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What the Budget Means

Mon 29 June - As the Budget session draws to a close many have asked me what I thought about the Budget and whether we are in more trouble than we are being told? In simple terms the good news for the State was that the AAA rating was retained but this looks at risk in the longer term, and the forecasts look nigh impossible given some of the assumptions.

The latter point is important as excluding Kevin Rudd’s stimulus payments, NSW has an underlying deficit position of $8 billion over the estimates period. In other words, this is the best case scenario and I remain concerned that the recovery is pinned on an "expense saving" plan that lost credibility day one when Budget advertisements were rolled out. If expense savings are not achieved and forecast economic growth does not eventuate, we could have an ongoing underlying deficit of $3-4 billion and no plan to recover.

With this background it is hard to understand why the Government was so keen to pat itself on the back. The problems remain buried and there is no attempt to address them until an election year .... hmmm. The unfunded superannuation remains a case study in not dealing with the problems. Despite blowing out to $34 billion from $17 billion, the Government has not increased contributions and instead deferred a review until after the Budget ... Nice ... rather than do what is responsible they have deferred it, to deflect attention and importantly to try to present the underlying deficit in a more positive light.

At the same time unemployment is forecast to increase by up to 70,000 jobs in the next two years and NSW has been confirmed in recession.  So with many levers moving against us, we have not tackled the problems head on ... The runaway expenses have been left unchecked for two years and the tsunami style blow out in unfunded superannuation is swept under the carpet. The problem is that this approach is like trying to hide an elephant in your living room under a rug.

So despite the rating being retained it is hard to give the Government a pass mark with the future shrouded in dark forecasts and long term problems pushed out further. The absence of the Northern Beaches hospital and a long term spit solution dampen local views, despite many promises over the past 10 years.

With the Budget week past I am going to take some study leave and head to Harvard to spend 3 weeks on their "Public Finance" program. It is a unique opportunity and given the problems to come, I am hopeful that some global case studies of best practice in budget management may prove helpful in the months ahead.

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Comments (4)
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NSW COALITION
Mike - you may be expected to critique the government budget but regretably the Coalition in oposition is devoid of any major policies that capture public support. O'Farrell's response was weak and his vacillation on various policies is beyond understanding. Nothing has changed to suggest that he is a winning leader; on the contrary he is a chair-sitter with mostly a team that have been unable to nobble the government for a number of years. As long as the Opposition fails to excite the public with realistic and visionary new policies and hangs on to frontbenchers that are manifestly inadequate for the job the more the terrifying prospect of Labor creeping back again. My earlier predictions to you that O'Farrell wont win haven't changed even though Labor has continued to stuff up. But with two years to go unless they implode or the Libs change people and policies Labor could scrape in yet again especially since federal Labor remains in the ascendency. 
 
Battles are won when initiatives are taken that outflank the enemy not by sitting in formation hoping that the enemy will impale themselves. Now is the time to change to confronting stratehies and tactics - by going for a new look top team headed perhaps by Prue Goward and yourself and rolling out far reaching policies that will return NSW to economic ascendency, provide us with decent services , transport and infrastructure, and restore faith in government.
Posted by: Carlo Bongarzoni at 30-06-2009 16:48
NSW COALITION
Carlo 
Thanks for your feedback. Although I have to disagree with some of your comments. I think Barry O'Farrell delivered a well thought out Budget reply speech with some sound policy announcements that will make a real difference to this state - such as establishing Infrastructure NSW so we can have public transport and hospitals built where people need them - not just promised with an advertising campaign and never delivered. You say it doesn't excite you - but that's what has got this state into so much trouble. Labor can't announce anything without an advertising campaign - just look at the one running at the moment promoting a Budget that's in deficit and a state in recession. I'm proud to say that we won't be basing our policy announcements on media stunts. Instead we are doing the hard work to get the policies right for the long term benefits of our community. 
Mike
Posted by: Mike at 03-07-2009 07:23
liberal party policys
Mike I also tend to agree with Carlo, all we seem to have heard from Barry O Farrell is they will reinstate dumped rail lines, and establishing different bodys, however where has HE mentioned that the Northern Beaches WILL get there spit solution and Frenchs forest hospital built? When can we expect to see some firm policy announcements? Furthermore I truly believe your party should be showing the public each week on all the monumentals stuff ups and costs this government has done since it came into power to keep it out in the public conscience , take a full page out in fridays paper until the election, anything just so they do not drift off the map and forgotten about come election time.
Posted by: sean at 03-07-2009 13:19
Decentralisation
For the life of me I cannot understand why th State seems to underate decentralisation to expand the economy and lessen the demands on Sydney's infrastructure. I spend time in a prosperous small country town with little if any unemployment yet Govt strategy resists expansion of this town. The Libs might even make friends with the NCParty
Posted by: Stan Droder at 03-07-2009 14:43
 

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