is one of the few opportunities that Legislative Council members have had over the years to be able to speak on a wide variety of issues and that convention, in my view, ought to be continued and protected.

Having said that, I want to address some issues in terms of the financial and economic issues that confront the state of South Australia. The federal budget that was recently brought down had some good news for South Australia. Without putting all the detail on the public record, the total payments to South Australia from the federal budget next year, compared to this financial year, increase by just over $1.1 billion. To be precise, total federal payments to South Australia next year will actually be $1,137 million more than for this year. By 2018-19 the federal budget shows the total payments will actually be $1,756 million more than for financial year 2015-16.

What we are seeing is that next year's payments, compared to this year, jump by just over $1.1 billion, and by 2018-19, if compared to this year, they actually jump by over $1.7 billion. That comprises both tied grants and completely untied general payments such as the GST. The jump in GST revenue is extraordinarily significant when one looks at just this year compared to next year, a jump of more than half a billion dollars in GST payments to South Australia from the commonwealth.

We often hear from the Premier and the Treasurer that, yes, we are getting this extra money from the commonwealth government, but it is tied up in health or it is tied up in education or tied up in environment specific purpose payments. But the reality is when one looks at the federal budget that, yes, there have been increases in the specific purpose payments, but there have also been big increases, and are going to be big increases, in the GST payments to the state, which are completely unencumbered and completely able to be spent at the discretion of the state government.

So the state government makes the decisions within its own spending priorities as to how it wishes to spend the money. That disproves the essential premise that the Premier and the Treasurer have often proclaimed, that in some way any additional monies that we get from the commonwealth are tied into particular areas. Yes, a proportion is tied to specific purpose payments but a very big sum of money comes in the GST, which is for the discretion of the state government to spend.

What we also saw in this federal budget was a further increase in health spending. The debate about health spending in South Australia and health contribution has been mired in claims of what the extent of any cuts or savings might have been. I noted this morning on ABC that the ABC Fact Check, which the Labor Party often proclaims is the independent source of factual information on controversial issues, completely discounted the position of the Premier and the Treasurer in South Australia in relation to health funding.

Essentially the argument is relatively simple, although it is a complicated argument to prosecute in eight-second grabs on television. The essential argument which the ABC Fact Check highlights has two points, the first of which is that health funding from the federal government is continuing to increase. This is a discussion point that the state government has utilised on occasions as well, and the federal government utilises on occasions as well, that is, in absolute terms, health funding continues to increase.

The extent of what is claimed to be a cut or a saving is whether it is increased at the rate that was either agreed or promised. The situation is that health funding does increase, it does not actually get cut. But it might have been cut, or there might have been savings made from, a level of a previous agreement, that is, there might have been an even bigger increase in health funding that had been promised or committed and therefore what is known as the saving or the cut is a reduction in the level of the increase in health spending.

The ABC Fact Check said that, in essence, the position that the Premier and Treasurer in South Australia had been prosecuting was factually wrong. There have been increases in health spending, contrary to the claims that had been made by the Premier and the Treasurer. The other issue that the ABC Fact Check raised has been the subject of an argument between the federal government, federal opposition and various state governments as well, and that is that former prime minister Gillard had promised large, unfunded increases in health spending outside the forward estimates. The ABC Fact Check said—and this is not the Liberal Party saying this—that was essentially an unfunded promise made by a former prime minister.

It was surprising for me to hear that coming from ABC Fact Check, because they almost entirely mirrored the position that federal Treasurer Morrison, Prime Minister Turnbull and, prior to that, former prime minister Abbott, had been prosecuting for a number of months, if not years. That is, in essence, saying that former prime minister Gillard promised the world but did not fund it, and what was being talked about was a reduction in the level of increase in health spending. I can understand both sides of this particular argument, but, as I said, the ABC Fact Check has come down. Because the Labor Party are such firm supporters of the ABC Fact Check, as the independent source of advice on—

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

The Hon. R.I. LUCAS: I am sure they would not want to cherrypick it, given the statements that have been made in this house today and in recent days. I am sure they would not want to cherrypick the ABC Fact Check advice. The reality is that we are seeing increases in total funding coming to South Australia.

In the specific purpose payments, we are seeing another increase in health funding in this budget. The state government will say, 'Well, look, it's still not as much as Julia Gillard promised us.' Nevertheless, it is a further increase over and above the increase that prime minister Abbott and the Abbott government had promised. The Turnbull government have provided an ever further increase in specific purpose health payments to South Australia. In addition to that, we have this huge increase of over half a billion dollars next year, compared to this year, in GST, which we can spend completely on health if we wanted to, or on education, or on transport, or whatever it is. We in South Australia have to make those particular decisions.

The other general point I make in relation to the Supply Bill is on the recent issue of the privatisation of the MAC. There was a genuine discussion point as to whether or not the government's privatisation of the MAC was going to qualify for the 15 per cent asset recycle bonus—that is, for every billion dollars in an eligible privatisation, the commonwealth government would pay a bonus of $150 million to the state if you had eligible new infrastructure projects to spend that on. That was known as the asset recycle bonus fund.

As I said, the first question is: is it accepted as a privatisation or not, and how much of it is accepted as a privatisation? There was a genuine question as to whether this was a privatisation, because the MAC will continue, and there is an introduction of four new private sector competitors. Some of the money was actually taken out prior to the introduction of the private sector competitors, and the tender had finally concluded (that is, taken out of the MAC and put into the budget). Would that qualify for a potential asset recycle bonus?

There were also issues as to the way it was taken out. Some of the money was taken out as a dividend, and some of it was taken out as a retained surplus. There were genuine questions and discussions at the federal and state levels as to whether all of those payments—particularly given the advice former under treasurers had given to the Budget and Finance Committee—would be included in the calculation.

The reality is that, in the most recent Treasury appearance before the Budget and Finance Committee, the Under Treasurer reported that the commonwealth government had agreed that the MAC privatisation was accepted, it had met the qualification from the commonwealth as an eligible privatisation, and that all of the funding that was being taken into the budget had already been taken as a dividend or as retained surplus, and that those amounts that were still to be taken would qualify.

If that is the case, the estimates provided to me recently are that that potentially could be a total of somewhere between $2 billion and $2.5 billion being returned to the state budget. The Mid‑Year Budget Review I think already incorporates an estimate of about $1.6 billion, but, as I said, estimates provided to me from both industry and government sources indicate that it will be much more than the $1.6 billion; it will be at least $2 billion and possibly as high as $2.5 billion.

The 15 per cent potential bonus for that is, if it is $2 billion, at least $300 million extra, and if it is $2.5 billion it is $375 million extra that is available for job-creating infrastructure projects. Having got approval for the first stage of this, what the state of South Australia had to do was actually go to the commonwealth and say, 'Here is a new infrastructure project which will help create economic growth and jobs in South Australia, which we want to get a tick of approval for to spend our $300 million to $375 million on.' What the facts now show, from evidence in the Budget and Finance Committee and elsewhere, is that the state government started to play games.

The first game they played was they said, 'We won't come up with a new project. What we will actually promise to do, if you will give us this extra $300 million plus, is accelerate the completion of the Darlington project and the Torrens to Torrens project by six months.' They went to the commonwealth and said, 'We won't actually have a new infrastructure project, but we have two existing projects we are already funding. We want to spend this money on bringing forward the completion date from one particular date to a six-month earlier date.' Unsurprisingly, the commonwealth said, 'Who do you think we are? We didn't come down in the last shower. That is not an eligible project. That is not a new infrastructure project that is going to help create jobs and drive economic growth in South Australia. Go away.'

So, what Mr Rowse told the committee at his last appearance earlier this year was that the government then packaged together about $400 million worth of projects. That is why this estimate that I have put on the public record of $300 million to $375 million would appear to be in the right ballpark, because the Under Treasurer has conceded that he and the state made an application for $400 million worth of asset recycling bonus money to be spent on a variety of projects.

What did they try this time? Having been knocked back about accelerating two existing projects, they tried to repackage already announced projects from the 2015-16 budget in June last year and the Mid-Year Budget Review in December. They packaged together an extraordinary package of things, like already promised upgrades of school facilities, road maintenance, and the major events funding package, which is the package of money we give to whatever that body is—whether it is the Tourism Commission or Events SA, I am not sure of the exact title now—to pay half a million dollars to Liverpool Football Club (the Treasurer's football club) to come and play a soccer game here in Adelaide, or to the Rolling Stones, from that major events fund. That is not even an infrastructure project.

The Under Treasurer said, 'Well, I know it's not infrastructure but we argue that it is economic development.' But that is not what the asset recycle bonus fund said. It said that it had to be an eligible infrastructure project, and yet the state of South Australia tried to convince the commonwealth government to get funding for its major events funding package.

The fourth one was, again, the already announced transport project, the Northern Connector. Again, the same problem; it was an existing project like Darlington and Torrens to Torrens. Unsurprisingly, when the federal budget papers came down a few weeks ago, South Australia missed out completely on getting any of the asset recycle bonus fund. Two other states and two territories were listed as having received asset recycle bonus funds. South Australia did not receive a dollar. We checked with the federal minister's offices and said, 'Well, is there something in the pipeline? Is there more money coming?' and they said, 'No, we're about to go into caretaker mode and that's it,' and the federal budget papers make it clear that the asset recycle bonus fund was closed, and the unspent monies were returned to budget as a budget saving.

That is saying to us that the government, having taken the decision to privatise the MAC, and the government, having won the first part of the argument, that is, to qualify all of the money they receive as being an eligible privatisation project—so having completed the first tranche, the government started playing games with the second tranche in terms of trying to get funding for already existing and committed projects, some of which were not even infrastructure. But then what happened was that the federal government said no. They have now closed the fund, and South Australia missed out on somewhere between $300 million and $375 million in funding which could have been used for a new infrastructure project to help drive economic growth and create jobs in South Australia.

The Premier and the Treasurer have questions to be answered, because unless they can come up with some convincing response as to why they gave up $300 million to $375 million—and one other point I would make is that the Under Treasurer has put on the public record in the Budget and Finance Committee that any monies a state receives for the asset recycle fund (so if you got the $375 million) would be quarantined from the horizontal fiscal equalisation arrangements for the GST, so that is, it would not be that we would get $300 million to $375 million in recycled bonus funding, and then lose GST grants as a result of it. So the Under Treasurer was asked that question by the committee and he was quite clear that that was not going to occur.

It seems an extraordinary position, and only the Premier and the Treasurer can answer why this has occurred. It is a critical issue, because on the surface of it what it is saying to us is that through the financial mismanagement and incompetence of the Weatherill government, the Premier and the Treasurer in particular, we in South Australia have lost out $300 million to $375 million in funding for us to be able to help tackle the unemployment problem in South Australia.

I am sure there are one or two thinking members of the Labor caucus who, hopefully, will assist us in asking the hard questions. How could you have let this happen? What is the level of financial mismanagement and incompetence that exists at the upper levels of this government after more than 14 years? Is it just laziness? Is it incompetence? And, sadly, in relation to the Treasurer, is it just a simple issue of financial mismanagement and a lack of understanding of relatively simple budgetary and fiscal issues that relate to his portfolio? But only the Premier and the Treasurer can answer these questions, and answer them they must, in relation to those issues.

There were a significant number of other issues that I wanted to address in some detail, but I will only touch on them pretty lightly now. I will prosecute them at a different time. We have seen significant other financial mismanagement and waste right across the board. We are a state that is confronting the highest level of unemployment in the nation. No matter how the Treasurer and the Premier try to spin the issue, the brutal reality is that every month the unemployment figures come up and we are, sadly, Top of the Pops in terms of our unemployment. We have been looking at what it is the government has been doing, or seeking to do, in relation to tackling the unemployment issue.

Those members in this chamber have seen the completely inadequate response from the Leader of the Government in this chamber in relation to the Northern Economic Plan, and, sadly, his understanding of what is being done under the Northern Economic Plan is lacking, sadly lacking. There is a lack of urgency.

It is a plan which was launched in January. The $10 million Small Business Development Fund was launched in January, and, contrary to what the minister told the Legislative Council, applications will not actually open until 1 July. Small businesses will not actually receive funds until some time well after 1 July. Yet, we have a chronic unemployment problem in the northern suburbs already, as we are told, and the lack of urgency from the minister in actually getting action undertaken on a plan that has already been announced is very sad indeed.

Today we asked the question about the other big plank of the Northern Economic Plan, the $7 million Northern Adelaide Food Park. Again, when one goes to the PIRSA website, the Department of State Development website, government websites, there is no detail at all as to how that funding is going to be distributed, when the money will actually be given to businesses to help to try and create jobs in the Food Park. In fact, again, evidence taken from PIRSA at the recent Budget and Finance Committee made it clear that they still had not decided on how the $7 million was going to be allocated.

For the life of me I cannot understand how a government can get itself into a position where it announces a Northern Economic Plan, a $24 million plan, and it says we are going to have a $10 million Small Business Development Fund and a $7 million Food Park, and it has no idea at all as to what the guidelines will be for the development fund for small businesses or for the Food Park.

Surely to goodness, your governance systems, your governance structures, ought to be that if you are releasing and launching a plan which says it is a great idea to have a $10 million Small Business Development Fund, you have actually worked out how you are going to distribute the money, and you can actually start the plan straightaway, if you have a chronic unemployment problem in the north.

The same thing with the Food Park. If you are announcing $7 million to attract tenants to the Food Park, why on earth would you not have already agreed and decided on that before you actually launch the plan. The reason is that the government is really only interested in the announcement. It is interested in the packaging. 'You have to have a number, Premier and ministers.' 'Okay, we've got $24 million.' 'You've got to have a couple of titles in there.' 'We'll call one a Small Business Development Fund, because that sounds good, and we will call one a Food Park, because there is support for that at the local level, and we will put $7 million in it.'

Maybe a minister asked the question, 'Well what are they actually going to do and how are they going to spend the money,' and they say, 'Well, we have no idea, but we will sort that out later,' because the Premier and the Treasurer and the government are only driven by the press release. They want to go out there in January to announce a bold new Northern Economic Plan with $24 million in funding, and everyone assumes that something is actually going to happen. Here we are in almost June and you still cannot get a dollar out of the Small Business Development Fund. That will not start until July.

We still do not know, and the minister does not know. A month or six weeks ago, when I asked him the question, he said, 'Look, we are working on the guidelines for the Food Park and I will bring an answer back to the house shortly.' Today he is flick passing it completely, saying, 'I've got no idea whether there are guidelines'—not that he's working on them—'that's somebody else's problem, that's PIRSA's problem'. So, we do not know how that is going to operate.

That is the problem, sadly, after 14 years with this government. It is more interested in the announcement, the packaging and the plan—the saleable title: the Northern Economic Plan; the saleable title—$10 million small business development fund; the saleable title—a $7 million Food Park—but it does not give a continental about how it will actually operate or work, that can be done later on. There is no urgency, no hurry, no need to resolve these issues quickly. Too bad if there is chronic unemployment in the northern suburbs already, as they often tell us: the reality is that that is just left until afterwards. These are questions that members of the caucus should be asking of the Leader of the Government in this chamber, the Minister for Primary Industries, the people who are responsible for these catastrophes within government. You announce the funding, and then nothing happens.

We had the extraordinary position of the Investment Attraction Agency. The Investment Attraction Agency! Members of the Budget and Finance Committee who are with me at the moment, I can see the look in their eyes, because they know what is coming. The evidence we took about the Investment Attraction Agency was that they have $15 million to give to businesses in South Australia. We asked them the question: there is $5 million this year, how much money did you spend on administering the $5 million? Then we asked: you have $10 million next year, how much money are you going to spend on administering it? To put you all out of your misery, they are spending $13.6 million on 40 full-time equivalent staff to distribute $15 million in grants to businesses!

Now, who is in charge of that program? Surprise, surprise, minister Hamilton-Smith! Why are we not surprised? A man certainly lacking in any financial competence or management capacity at all is demonstrating it adequately, a minister who is more interested in empire building, in having mini-bureaucracies. Because he does not control the whole of the Department of State Development (there are about five ministers involved in that department) what he is doing, having been given responsibility for that, is building up his own mini empire in it. He is taking it over from within. It is like a cancer growing within the Department of State Development under his control, the Investment Attraction Agency.

He appoints a highly paid chief executive, and they now are going to have 40 full-time equivalents. They have already spent more than half the $15 million on two businesses. So, two businesses have got $8 million out of the $15 million, so there is only $7 million left to be distributed, and you have 40 full-time staff. You have hot and cold running staff through the Investment Attraction Agency, under the control of minister Hamilton-Smith and the chief executive, doling out money at a cost of $13.6 million. They have gold-plated taps, gold-plated desks or whatever in the Investment Attraction Agency.

This is what your government is doing. This is what you do when you hand over control to carpetbaggers, to people who sell out their principles from one side of the political spectrum to the other for the price of being a minister and having a white car. A mini-empire is being built within that Department of State Development, and the only way it will be justified now is that they will have to give him more money, because it looks terrible if you are spending $13.6 million to spend $15 million. They will not do the right thing and ask, 'Minister Hamilton-Smith, why on earth have you got 40 staff and $13.6 million to distribute $15 million?'—that is the obvious question—'Let's get rid of three‑quarters of those staff that you have just taken on.'

The Hon. J.S.L. Dawkins: Get rid of the minister!

The Hon. R.I. LUCAS: Get rid of the minister as well. 'Let's get rid of those who you've just taken on, and we'll use the rest of the agency, together with a few number of extra staff who you've got.' But you have other ministers in other agencies. They must look at the hands-off attitude to ministers like minister Hamilton-Smith and their departments and the programs like the Small Business Development Fund and others. They must just shake their heads, surely, and say, 'What level of incompetence am I sitting around the table from? How on earth do we support and protect ministers who perform in such a financially incompetent way that they can spend $13.6 million on distributing $15 million?'

What is the solution going to be? Not to cut it back and solve the problem. Cabinet is going to be asked in the budget discussions, the ministers sitting around this table, 'We're going to have to give minister Hamilton-Smith more money to distribute, so the equation is going to look a bit different.' It will be $13.6 million to distribute $30 million or something, so that percentage will change a bit. Other ministers are going to have to take further cuts and savings in their budgets because ministers like minister Hamilton-Smith, minister Maher and others are incapable of actually managing their budgets, and the Premier and the Treasurer, sadly, are lacking the authority or the willingness, or both, to pull in the reins and do something about what is going on in some of those departments.

We have seen some of the other programs, such as the Unlocking Capital for Jobs program, the $50 million program. We asked the question. This was a big announcement in the media; a big announcement, 'We are going to unlock capital, we are going to provide assistance to businesses to create and grow jobs.' We asked the person responsible for that, 'How many applications have you done due diligence on and how many grants have you given?' One in 18 months—one! There is $50 million there, a big announcement, they signed up the banks to the scheme, and they have given one grant.

We asked the question, 'Maybe you did due diligence on a whole range of others because you deemed them worthy and then you rejected them or something?' No, they had only ever got to the due diligence stage of one application, which was the one they gave. They had a few inquiries, but they were not serious enough to take any further. So we have an unlocking capital program somewhere in this agency, supposedly creating jobs with a $50 million bankrolled budget, and over 18 months or two years it has processed one application to one business.

There are so many of these examples, it would make you cry, if you were that way inclined. It would make you cry to have to endure sitting through it, as we do on Budget and Finance every second week. There is a $4 million scheme that Premier Weatherill signed up with minister Brock, a $4 million loan scheme for small businesses, a part of a job acceleration package that was announced to get minister Brock across the line. We asked the question, 'Okay, how many small businesses have you assisted through the $4 million loan scheme?' None, zippo, zero, nil; not one. A $4 million dollar loan scheme has been operating there for almost two years, or whatever it is, and not one business in South Australia has been assisted by Premier Weatherill and minister Brock's small business loan scheme.

That is the problem you have with this government and with these ministers. You have ministers and premiers who just do not understand how the real world works. They see the real world in terms of businesses being, we announce a package which we can market to the media. It has to have a trendy title and a lump of money; call it something nice and that is it. Then you just move onto the next one. You have the $4 million loan scheme. You have the $50 million Unlocking Capital for Jobs scheme. You then have the industry Investment Attraction Agency scheme. You then have a Small Business Development Fund. You then have a Food Park, whatever it is. You just move from scheme to scheme with different lumps of money, different ministers all involved, no accountability, no record, other than the work that committees like the Budget and Finance Committee do to—

The Hon. J.S.L. Dawkins: It makes the Riverland Sustainable Futures Fund look good.

The Hon. R.I. LUCAS: There are any number of these schemes and funds and grant schemes, etc., which need to be brought to account in terms of what is the value of these particular programs. What we need to do as an alternative course of action is to actually bring down the costs of state taxes and charges, the cost of doing business in the state of South Australia, essentially the proposition that Steven Marshall, the member for Dunstan, put to the people in South Australia at the last election, and continues to be the basis of the 2036 trailblazing document that was launched earlier this year by the Leader of the Opposition.

For those members who are interested, I always have my copy with me and I am very happy to quote from it at length if any members need guidance in terms of what is an alternative course of action; what is a better way of approaching the budgetary and financial problems of the state and the economic development and job creation issues that confront the state of South Australia. Is it, after 14 years of doing exactly the same, worthwhile continuing with or is it actually worthwhile contemplating a new direction, a fresh change, something which actually recognises the reality of the real world and something which recognises that what has been done for the last 14 years by this government has failed and failed miserably? With that, I indicate my support for the second reading.

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