Grant Chapman (SA, Liberal Party) Share this | Link to this | Hansard source

I direct my question to the Leader of the Government in the Senate and Minister for Finance and Administration. Minister, how important is sound budget management by all tiers of government? How does the financial position of the Australian government compare with those of individual states?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I thank Senator Chapman for that astute question. It is a fact that over the last 10 years the financial position of the Australian government has improved enormously. When we came into government, the budget deficit was $10 billion annually and we inherited a debt of $96 billion. Today we are on track to record a surplus of $11½ billion, and government debt will be eliminated entirely in the next few months. It really is important that the Australian government runs surpluses when the Australian economy is strong. That helps us keep pressure off interest rates, and it makes sure that as a government we are contributing to national savings.

Unfortunately, while the Australian government is adding to national savings by more than one per cent of GDP this financial year, on the other hand, state and local governments are actually detracting from national savings by 0.3 per cent of GDP because, unbelievably, those state governments are heading into deficit and running up debt. Last year, of course, we saw the biggest state government, New South Wales, under its Labor administration, trying to do something to address its parlous economic position. It is incredible that, after 10 years of strong economic growth, an unprecedented property boom in Sydney and massive net benefit from the GST, Labor in New South Wales is facing these horrendous deficits. Unfortunately, in the case of South Australia, the Rann Labor government seems intent on going down the New South Wales path.

Opposition Senators:

Opposition senators interjecting—

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I just happen to know a bit about the state of South Australia. That state has received over $17½ billion in GST revenue since the GST was introduced, including a windfall of $402 million over and above what it would have got if we had continued with the old Labor way. Yet, despite that windfall, South Australia’s budget is now heading into the red. The Rann government itself is projecting an operating surplus of just $9 million for 2006-07. But, if you look at the underlying cash position, which is how we measure the federal government budget, when using the same measure as the federal government budget for South Australia you will see that South Australia will run a deficit of $105 million in 2006-07. So Mr Rann has turned windfall revenue gains into a budget deficit and now has the hide to base his campaign for re-election in the state on his economic credentials.

Mr Rann runs around taking credit for the air warfare destroyer contract, which he had nothing to do with. The person who should be commended for the air warfare destroyer contract is Senator Robert Hill, my esteemed colleague. It was the federal government that let that contract, not the Rann government. All that we heard from Mr Rann and Mr Bracks just meant that they cancelled each other out. Mr Rann also had the hide to try and take credit for the expansion of the Olympic Dam mine, ignoring the fact that it is the mine’s owners who are putting the capital at risk to expand that mine. And it is absolutely no thanks to the Labor Party, which actually forbids new uranium mines. It is all right to expand an existing mine, but apparently you are not allowed to open new mines. Of course, Mr Rann takes credit for the growth in the South Australian economy, which, again, he had absolutely nothing to do with. That is all the effect of sound economic management at the federal level. So the South Australian government is doing what other state governments are doing under Labor—cruising on national economic strength, pocketing windfall GST revenues and squandering all of those revenues on misplaced priorities. The disastrous financial situation in New South Wales is clearly a sign of what awaits South Australia if they re-elect the Rann government.