The Hon. R.I. LUCAS (16:18): I am delighted to be able to speak at this hour of the afternoon, and I am pleased to be following the contribution of the Hon. Mr Finnigan. It is not because of anything sensible or useful that he has added to the debate. As I suspected, he managed to cover a range of subjects under the broad convention of the Appropriation Bill.
The Hon. C.V. Schaefer interjecting:
The Hon. R.I. LUCAS: Well, indeed. He was able to traverse the subject of the Liberal Party leader’s website and market research results. He was able to talk about US elections, sentencing laws and the approach of Independent members in relation to the WorkCover legislation under the broad ambit of the Appropriation Bill. I welcome the flexibility and the conventions we now have to be able to traverse a range of issues under the auspices of the Appropriation Bill. It is for that reason that we are indebted to the Hon. Mr Finnigan and his contribution—as I said, not for anything sensible or rational that he added to the Appropriation Bill debate but for the much needed flexibility that I am sure members this afternoon and my colleagues on Tuesday next week will be able to avail themselves of in addressing the Appropriation Bill debate.
The first matter that I want to address in relation to the Appropriation Bill is the issue of deficits and surpluses in budgets. Dishonest claims have been made by the Rann government, its ministers and its wholly owned subsidiaries sitting on back benches in another place and also in this place. They continue to make claims in relation to the magnificence of the current Treasurer in producing surplus budgets and the absolute abomination of former Liberal treasurers Baker and Lucas in producing deficit budgets during that particular time. I want to look at the facts and place on the record for new members, in particular, the facts in relation to some of those claims. I seek leave to have inserted in Hansard without my reading it a purely statistical table taken from Budget Statement, Budget Paper 3.
(Please refer to attached document “A”)
|2008-09 Budget||2009-10 Estimate||2010-11 Estimate||2011-12 Estimate|
|Net Operating Balances||$m||160||355||434||424|
The Hon. R.I. LUCAS: This is a subsection of a table from that budget document, which looks at the budget results for the current year and for the forward estimates period through to 2011-12. It looks at the three measures of whether a budget is in balance or in deficit: the cash surplus, the net lending position and the net operating balance position. Let me first address the issue of the cash surplus, because that was the way in which, up until the late 1990s and the early 2000s, budgets were essentially reported in South Australia, and it is also the way in which the federal government still reports its federal budget result. When one sees the result of the $20 billion surplus, that is not an accrual measure, such as net lending or net operating balance: that is a cash result, because federal governments, Labor and Liberal, have not moved into this world of accrual accounting in relation to reporting of budget results.
When one looks at the cash position in this budget, one will see that we are looking at a deficit of half a billion dollars this year and for each of the next two years, and a budget deficit of $363 million in 2011-12. The figures are $530 million, $545 million, $527 million and $363 million. We are talking about budget deficits of just on $2 billion, in cash terms, brought down in this particular budget.
The next measure of the health of the budget is an accrual accounting measure and it is known as net lending. This was the one true measure of the health of the budget, or otherwise, announced by Treasurer Foley when he came to government in 2002. He said, ‘Look, we have moved beyond cash, and the one real measure of whether or not a budget is in deficit or surplus is this measure of net lending, and I, the self-proclaimed all powerful and magnificent Treasurer, will produce net lending surpluses henceforth’, that is, from 2002-03 onwards.
That worked for a couple of years and then all of a sudden the Treasurer started getting advice from Treasury that there was no way, on the current spending patterns, that he was going to be able to maintain the promise he made in 2002. What happened is that at about the time of the last election the Treasurer jettisoned that particular measure because it was going to become a deficit and stay a deficit, and he adopted a new measure, which I will talk about in a moment.
Let us look at this net lending measure. Under this particular measure this year the budget is in deficit by $548 million, next year $589 million, the following year $611 million and in 2011-12 $460 million—a $2.2 billion deficit over the coming four years. So, on the cash measure, there is a $2 billion deficit over the coming four years; and, on the net lending measure, that is the one true measure that Treasurer Foley said in 2002 would have to be used—$2.2 billion in deficits over the next four years.
The only measure remaining, where this budget could be said to be in surplus, is another accrual accounting measure, and it is known as the net operating balance. On that measure we have a modest surplus of $160 million out of a budget of $13 billion or $14 billion this year, and the Treasurer estimates that that will increase to $300 million or $400 million over the forward estimates period.
On the measure that the federal government uses we have $2 billion in deficits over the next four years. On the measure that in 2002 Treasurer Foley said is the only real measure in terms of the health of a budget, we have $2.2 billion worth of deficits over the forward estimates period. That is why in 2006 Treasurer Foley said, ‘Well, I know what I said in 2002 but, because it is now in deficit and I want to be able to say that the budget is in surplus, I had better go to a new measure, which is the measure called net operating balance, and that is the only measure where I am able to say that this budget happens to be in surplus.’ They are the facts in relation to the position of whether or not this budget is in surplus or deficit.
I now turn to the dishonest claims that have been made by the Rann government, its ministers and some of its wholly owned subsidiaries. It relates to—and it rolls off the tongue—’I am magnificent’, says Treasurer Foley, ‘I produce surplus budgets. You Libs were hopeless and incompetent. All you ever produced was eight deficit budgets.’ I seek leave to have a purely statistical table on this issue inserted in Hansard without my reading it.
(Please refer to attached document “B”)
The Hon. R.I. LUCAS: This table, which is headed ‘Underlying non-commercial sector cash result: surplus/(deficit)’, is for the period from 1993-94 through to the end of the Liberal government’s eight-year term in 2001-02. Now that this table has been inserted in Hansard I can indicate that the first seven years’ figures were calculated by Treasury prior to my leaving office as treasurer in 2002, and the numbers for 2000-01 and 2001-02 have been taken by me from the actual results for the financial years 2000-01 and 2001-02.
Throughout that period the former Liberal government was essentially producing budget figures on a measure that the public sector called the non-commercial sector. I will turn to some differences between that and what is known as the general government sector in a moment but, as a result of the Commission of Audit in 1993 after the State Bank crash, the commission stated, ‘You need to have a better measure of what the public sector is about.’ As a result of that the non-commercial sector definition was established, and throughout the period of the Liberal government (eight years) the non-commercial sector was the pre-eminent sector that the budget papers were produced on.
A smaller subset sector called the general government sector was also reported on, because of national agreements, but the budget documents were produced for the non-commercial sector and on a cash basis. They were the results that were being produced during that period. During that period, the government in 1993-94, in the first budget that we inherited straight after the State Bank, had a cash deficit of $200 million, and the next one, still straight after the State Bank debacle, was a deficit of $239 million. Then there is a gradual and strong reduction in the level of the deficit over that period through to (in the latter years of the Liberal government) modest surpluses in the last two years of $21 million and $22 million. In the previous year (1999-2000) there was a deficit of just $25 million.
When you are talking about a budget of $7 billion or so, whether it is a surplus or a deficit of $20 million, it is less than half of 1 per cent of total revenue. So, to all intents and purposes, budgets were being balanced over the last six years of the previous Liberal government. Some were very small deficits; some were very small surpluses. If you take the last six years, from about 1997 onwards, it is almost balanced in terms of the small number of deficits and surpluses.
In the end, if you want to talk technically about what the government inherited, the non-commercial sector cash result position being reported was surpluses in the past two years of $21 million and $22 million. The claims being made by the current government, in particular the Treasurer, that the former government never balanced a budget, only ever produced a string of deficits, is based on falsehoods. I turn now to how the government has reconstructed its figures to demonstrate that, because it produces a table and graph which, in graphic form, shows purported deficits under the former government and surpluses under the current government.
How has the government managed to achieve this result? I will turn to this in a moment. Whilst at the same time as trying to reduce the level of budget deficit we inherited—and the first estimate of the budget deficit was not the $200 million eventually reported: $300 million to $350 million was the analysis done by the Commission of Audit in 1994—and trying to bring the budget into balance, we were reducing state debt from $11.6 billion down to $3.2 billion over that time frame, and I will comment on that later.
I turn now to how the Treasurer and government manage to turn a position of repairing the state’s finances and producing surpluses into its claim that the former government only ever produced deficits. It does two things, because the facts are as I have just outlined them. It just changed what you measure in two ways. First, instead of the non-commercial sector being the measuring stick as to what is going on in the state and budget, the government took the narrower definition of the general government sector.
What does that mean for practical purposes? It means that, whilst the former government reported on a non-commercial sector, this government takes out of that measure bodies such as: the Adelaide Convention Centre, the Adelaide Entertainment Centre, the Adelaide Festival Centre Trust, the Land Management Corporation, the Lotteries Commission, the Public Trustee, the South Australian Forestry Corporation, The South Australian Housing Trust, the South Australian Employees Residential Properties Body, the South Australian Motorsport Board, SA Water, TransAdelaide, the West Beach Trust, the Adelaide Cemeteries Authority, and various electricity authorities.
Whereas the former government was reporting on the non-commercial sector and included all those bodies and agencies I just mentioned, the government has now said that it will no longer report the budget in terms of its health by that measuring stick, that it will take out all these bodies—and bodies like the Housing Trust, SA Water and TransAdelaide are very significant bodies in terms of their impact on the budget. They are all removed in terms of the government’s measure, which is now the general government sector. So the impact of whether or not they are making profits or whether there are losses in those bodies are not included in the government’s definition of whether or not the budget sector, the general government sector, is in surplus or deficit.
Secondly, it changed the measure: that is, instead of reporting on cash grounds it said it would only report on accrual accounting grounds. It then said to Treasury, ‘Okay, Treasury, you go back now to the Liberal government years and redefine what they did by changing the measure from cash to accrual and by changing the measuring parameters from the non-commercial sector to the general government sector, and we want you to construct a new set of figures as to whether their budget was in balance or in deficit.’ So, retrospectively, it has got Treasury to go back and say, ‘Okay, new measuring stick (the general government sector), new measuring stick (accrual accounting), and were those budgets in deficit or surplus?’ Through that device they have been able to construct a set of accounts which purportedly show deficits under the Liberal government and surpluses under the Labor government.
They also engaged in a number of rorts and fiddles, but I will mention just one of those. In 2001-02—bearing in mind that the election was held in February 2002 and the new government took over two-thirds of the way through the financial year and therefore was in a position to rule off the accounts at the end of the year—at the end of the year a budget line had been approved for a transfer of $300 million from SAFA and the South Australian Asset Management Corporation to go into the accounts. It was a revenue item, and in this budget we are still seeing revenue items from SAFA and the South Australian Asset Management Corporation.
It had been a longstanding revenue treatment for budgets and continues to be taken into account for the government currently. In that period after March and before 30 June when it ruled off the accounts, it reversed that decision. What does that mean? It means that the last Liberal budget, 2001-02, suddenly lost a $300 million income line and the first Labor budget in 2002-03 had a bonus of a $300 million income line because it could transfer the money that year. That fiddle is not just a claim from me as the former Treasurer and from the opposition. The former Auditor-General in New South Wales, Tony Harris (who had commenced writing for the Australian Financial Review), and other Financial Review journalists reported on that budget and on the Treasurer’s fiddle, that is, taking $300 million out of the last Liberal budget and putting it into first Labor budget and, through that device, pretending the new government had inherited a massive deficit.
If you actually look at the figures, if you even accept that the first two changes the government made—that is, to have a new general government sector and to use accrual accounting measures—before this particular fiddle, the last Liberal budget would have shown a deficit of $124 million on accrual measures for the general government sector. In the first year of the Labor administration there was to be a surplus of $312 million—that is by including the $300 million fiddle in relation to SAFA and the South Australian Asset Management Corporation dividends.
If those figures had been as originally included in the budget by the former Liberal government, the last accrual accounting measure for the general government sector would actually have been a surplus of up to $200 million, and the Labor government’s first budget would have been a surplus of about $100 million. So, even with the new measures that the Labor government was implementing, the budget it inherited had a surplus, in accrual accounting terms, of up to $200 million, giving the lie to the claims that were made by the Treasurer and others at the time, and that continue to be made, that the former government had left a massive black hole and a budget in deficit.
I turn to the second issue in relation to overall aggregates, and I seek leave to have incorporated in Hansard without my reading it a purely statistical table on debt.
(Please refer to attached document “C”)
The Hon. R.I. LUCAS: This table is from Budget Statement 3, page B8, and is headed ‘Non-Financial Public Sector Key Balance Sheet Aggregates’. It looks at net debt but also looks at unfunded superannuation, net financial liabilities, net financial worth, and net worth. I draw members’ attention to the table because it shows that, all through the period from 1993 to 2002, the Liberal government significantly reduced the State Bank and other financial incompetence debt—which peaked at $11.6 billion in 1993—that it had inherited from the former Labor government. The Liberal government reduced that to $3.2 billion by 30 June 2001, and on 30 June 2002 (the first period of the new government) it was still at $3.3 billion.
It is informative to look at what has happened to net debt since then because, in an approach that had support from the opposition over the past six years, the level of net debt was further reduced from the $3.2 billion that was inherited down to just on $2 billion as at 30 June 2007. So there had been modest improvements; it had significantly dropped from $11.6 billion to $3.2 billion under the Liberal government, and that reduced from $3.2 billion down to $2 billion under the Labor government.
This budget sees a very significant increase in the level of net debt over the forward estimates period, because that $2 billion net debt figure is to increase to $5.2 billion by 30 June 2012. So we are seeing a $3 billion increase in net debt off a base of $2 billion, an increase of 150 per cent in terms of the total level of net debt in South Australia. The point, as the Liberal leader in another place has highlighted on a number of occasions, is that we are seeing a significant reversal of the hard work undertaken first by the Liberal government and, to a much lesser degree, by the Labor government in the past five or six years, so it is a very significant increase in the level of net debt.
At the same time it is also informative to look at what has happened to unfunded superannuation since this government was elected. When the government was elected the last figure, as at 30 June 2001, was $3.2 billion; to be fair, as at 30 June 2002 (which was just after it was elected), it was $3.9 billion. That number has jumped from $3.2 billion on 30 June 2001, and is now estimated to have more than doubled to $7.1 billion—an almost $4 billion increase in the level of unfunded superannuation since the election of this government through to 2012. So, we are seeing massive increases in the net financial liabilities of the state of South Australia; we are seeing the net financial liabilities jump very significantly from the 2007 measure of $9.5 billion through to $14.7 billion in 2012—an increase of $5.2 billion in terms of net financial liabilities to be confronted by South Australians.
Other than for economists, treasurers, accountants and those business people who follow these issues, what are the particular concerns regarding that? Well, the obvious ones are that this government will have to continue to plunder the families of South Australia through ever-increasing rates of taxation, charges, levies and duties to fund the ever-increasing debt and ever-increasing waste. I am sure members who sit on the Budget and Finance Committee will be staggered, every two weeks or so, when they are confronted with further examples of incompetence, negligence or mismanagement by some ministers, government departments and agencies.
That is the sort of waste that taxes and charges and ever-increasing rates are going to have to fund. The other warning sign, not just coming from the opposition, is from ratings agencies like Standard and Poor’s. In the interests of expediting another matter, I seek leave to conclude my remarks later.
Leave granted; debate adjourned.
The Hon. R.I. LUCAS (16:52): When I was last speaking on the bill, I was warning about the importance of monitoring our net financial liabilities, in particular our net debt and our unfunded superannuation. I think I was dealing with not the warnings of opposition politicians but the warnings of credit rating agencies, such as Standard & Poor’s.
At the time of the state budget this year (5 June), Standard & Poor’s issued a statement that was generally supportive of the maintenance of a AAA credit rating and a stable outlook for South Australia. That is a credit to our state’s financial position, and I acknowledge that. However, in amongst the words is a cautionary note from the rating agency, as follows:
However, it will become more difficult for the state to retain the current rating if it exceeds its debt level forecasts.
What that rating agency warning is saying is, ‘Hey, the former government had very significantly reduced the net debt in South Australia, and for the first time we are now seeing a very significant increase in the level of net debt in South Australia.’ As I have said, there has been a 150 per cent increase in just four years, from a base of $2 billion, and an increase of $3 billion on top of that to $5 billion in terms of net debt.
Standard & Poor’s is saying that that is about the limit and, if this government and this Treasurer were to continue in that way, that may well jeopardise the state’s AAA credit rating. That is a very strong warning sign in rating agency speak, if I can put it that way, to the Treasurer and to the government in relation to the management of the state’s finances. As I have said, whilst they do not report on it, hopefully, they, too, would have done the same analysis to indicate that the net lending position in this budget has a $2.2 billion deficit over four years and the cash position is in deficit by $2 billion over four years, and the only measure where there is any modest surplus is using the net operating balance.
They will be mindful also of some of the warnings that are being made that some of the savings programs by the government are proving to be illusory. Again, I will not go into all the detail this afternoon, but the work of the Budget and Finance Committee has demonstrated that, for example, the claimed savings from the much vaunted shared services savings initiative or the Future ICT program are, in significant part, illusory. We have been warning for some time that the shared services initiative was not going to achieve the savings that were claimed, and we are certainly seeing evidence of that at the moment. A number of agencies have already said that they have already made those savings that are now being attributed to the shared savings initiative and that the Under Treasurer has allowed them to keep those as their own particular savings required by Treasury, as opposed to a centrally controlled shared savings initiative.
The Future ICT has been a complete farce. We took evidence again only this week from the Police Commissioner, who again confirmed the evidence we have had from a number of departments that there was no saving for SAPOL in relation to Future ICT. These departments had an attributed or notional cut; that is, Treasury said, ‘You are going to save money from Future ICT, and your budget is cut.’ They said to Treasury, ‘Well, I’m sorry, but we actually haven’t seen those savings. We’re going to have to therefore cut our budget in other areas,’ and that is what they have had to do. We took some evidence of the replacement policy for assets being delayed by a year, and all sorts of measures like that having to be implemented within the police force to meet some of those cuts that have been imposed upon it by Treasury.
Earlier today, some members made reference (as occurred in another place) to the proposition that at the last election the Liberal opposition had openly and transparently indicated that it would fund its spending programs through a reduction, but with no sackings at all, of some 4,000 public servants in South Australia. A number of members have said how terrible that was and also used other sorts of adjectives. I remind those members that this government is in the process of implementing cuts of almost 3,000 full-time equivalent public servants from government departments and agencies.
In the budget two years ago, the government announced cuts of 1,600 full-time equivalents over the forward estimates period. That was straight after it had already implemented cuts of some 200 to 300, so about 2,000 was announced in the budget two years ago. In this budget it announced further reductions in funding to government departments and agencies.
For example, we spoke to the Police Commissioner this week and he told us that a particular night shift service for records management, which essentially was being provided to country areas but also to other areas, had been cut, and I think three or four staff members had been removed from that particular administrative area.
Right across the board in this budget the government has announced two departments and agencies which have to reduce expenditure. As the Police Commissioner indicated, 80 per cent of his expenditure was salaries related. The only way in which these departments and agencies can reduce expenditure significantly is to reduce full-time equivalent Public Service numbers.
The fact that there has been a blow-out of more than 12,000 full-time equivalents above that which the government has estimated in the past six years does indicate that there is probably some flexibility in terms of reining in the total number of administrative public servants within departments and agencies.
Let us not accept the nonsense of wholly-owned subsidiaries of Labor factions and ministers and backbenchers in this place and another place, and, indeed, I think the Leader of the Government in the past week, when they have trumpeted, ‘You wanted to cut 4,000 public servants, what a terrible thing!’ His own government—and he has been a member of cabinet over the past two budgets—has been implementing cuts of 2,500 to 3,000 full-time equivalent public servants (on my estimation) throughout the public sector.
The Liberal government was going to channel moneys into other priorities, which would have led to further employment of police and nurses and provided other front-line services, so the total numbers would not have been impacted by the 4,000 number. So, too, this government can indicate that, while it is cutting back on administrative full-time equivalent public servants, it will add additional police and other public servants in other high priority areas, as well.
The third area to which I refer is the latest calamity to befall this government—and there are many that one could address that have had, and will have, an impact on the budget—in relation to the government’s handling of the SA Water fiasco in the past week, or so.
I want to turn to a quick analysis of what was said. I refer to The Advertiser of 19 July. Obviously, a statement was given the night before, exclusively to Michael Owen from The Advertiser. Kevin Foley came out, all guns blazing, indicating that he would sort out this mess and turn the blowtorch on Anne Howe, Chief Executive, and other officers within SA Water. The article states:
“Treasurer Kevin Foley has apologised to householders and business owners deliberately overcharged by SA Water…he would ‘sort this mess out’…On Monday, SA Water chief executive Anne Howe will be summoned to Mr Foley’s office to face a ‘please explain’.”
Further, it states:
“SA Water knew exactly what the government’s intentions were and in a classic case of Yes, Minister we have been wrong-footed. I am not happy. Blind Freddy could see that people would be angry and upset if after having said these charges would apply from July 1, they were actually backdated to December. You don’t have to be a rocket scientist…”
—And I certainly indicate that the Treasurer is not a rocket scientist. It continues:
“You don’t have to be a rocket scientist to understand that is not what the government committed to.”
The fearsome Treasurer is quoted as saying:
“SA Water will know exactly how I feel when I meet with them on Monday morning.”
The Treasurer in ominous tones said to The Advertiser on Friday: ‘SA Water will know exactly how I feel when I meet with them on Monday morning.’ Of course, that continued throughout the weekend. There were threats and intimidation to take on Anne Howe and SA Water.
However, little known to the Treasurer is that Anne Howe actually had a paper trail. Anne Howe actually had documents. Anne Howe actually had records of advice that had been provided to her minister (Hon. Karlene Maywald) and the Treasurer. Anne Howe actually had a paper trail of documents from officers within SA Water. Anne Howe also had a paper trail of documents from officers from Treasury. She may well—and, of course, I am not in a position to know all this information—also have had copies of emails and notes of discussions that indicated that what Treasurer Foley was saying (that is, ‘I know nothing’, the Sergeant Schultz defence) on Friday evening to The Advertiser was untrue, was not correct.
The Hon. I.K. Hunter: I think you said ‘may’.
The Hon. R.I. LUCAS: Well, let us look, for the benefit of the Hon. Mr Hunter, at the language on Friday when the Treasurer was saying, ‘SA Water will know exactly how I feel when I meet with them on Monday morning. I am not happy. They will be required to please explain on Monday.’ What happens on Monday morning when suddenly the temperature is turned up a few degrees by the Treasurer? What happens on the Monday? Suddenly, on the Monday, Treasurer Foley is back-pedalling with five gears. He is in overdrive in reverse. He is apologising: ‘This is a stuff-up. This is a breakdown in communications. We are very sorry. Mea culpa. It should not have happened.’ The intimidatory language of Friday night and Saturday morning had changed markedly. Why had it changed markedly, Mr President?
The PRESIDENT: Perhaps you will tell me.
The Hon. R.I. LUCAS: Thank you, Mr President, I will tell you. The reason it changed, Mr President, is that suddenly Anne Howe said to her minister, to the Treasurer and to the advisers, ‘Okay; you have a look at this stuff. You have a look at this. Have a look at these documents. Have a look at what I told you. Have a look at what was in the cabinet submission. Have a look at this particular acknowledgment from Treasury officers.’ Suddenly, Treasurer Foley thought, ‘Whoops! I’ve turned the wick up Friday night and Saturday morning, and there is going to be a please explain. They’re going to know I’m not happy.’ Suddenly from, ‘They’re going to know I’m not happy’, it is ‘I’m very sorry. Mea culpa. There has been a breakdown in communications.’ All in the space of 48 hours we see this major change going on in the approach of the Treasurer.
It is clear that what we were being told as South Australians in relation to the government’s knowledge of all this was not correct. As a result of Anne Howe plonking on the table, in a figurative sense, all the documents and saying, ‘Well, there you go’—and I’m not sure, but certainly I would have thought that, if they had the opportunity, a number of parliamentary committees ought to be bringing Anne Howe and her senior officers before them and directing that copies of all those documents be produced with the power and authority of the parliament, of the Legislative Council, and saying, ‘Okay; let’s have a look at all these documents.’
I think that Kevin Foley, the Treasurer, realises that that is what potentially will happen, because he is now starting to concede, ‘Well, there were references in various documents. There were references in various submissions that went to cabinet. There were references.’ The arrogance of this government! It has not taken minister Maywald long to pick up the fleas from her fellow travellers, if I can use a colloquial expression that you, Mr President, would understand very well. It has not taken her very long at all. The arrogance of this minister shows almost no bounds. This morning was the first time her regalness deigned to give an extended interview on the issue of the monumental stuff-up, as described by Treasurer Foley.
This issue having been identified almost a week ago, minister Maywald was prepared to give her first extended interview on the Matthew Abraham and David Bevan show on ABC Radio this morning. There were a few fleeting grabs here and there. She certainly went into hiding for the first few days and refused to answer any questions. She was flushed out a bit for a little grab or two here and there, but that was the first extended interview, where she was probed (in the political sense, I might say) by Mr Abraham and Mr Bevan in relation to her knowledge and responsibility.
I must say that her definition of ministerial accountability now is certainly much different from that which she held when she was in opposition. I will not extend my contribution in the Appropriation Bill debate by looking at that. However, I will refer to the arrogance of this government. As I said, it has not taken long for this minister to take on the arrogant nature which was first demonstrated by the Premier and the Treasurer on so many issues and which is now being demonstrated by this minister on the issue of who ultimately accepts responsibility.
I think the interesting thing is that now, when the question is put to minister Maywald and the Treasurer, ‘Whose head will roll over this? Does Anne Howe’s head roll?’ the answer from the minister is, ‘No, no, no.’ I can tell members why she is saying that: because Anne Howe has all those documents. She has the cabinet submissions; the notes of the meetings with officers; the emails, if they were to exist (I am talking about the emails now). She has all of that material, and it would be very embarrassing if this government were to take action against Anne Howe and then, through one form or another, all of that very embarrassing material was to become available by way of a parliamentary inquiry or some other mechanism.
Given that we will be debating and hearing the minister’s replies next Tuesday, I now want to turn to a series of questions that I want to put on notice for the minister to reply to. I turn to the budget paper that looks at the portfolio statement for Treasury and Finance, in particular. On page 3.27 there is a reference to a significant change in inventory levels held by the Department of Treasury and Finance. In 2006-07, the inventory levels actual were $43.7 million. In 2007-08, it was budgeted to be $2.3 million but the estimated result was back to $43.7 million, and this year it is again budgeted to be $43.7 million. Can the Treasurer indicate what the budget reduction in inventories was to have been last financial year and why that did not occur, and what the change of policy decision was that might have resulted in that?
On page 3.39 there is a reference to past service superannuation payments of about $200 to $300 million per year for the periods that are covered. Given that the government’s position remains (as was the former government’s) to repay the unfunded superannuation by the year 2034, I ask the Treasurer to provide a copy of the repayment schedule from this year, 2008, through to 2034, with the estimated amounts of repayment in each of the financial years from 2008 to 2034. This budget estimates, I think, that the level of the unfunded superannuation will now peak in about 2014 and decline from then onwards.
I hasten to say, having been a former treasurer, that that particular document to which I am referring is not something that will have to be prepared: it already exists. As treasurer, Treasury provided me at varying stages with copies of the schedule of repayments and also a graph which summarises that.
On the same page (3.39) are the references to the three contingency provision lines. First, I want to refer to contingency provisions for employee entitlements. In 2007-08, the budget paper indicated there was $15.8 million in contingency provisions for employee entitlements, yet the budget is reporting that the estimated result for that year is that the contingency provisions were actually $75.9 million. Logically, when you look at what a contingency provision is, it is headroom in the budget—it is money that can be used for employee entitlements. The budget indicated that $15.8 million was there. I am asking the Treasurer to explain how, in the end, you report a result of $75.9 million in terms of an estimated result.
I can only assume that it means that the Treasurer has transferred into that line funding from another line. Some of it might have come from contingency provisions for supplies and services but also it would have had to come from some other line as well, because it is an increase of almost $60 million. I am seeking an explanation as to what it actually means and from what line funding was transferred. This is last year now, so it does not indicate anything about where contingencies will go this year. This is reporting on the past, so how did that actually occur?
I also ask a question about the contingency provisions supplies and services line, because the budget had $82 million in the contingency provisions line, and then at the end it has the estimated result at $34 million. What does that mean? At the start of the year $82 million was in there for unforeseen supplies and services contingencies; then at the end of the year it has the estimated result at $34 million. Is Treasury indicating that $34 million of that was spent or that $82 million was there and then they transferred some of that money (just under $50 million) into another line, which is the employee entitlements line? I am seeking an explanation from the Treasurer in terms of what exactly the budget document is telling us.
I highlight, in order to assist matters on Tuesday, that if the written reply is not clear this is an issue I want to explore with the Leader of the Government and his Treasury adviser who will be here during the committee stage of the debate, because I think it is important for members of the committee to understand how the contingency provision lines are being used by this government in the lead-up to the election.
The reason for that is that there is a massive increase in the contingency lines in this budget. We have a total of $334 million in those three contingency lines in this year’s budget, whereas just two years ago the contingencies were only approximately $85 million, so they have jumped from $85 million two years ago to $334 million. The Treasurer may well argue that that is because we are about to settle deals with doctors, nurses and teachers, and I can understand that; however, it is interesting that the biggest contingency is held in the supplies and services line and the employee entitlements line, which is the wages and salaries, is only $69.7 million.
It is clear that the Treasurer has been moving funds from supplies and services into the employee entitlements line to help fund some of these wage settlements. I acknowledge that some of the wage settlements such as in teaching may well include supplies and services. I think the example that Treasury used in the estimates committees was that increased teacher numbers, for example, might be part of a settlement rather than a wage increase. I am not sure that increased teacher numbers was actually a supply and service, and would not preferably be in employee entitlement, but again I give forewarning to the Leader of the Government that I want to explore this issue with him and his Treasury adviser during the committee stage next week.
On page 3.40, the Industry Financial Assistance Fund, last year, was meant to spend $15.9 million and spent $23.7 million. I seek an explanation as to the reason for that increase. I note that the next line, Land Management Corporation—and this is in the cash flow statement under ‘grants, subsidies and transfers’—has declined over the last two years from $15.8 million. Last year it was meant to be $20.7 million but it was actually only $6.1 million, and then this year it is only $1.1 million. I seek an explanation from the minister as to the reason for that reduction in terms of the estimated payments in that particular line.
I seek an explanation to the line referring to long service leave costs. What does that $30 million transfer in the cash flow statement for 2008-09 refer to, because there is no equivalent payment for long service leave costs in the past two financial years on that page? What is the explanation for that $30 million line? On page 3.42, under the Country Price Equalisation Scheme, there is a reference to an actual payment, in 2006-07, of $740,000. I seek an explanation from the Treasurer as to what that refers to.
On page 3.43, in last year’s estimated result, there is a receipt of $442,000 under the heading of ‘Support services to parliamentarians’. There was nothing budgeted, but there was a receipt of $442,000, and this year there is a receipt of $455,000. I seek an explanation from the Treasurer as to what is that receipt line, support services to parliamentarians. It is included in the administered items for the Department of Treasury and Finance.
On the same page, the Country Price Equalisation Scheme, under ‘supplies and services’, there is $99,000 in the budget line for 2007-08. What does that refer to? The Independent Gambling Authority, under ‘supplies and services’, last year saw an increase in the budget from $697,000 to $974,000. What is the reason for the increase? Same page, South Australian Motor Sport Board, last year’s budget was $20.6 million in terms of supplies and services, yet the actual expenditure was $31.6 million. What is the reason for that?
I turn to page 3.44, the Industry Financial Assistance Deposit Account, under ‘Intra-government transfers’. Last year the budget was for a transfer of only $1.5 million, yet there was actually a transfer of $35 million: $33.5 million above budget. Will the Treasurer explain what that significant increase in intra-government transfers refers to? That is all in relation to the Portfolio Statement.
In Estimates Committee A of 25 June 2008, on page 73 of Hansard, there is a reference to some questions that were being asked about PPPs. The Treasurer was talking about the cost of capital to government as compared to the private sector. He stated:
“…I might add. It could be a couple of hundred basis points or, hopefully, less than that so we are not talking a big variation but it is a higher number.”
I would seek advice from the Treasurer, because I am assuming that that is a slip of the tongue; he could not possibly be talking about a differential of a couple of hundred basis points. If he is, I am mightily concerned. I am asking the question as to whether or not that was a slip of the tongue from the Treasurer, his reference to a couple of hundred basis points.
I must admit that I was listening to the committee at that particular stage and I heard him say that, so it is an accurate reflection of what the Treasurer said to the estimates committee in June of this year. I do seek clarification as to whether that was a slip of the tongue.
The Hon. R.D. Lawson: That assumes he knows what he’s talking about. That is a big assumption.
The PRESIDENT: It is a wonder that the shadow treasurer did not say something.
The Hon. R.I. LUCAS: I leave that to the minister whether he can indicate whether that is, indeed, a mistake and that the level of differential would be significantly less than a couple of hundred basis points.
On page 73 of the estimates committee of 25 June the Treasurer, in relation to some very perceptive questions from the shadow treasurer about this particular issue, indicated:
“I do have in the forward estimates expected payments for schools and prisons.”
Then he goes on to say, ‘But I’m not going to tell you what they actually are.’ We can debate that on another occasion, but, whilst I understand that the government is saying that they are not going to indicate exactly what the numbers are at this stage, can the minister indicate which particular budget lines they have been incorporated in or included in currently? That is, are they being held within budget lines within education and within corrections or justice, as they relate to PPP payments, or are they being held within Treasury contingency lines? If they are being held within Treasury contingency lines, are they held within those three Treasury contingency lines to which I referred earlier when I asked a series of questions, or are they being held in some other contingency line which is not expressly listed in the budget papers?
I have one other issue to mention in relation to SA Water. Much was being made evidently in another place, obviously not that I was there or followed it with too much detail, but my colleagues have raised with me the issue of evidently a press statement that I issued on 6 December 2001 in relation to water prices for 2002-03. My memory was reasonably clear, but I have nevertheless checked the record. For the record I indicate that two days prior to that, on 4 December, I had the great honour of being appointed the minister for government enterprises evidently. On recollection, that was because Michael Armitage did not continue in the ministry under the new premier, Rob Kerin at that particular time.
Two days prior to my issuing the release on the 6th, which was the Thursday, I was appointed the minister for government enterprises. The cabinet submission and all of the water pricing submissions were taken through the cabinet process and the SA Water process by my former colleague the Hon. Mr Armitage. One of the joys of having been appointed as the minister for government enterprises was that two days later I had to go out and explain the government’s decision in relation to water price increases.
I also note that that was on 6 December 2001. The election was held in March 2002. We went into election mode in late January/early February 2002. During that six to eight week period, on my understanding, very few, if any, SA Water accounts would have gone out. Most of the accounts, as I understand it, were probably going out in the period March, April, May, June and, of course, that would have been under the Labor government. Certainly at that stage I was no longer minister for government enterprises. For the sake of the historical record I thought I would place on the record when I took over responsibility for government enterprises and announced the water rate increase for 2001-02. With those comments, I indicate my support for the second reading of the bill.
Debate adjourned on motion of Hon. I.K. Hunter.