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19 Jun 2014

Supply Bill

The Hon. A.L. McLACHLAN ( 15:20 ): I rise today to speak on the Supply Bill and to support its second reading. I begin by acknowledging the importance of this bill and, in particular, the ability of the government to have access to the funds it needs to ensure its continued operation ahead of the consideration of the upcoming budget and the associated legislation. However, in supporting this bill one cannot help but pause to reflect on the difficulties South Australia is facing and the state’s perilous finances that allow little room to freely chart its course in the coming years.

How did we come to find ourselves as a once wealthy and vibrant community now racked by self-doubt, debt laden and with recurring deficits? Government must work with business to build a strong economy and to secure the state’s financial position which, in turn, will allow us to pursue our social endeavours.

At the same time, the environment in which we operate must always significantly determine our spending priorities—yet the state deficit is one of the fastest growing of any state. Unemployment, which is the scourge of social cohesion, is on the rise and there are 18,000 fewer full-time jobs since the last budget. The youth jobless rate is above the national average. In certain economic rankings the state is often the worst on the mainland. Some economic forecasts indicate our growth may be up to four times slower than the national average.

Small to medium size businesses are the backbone of the South Australian economy. One analysis of our competitive environment surprisingly indicates that Melbourne is cheaper for doing business than Adelaide. As a community, led by this parliament, we must carefully review our spending priorities and ensure that their impact is maximised for the benefit of the citizens that have elected the parliament.

There was a time—a happier time—when South Australia could see itself on an equal footing with New South Wales and Victoria. Now we are spoken of comparable to Tasmania. Like Tasmania, we have in comparison to the east coast states, per head, larger government, higher numbers of citizens on welfare and larger numbers of public servants. This is not a recipe for success. These metrics will not deliver us a prosperous future; rather, they are the symptoms of a directionless economy and steered by a government that would rather grow the public sector than create an environment in which its spirited citizens can flourish.

There are two expenditure areas upon which I wish to make some specific comments: the public sector and health. The Public Service is essential to ensure that South Australians enjoy the key services which the government traditionally provides. However, the public sector does not have the skills or motivation to take on risk and create wealth. As I have remarked earlier, we continue to have one of the highest ratios of public sector employees to citizens. If we are to continue to spend at this level on the public sector the focus should be on service delivery and less on oversight and administration.

There is little point spending on employment that has either little or no impact on the ability of our people to create wealth and, in turn, improve employment opportunities. Our public servants need to become leaders of our community rather than merely its administrators. Their focus should be on creating an environment where there is an increase in productivity and participation, not regulation and economic stall.

I now turn to health. Health is the largest challenge for the government to meet its budget expectations. Measures to control spending are an obvious priority. There needs to be an urgent emphasis to reduce waste and inefficiency. The rate of spend in health cannot continue unabated, for it will eventually surpass our ability to raise the necessary revenues.

Health spending has grown about 8 per cent a year and now consumes around 30 per cent of the state’s budget. While the spending increases, it directly limits our ability to provide for the other needs of our community, such as education and infrastructure for trade. A transformation or recasting of this sector is necessary so that our community investment derives the best outcome and value for our people. The longer we continue to invest in the existing and unsustainable model of enterprise, the longer it will take to return our finances to an even keel.

It has been said by many that the main objective of fiscal policy should be to contain public debt. I agree with this sentiment. Sustainable long-term growth requires sound public finances. We should turn our gaze to Europe and acknowledge the disaster that expansionary fiscal policy has brought to those countries that have taken this path.

I urge the government to make a serious commitment to identify and realise a sustainable economic model for this state. We should endeavour to have surpluses which will provide security for our people when future challenges or unexpected shocks arise. At present we do not have the fiscal settings that will provide us with the financial strength to confidently embrace our future and the inevitable challenges that await us. Our watchword in all our deliberations must be self-reliance. I urge the government to be more diligent in the leadership and the management of our state. I commend the bill to the house.

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