Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Tonight I rise to raise questions about the Tasmanian Labor government’s mismanagement of the state’s finances and its maladministration of Tasmania’s affairs. I raise these issues because, for the period 2006-07 and 2007-08, the state is running an operational deficit of $110 million and it has to sell three government owned entities in one year. I am advised that it is the only state budget brought down in Australia this year that is in deficit. This is despite the fact that the government is in receipt of the highest amount of tax in the state’s history—firstly, it is receiving buckets of GST and other revenue from the Australian government; and, secondly, Australia is experiencing solid economic growth under the Howard-Costello stewardship.

The state government is expected to receive more than $3.7 billion in revenue over the 2007-08 financial year, which is a six per cent increase on 2006-07 and approximately $1.7 billion and 85 per cent more than it received in 1998-99. The state government has received a windfall from GST receipts and special purpose payments, estimated to be well in excess of $100 million for each year since 2003-04. GST payments to the state have risen from approximately $1 billion in 2001-02 to a projected $1.646 billion for 2007-08. That is a 64.6 per cent increase, averaging almost 11 per cent a year and well above our low inflation rate of 2.5 per cent. While not large relative to the entire state budget, the windfall is nevertheless large enough to build the equivalent of several new high schools, more than 480 housing division homes and up to 12 district hospitals—noting that at the present time they have a plan in place to close the Ouse District Hospital and its aged-care centre and the Rosebery Community Hospital and its aged-care centre. The government plans to rationalise Tasmanian health services, particularly in rural and regional Tasmania. Put another way, this windfall totals almost $1 billion in payments between the years 2003 and 2011. And this is a system that Labor, state and federal, fought tooth and nail against when the Howard government introduced the GST back in 2000. That was a tough decision that was made for the long-term benefit of Australian families. That is a hallmark of the Howard-Costello team.

The other half of the equation is tied grant payments to the state for specific purposes such as school funding, hospitals and primary industry programs. The Australian government decides how this money will be spent. These grants now total $767 million a year for the Tasmanian government, which is a 13 per cent increase on last year—again, well above inflation—and a 38.4 per cent increase on 2001-02. The state’s tax collections have risen by 40 per cent, to $752 million, since 2000-01. This includes the anti-worker, job-wrecking payroll tax, which has grown by 44 per cent since 2003. So the state is sucking in the dollars thick and fast, and it is being well funded by Canberra, with substantial hospital funding, GST payments and tied grants funding.

I noticed the state Labor Treasurer’s boasting in the recent state budget about a plethora of tax cuts, but most of those state tax cuts in recent years have been handed down by Peter Costello as a result of the agreement that was made back in 2000 in return for the buckets of GST revenue that state now receives. The Tasmanian Treasurer argued that the $117 million GST windfall was closer to $8 million. He said this at a post-budget business presentation. This is poppycock. In his next breath he admitted that most of this had been forced on him by Canberra. The Howard government is making sure the states do not squander the windfall but use it wisely, as was originally agreed—for example, to cut business taxes.

The GST revenue also funds Tasmania’s $20 million a year First Home Owners Scheme, which is managed by the state. This scheme has been largely responsible for firing the housing boom and allowing thousands of young Tasmanians to buy their first home. The Tasmanian Treasurer claims this as a state initiative but, no, it was not; in fact John Howard and Peter Costello created and funded it, commencing in the year 2000.

On the education front, in 2006-07 federal payments to the state public school system rose by 10.4 per cent, but the state increased funding by only 3.2 per cent, thereby short-changing Tasmanian schools, pupils and families by $46 million. So why is the state running a deficit? It is what I call budget mismanagement.

Previous regimes, both Liberal and Labor, have resolved to keep Tasmania’s finances in the black and healthy, and they have had varying degrees of success. However, I fear the current Tasmanian Labor government has lost its way because of rank amateur performances by a largely inexperienced cabinet. As a community, we are fortunate to have the Hon. Will Hodgman, the leader of the Tasmanian Liberal Party, and his team to keep the state government accountable and responsible. The Tasmanian government’s fiscal position is enjoying higher than previously expected receipts from the Australian government of between $100 million and $180 million a year, yet the state is desperate for more revenue to cover the state government’s bloating expenses, most notably those relating to employees, which have forced taxes on ordinary Tasmanians, special raids on reserves held by government business enterprises and the selling off of assets.

In the past week, we have seen reports of proposed exorbitant power price increases under the state government owned power company, Aurora. This is very disturbing. In this financial year, the state government will sell an estimated $72 million worth of public assets, which include the Tasmanian Printing Office, the Southern Tasmanian Cemetery Trust, Hobart Airport and public housing, after a $72.3 million fire sale last year. Why? How can state finances be in such a parlous state when the national economy is firmly under control and humming, thanks to the Howard government? Why is the Tasmanian government struggling with looming asset sales, some badly performing business enterprises and deficits when its tax take is up, thanks to a thriving economy and better than ever federal funding, with certain and stable increases each year? What is wrong with a state government that cannot balance the books even though the Australian government is funding the state’s tax cuts? The answers can be found in some of the decisions the Tasmanian government has made in recent years.

The state government has undertaken new infrastructure spending of only 3.6 per cent more than in 2006-07, but this is still lower than was budgeted for in 2005-06. This means that state infrastructure spending as a proportion of the state’s economy will decline. The only increase in infrastructure spending over the last year is wholly due to an increase in federal infrastructure support, from $57.9 million this year to $77.4 million next year. The majority of this federal funding, $61 million, is for road infrastructure. Yet the state is hitting up Tasmanian motorists an extra $20 with a new tax, and state funding for infrastructure is actually declining. The state government is putting another 2c a litre on petrol, increasing the cost of petrol for Tasmanians. This is not on and it is not fair. Tasmania is the only state in Australia where the federal government actually spends more on roads than the state.

While net debt has declined and now represents a positive cash balance, this only partially offsets the burgeoning liabilities associated with an ageing public service. So the net superannuation liability that is unfunded is rising from $1.2 billion in 2001-02 to $2.14 billion in 2006 and a projected net $2.43 billion by 2008. Labor is mortgaging the future of our children and our grandchildren. Let’s not forget the hundreds of millions of dollars of taxpayers’ money wasted on the Spirit of Tasmania III fiasco, which was already subsidised by the Australian government through the Tasmanian Freight Equalisation Scheme and the Bass Strait Passenger Equalisation Scheme. I note an announcement about that today by the honourable senator Richard Colbeck confirming its continuation and its important contribution to the Tasmanian economy.

It is no wonder that the federal Treasurer, Peter Costello, in a speech on June 1 this year questioned why the states were running deficits while the Australian government was running a cash surplus of $13.6 billion. He said:

... the States are not funding investment from their revenues. The States are borrowing—drawing down on savings rather than adding to them—and in this respect adding to pressure on monetary policy.

My biggest fear is that the fiscal incompetence of the Tasmanian government, being exercised in the context of boom economic times and generous federal funding, provides more than a glimpse of how a Rudd Labor federal government would perform if elected later this year. What if we had wall-to-wall Labor in every state and territory and federally? The comparison is genuine and relevant. I do not doubt that there are some talented people in the ranks of the Labor Party both here and in the states. To suggest otherwise would be disingenuous. However, they are the cream on top and if you skim them off then you find underneath a watery grey. They are vastly outnumbered, and in many cases sidelined, by ex-unionist bosses. (Time expired)