Mike Baird | Member for Manly - International Economic Crisis

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International Economic Crisis

Tuesday, 23 September 2008

Mr MIKE BAIRD (Manly) [3.55 p.m.]: I move:

It is fascinating today to hear members on the Government side lauding the economic achievements of this Government and the governments that have gone before it in the past 13 to 14 years. The Premier is new. In his first serious test he has faced a financial crisis. Alan Greenspan has said that this crisis is a once-in-a-century event. The Premier spoke about that today, but his first words give an insight into the culture inside a Cabinet that is dealing with serious problems, but has no idea how to deal with them. His first comments were, "I have no time or inclination to talk about the financial crisis." If a Premier were ever asked did he have a billion dollar hole in the budget, one would think he would have the time and inclination to talk about it.

We have heard all about the global and national events, but the fact is that every other State and Territory in this country is experiencing economic growth while the New South Wales economy is shrinking: in the past quarter it was negative 0.1 per cent. Unemployment in this State is increasing faster than the national average. Applauding a commitment that was made just a few months ago to reduce payroll tax it gives an idea of the position we have reached. Of course, the payroll tax cut will not commence until next year, and we did not hear that New South Wales is the most heavily payroll taxed State in the country. As members know, when payroll is reduced to 5.75 per cent next year, the State with the closest level of payroll tax will have a rate of 4.95 per cent. We will remain the most heavily payroll taxed State. No wonder there is incentive for businesses to go left, right or centre. When the Premier was asked about the impact of the collapse on State finances he told AAP he did not even know the scale of the loss. He said:

These figures came in only in the last couple of months. We've got a series of significant challenges we hadn't anticipated.

Of course, everyone will love Eric Roozendaal's approach. It is very simple. He said:

I understand how budgets work. It's like balancing the home budget and it's not that difficult. When we need to make hard decisions, we'll make them.

That gives us every confidence. The Sunday Telegraph got it right when it said:

after 13 years of ordinary government and the last few years of appalling government, the people of this State are crying out for someone who can do more than have a "red-hot" go.

That's what Iemma tried and as nice and affable as he was, he failed. Miserably.

They are the facts we are confronted with. The Rees Government does not want to acknowledge the problems it is facing. Rating agencies do not change ratings without many factors leading to that change and for a long period Standard and Poor's would have been aware that the State Government's expense control, together with its increasing debt, was under siege. Moody's rating agency even raised it. The Leader of the Opposition informed us that back in June Moody's said that the continuing lack of expense control and our track record of overruns on capital expenditure—that is, budgets being higher than forecast—were leading to a likely downturn in the rating. That rating agency put the Government on notice that if these things continued and the economy softened demand, particularly if it softened in New South Wales—which we saw last quarter—our rating would be under pressure.

How is that manifested? The Government's management team has overseen revenue increase by 5.4 per cent, but expenses have risen by 6.5 per cent—it has gone 1.1 per cent, or $550 million, backwards every year. That means that over 13 years the New South Wales has gone backwards by more than $6 billion. The Premier has said nothing about that today; he merely referred to the long-awaited mini-budget. Expenses will continue to run out of control, as they have for the past 13 years under this Government. Michael Costa in his farewell press conference—which was must-see television for all of us—spoke about the lack of control expenses and ministerial budgets being $300 million overrun, in particular, the Health budget, two months into a term, and at the same time capital budgets were $500 million overrun. Where is the accountability? A Premier and a Government purporting to have some form of economic credibility must hold Ministers to account for every dollar. Two months into a term the Premier cannot just announce a $300 million overrun and a $500 million capital overrun. It warrants a ministerial dismissal and the Opposition seeks that sort of accountability.

Local councils are being left to their own devices. The State Government has ignored its responsibility. They have been left with a ministerial code that says, "Knock yourselves out. Go and buy collateralised debt obligations [CDO]s. Go and buy whatever rating or bank security you want." But then when they get into trouble, they are told to get independent advice. It is the responsibility of the Government to bail those councils out. As a step towards fiscal responsibility in this State the Opposition has called for independent experts to be available in New South Wales Treasury to guide each council. The Opposition condemns the Rees Government for placing New South Wales in this position. No government can lose its credit rating without fiscal irresponsibility.

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