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Legislative Assembly 776 LEGISLATIVE ASSEMBLY Wednesday 7 June 2006 ______ Mr Speaker (The Hon. John Joseph Aquilina) took the chair at 10.00 a.m. Mr Speaker offered the Prayer. Mr SPEAKER: I acknowledge the Gadigal clan of the Eora nation and their elders and thank them for the custodianship of this land. JOINT SELECT COMMITTEE ON THE CROSS CITY TUNNEL Establishment and Membership Mr SPEAKER: I report the receipt of the following message from the Legislative Council: Mr SPEAKER The Legislative Council desires to inform the Legislative Assembly that, having considered the Legislative Assembly's message of 25 May 2006 regarding the Joint Select Committee on the Cross City Tunnel, it has this day agreed to the time and place appointed by the Legislative Assembly for the first meeting of the Joint Select Committee on the Cross City Tunnel. The Legislative Council further informs the Legislative Assembly that the following members of the Legislative Council have been appointed to serve as members of the committee: Ms Fazio Mr Pearce Ms Rhiannon Legislative Council MEREDITH BURGMANN 6 June 2006 President JOINT SELECT COMMITTEE ON TOBACCO SMOKING Establishment and Membership Mr SPEAKER: I report the receipt of the following message from the Legislative Council: Mr SPEAKER The Legislative Council desires to inform the Legislative Assembly that, having considered the Legislative Assembly's message of 25 May 2006 regarding the Joint Select Committee on Tobacco Smoking, it has this day agreed to the time and place appointed by the Legislative Assembly for the first meeting of the Joint Select Committee on Tobacco Smoking. The Legislative Council further informs the Legislative Assembly that the following members of the Legislative Council have been appointed to serve as members of the committee: Mr Donnelly Mr Harwin Legislative Council MEREDITH BURGMANN 6 June 2006 President CHILDREN (DETENTION CENTRES) AMENDMENT BILL Message received from the Legislative Council returning the bill without amendment. APPROPRIATION BILL APPROPRIATION (PARLIAMENT) BILL APPROPRIATION (SPECIAL OFFICES) BILL 7 June 2006 LEGISLATIVE ASSEMBLY 777 DUTIES AMENDMENT (ABOLITION OF STATE TAXES) BILL STATE REVENUE AND OTHER LEGISLATION AMENDMENT (BUDGET MEASURES) BILL Second Reading Debate resumed from 6 June. Mr PETER DEBNAM (Vaucluse—Leader of the Opposition) [10.03 a.m.]: This Labor Government has reaped record property taxes and billions of dollars of above-budget revenue over the past 11 years, but its election promises simply have not been delivered. The people of New South Wales want to know where all the money has gone. They know that over the past decade the Labor Government has taxed them to within an inch of their life, but they also know that front-line services are scratching for resources and that the State's infrastructure is run down. Where exactly has all the money gone—all those billions of dollars of property revenue? Before the people of New South Wales allow Labor to run up another $17 billion of debt over the next four years they want to know what the Government did with that record tax revenue. I will tell them what the Government has done with almost $400 billion of revenue over the past 11 years, but they really deserve to hear it from the Labor Party. This election year budget is a classic New South Wales Labor budget. It is an attempt to fix headlines rather than the problems. Instead of an economic rescue plan for New South Wales, Morris Iemma is trying to sneak out a political re-election plan for Labor. New South Wales needs a plan to repair the State, not Labor's lagging political fortunes. After 11 years of Labor mismanagement the Government faced two choices in preparing this budget. A budget strategy of bold honesty was one choice—that is, it had an opportunity to detail the depth of the State's problems, to confront them head on and to introduce a program that provides real solutions. The second choice was a budget strategy of denial and deception—that is, a budget of fiction that Labor hopes will get it through the election. Labor took the easy option. With Labor, spin always comes before substance. The election year budget we saw yesterday is a budget of denial, deficit and debt. Labor still has not admitted to the people of New South Wales where all the money has gone. In fact, the three pillars upon which this budget is built—the Government's forecast of economic growth, its claim that it will rein in expenses growth and its claim to be cutting taxation—are deceptive. Labor has delivered another fairytale budget in an election year. The first critical piece of fiction in this budget is the economic outlook for New South Wales. Economic growth forecasts for future years are overstated and the inevitable failure to meet them will mean more deficits. Last year the Government's final demand forecast of 3.5 per cent was revised back to 2.5 per cent in the mid-year budget review. It remains at 2.5 per cent, a full 1 per cent below the original budget forecast. Gross State product [GSP] forecasts are even more unreliable. Last year the Government forecast GSP growth of 2.75 per cent and then revised that back to 2 per cent. It is now forecasting 2.5 per cent for this year and 3.25 per cent in the medium term. These forecasts are clearly highly ambitious, and given that the Government's GSP forecasts have been higher than the actual results for the past five years and the State economy's poor performance, we know that its growth forecasts will simply not be achieved. The second fiction is the Government's claim that it is cutting taxes. Despite claiming credit for budget tax cuts, the Labor Party has simply cut or removed taxes it has imposed in recent years. The Labor Party wants to be applauded for simply backing down on its own extravagant tax grabs. The reality is that government tax revenue will continue to reach record levels. According to the budget, the Government will receive a record $42.2 billion in taxation revenue next financial year, including a record $5.8 billion in payroll tax and a record $1.9 billion in land tax. The third fiction is Labor's claim that it will cut general expenses in 2007-08. That has to be the biggest fiction in the budget. The Government claims that it will return the budget to a surplus of $378 million in 2007-08. It claims it will achieve that by reining in growth in expenses. That is simply unbelievable. Despite general government expenses growing by an average of 5.8 per cent over the five years to 2007-08, the Government desperately claims that growth in general government expenses will fall to just 1.9 per cent in 2007-08, rising again to 4 per cent the following year. It is obvious that the Government has massaged that 1.9 per cent figure to conjure up a budget surplus forecast in 2007-08. Why? Because given the election year $696 million deficit the Government knows that the credit agencies will scream if serious deficits are projected for two years running, let alone for three. Credit rating 778 LEGISLATIVE ASSEMBLY 7 June 2006 agencies are already questioning the Government's ability to deliver promised spending cuts, with Standard and Poor's yesterday expressing concern over the budget projections and noting that the Labor Government has always had "difficulty with cost control". The reality is that this Government has never demonstrated any ability to rein in its expenses. Based on its previous record, the 1.9 per cent expenses growth in 2007-08 is more likely to come in closer to 4 or 5 per cent. A 5 per cent result would deliver a State budget deficit of approximately $1 billion in 2007-08. Such a projected series of deficits would likely trigger a review of the State's triple-A credit rating. At the very least the rating agencies would place New South Wales on credit watch. Let us understand the real state of affairs in New South Wales. In responding to the budget this morning I will outline more details on how the Coalition will tackle the problems Labor has left in New South Wales. But let us first take a look at the real state of the New South Wales budget and economy and examine some statistics and indicators not mentioned in the Treasurer's Budget Speech. According to the Australian Bureau of Statistics [ABS], New South Wales had the lowest economic growth of all the States and Territories at just 1.1 per cent for 2004-05 compared with the national average of 2.3 per cent. Notably, Victoria achieved a 2.3 per cent growth versus our 1.1 per cent. South Australia achieved a 2.6 per cent growth and the Australian Capital Territory managed a 3 per cent growth, undermining the Labor Government's claim that only the resource-rich States are doing better than New South Wales. The latest ABS data shows that New South Wales has the highest unemployment rate of all the mainland States, at 5.6 per cent, which is well above the national average of 5.1 per cent. Our employment growth over the 12 months to April is the lowest of all the States at just 0.28 per cent compared with the national average of 0.98 per cent or almost 1 per cent. Employment in Victoria is growing at 0.93 per cent, three times faster than in New South Wales, while in Tasmania employment is growing more than five times faster than in New South Wales.
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