23 June 2016

2nd Reading Speech

The Hon. ADAM SEARLE ( 16:10 ): I speak on behalf of the Opposition in debate on the Appropriation Bill 2016, the Appropriation (Parliament) Bill 2016 and the State Revenue Legislation Amendment (Budget Measures) Bill 2016. I will not give as full an account as the Leader of the Opposition did in the other House. He not only gave a detailed critique of the missed opportunities and shortcomings in this year’s State budget but also set out Labor’s positive plan and outlined a series of initiatives that will inform Labor’s deliberations going forward to the next election. Patients, students and aspiring home owners in New South Wales are the biggest losers in the budget handed down this year by the Baird Government. The Premier and the Treasurer will hoard more than $8 billion in surplus taxes over the next four years but they have ignored a raft of health, education and housing affordability priorities.

The Government trumpets the low level of net debt but members opposite should note that when we look at the forward estimates, as the Government starts to spend the proceeds that were put into Restart NSW, by 2019‑20 the net debt will rise rapidly to reach its highest level in two decades. There is talk about the infrastructure spend which, in the forward estimates, will be at its highest point this year. But over the next four financial years it will drop sharply and at the end of that period it will be at its lowest level in 12 years. The Government is trumpeting certain economic measures, but it is not investing in better schools or hospitals. I will give two examples. The Nepean Hospital in Sydney’s west needs an upgrade estimated to cost $370 million. In this year’s budget a mere $1 million was allocated for planning. Concord Hospital has suffered a similar fate. It requires an upgrade costing approximately $159 million, but only $700,000 was allocated to it in this financial year.

The importance of hospitals and health care is being downgraded in the budget. Upgrades across the State are being delayed or they are allocated only token amounts of money. More money is allocated in the budget for building new prisons than for building new classrooms. This Government has failed to restore the funding cuts it started in its first budget in 2011, when $270 million was slashed from school capital works funding. In fact, people with good memories will recall that nearly $2 billion was cut out of the budget for school and TAFE education. Over the next 15 years more than 165,000 additional children will be in our public schools. Yet this budget reveals a shortfall of nearly $11 billion in capital funding for necessary classrooms. At the rate the Government has set to meet this challenge, it will take 45 years to build the classrooms that will be needed in the next 15 years. In any person’s language that is an utter crisis. 

The Government has made a point of providing $330 million for school maintenance over the next two years. It inherited a school maintenance backlog of $156 million when it came to office in 2011. Today, that backlog stands at $732 million. That happened on the watch of those opposite. The Auditor-General’s report reveals that the maintenance backlog increased by $195 million last year alone. No matter which way we cut those figures, the Government is slipping backwards, the backlog is getting worse, and it has no plans to close the gap. The attacks on TAFE, which is the publicly funded vocational education provider, continue. The attack on TAFE started under the O’Farrell Government, with more than $1 billion cut from TAFE. The budget documents confirm an underspend in TAFE in the past financial year of $313 million. Since 2012 the Government has sacked more than 5,200 teachers and support staff in the TAFE system and forecast enrolments are down by more than 126,000 a year compared with 2012. 

A record of nearly $9 billion in transfer duties was delivered in the 2015-16 budget on the back of Sydney’s continuing property boom. That trend is forecast in the budget to continue, with stamp duty receipts totalling more than $37 billion over the next four years. Let us consider the mishandling of those important financial resources by this Government. There is a blowout in the WestConnex project of $6.8 billion, which is nearly the total amount of funding allocated to rural and regional New South Wales under the electricity privatisation process. That money has been squandered.


The Hon. Shaoquett Moselmane: Point of order: The Leader of the Government should not interject. This is an opportunity for the Leader of the Opposition to have his say about the budget papers. 

DEPUTY PRESIDENT ( The Hon. Shayne Mallard ): Order! Members with the call will be heard in silence.

The Hon. ADAM SEARLE: In addition to the $6.8 billion blowout in WestConnex, there is a $1.5  billion blowout in the metro south project. The inner city fleet renewal is blowing out by more than $1 billion. The Government is squandering the resources from the Sydney property boom. Despite the rivers of stamp duty gold, it has never been more difficult, because it is unaffordable, to get into the Sydney housing market. There is no measure in the budget to even attempt to square the shoulders of this Government to meet that challenge. While celebrating the surplus, there are no new measures in the budget to drive housing affordability or assistance measures for key workers such as police, nurses and teachers, who are finding it near impossible to buy a home. The only practical suggestion from the Government is for teachers to leave Sydney. On top of that is the fact that the First Home Owner Grant has been cut by $5,000 since the beginning of 2016. 

Despite the claim by this Government that it supports renewable energy projects across New South Wales, there is no line item of funding in the budget papers apart from the ongoing Solar Bonus Scheme and energy efficiency measures. No wonder New South Wales is now coming last in Australia with its performance in this area. In last year’s budget the Government claimed to be committed to driving down electricity prices. It is instructive that no such claim is made in this year’s budget papers. It is no wonder, because the Government has spent a small fortune in legal fees trying to overturn the determination of the Australian Energy Regulator, which would see significant cuts to electricity fees for businesses and individual home owners. Overturning that determination would drive up electricity prices and fatten the State-owned electricity assets for sale, which is against the public interest. 

But all that pales into insignificance compared with the key challenge at the heart of this budget—which remains wholly unacknowledged and unaddressed—and that is State finances. By 2020 revenue will drop to its lowest level in 15 years. This is compounded by the billions of dollars in Federal funding cuts to schools and hospitals arising from the 2014 Federal budget. Those cuts will soon be felt in the New South Wales budget, but those opposite have no plans to meet that challenge. 

Compounding this problem further is the State’s falling share of GST, which accounts for around 25 per cent of the total revenue. To put that into perspective, stamp duty accounts for around 9 per cent.

By 2019-20 the share of GST allocated to our State will have fallen to an historic low of 26 per cent—more than five percentage points below the 2014-15 share of 31 per cent. If the New South Wales Government had managed to persuade its Federal colleagues to keep New South Wales’ share of GST at 2014-15 levels, more than $10 billion of extra GST revenue would flow to the New South Wales Treasury. I am using the New South Wales Treasury’s own figures. The Government has gone easy on its Federal colleagues and New South Wales is being ripped off to the tune of $10 billion in GST revenue over that period. As I have indicated, this will be compounded by the share of State revenue, which will drop to its lowest level in 15 years by 2020.

There is no plan in this budget or in the Treasurer’s speech to acknowledge, much less address, this emerging and widening hole at the centre of State finances. At the same time, the State Government feels free to give away a range of existing long-term taxes that have historically been worth between $400 million and $500 million per year. The Government crows about lifting taxes for business. That is its choice. At a time of widening deterioration in State finances—through Federal funding cuts and the collapse of GST—the State Treasury has forecast that State revenue will decrease to its lowest level over the next four years. It is a time bomb at the heart of State finances—a point the Government refuses to acknowledge and that will come home to bite us. I will give a longer analysis of the shortcomings and missed opportunities in this budget during the budget estimates take-note debate. 

The Hon. Rick Colless: Read the budget papers before you do.

The Hon. ADAM SEARLE: I remind those opposite that I could speak for another 29 minutes. I could stand here for a fair bit of the afternoon if they want to interject. On that note, I will end my contribution. I look forward to returning to the discussion on the State budget during the budget estimates debate in August.