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- 22 September 2004
General Purpose Standing Committee No. 1
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Page: 11270
Report: 2004 Mini Budget
Debate resumed from 3 June.
The Hon. GREG PEARCE [5.29 p.m.]: Reverend the Hon. Fred Nile is no longer a member of the House so he is not here to speak on the report. I took a great deal of interest in the report and moved the motion that established the inquiry. To give the honourable member his due, I will mention a few of his comments about the role of estimates committees and the reason that General Purpose Standing Committee No. 1 undertook an inquiry into the mini-budget.
Essentially, Reverend the Hon. Fred Nile emphasised the role of the Legislative Council as a House of review. His view was that if estimates committees are to be of any value at all, they must allow Opposition and crossbench members to examine in detail the Government's program for the year, not simply rubber-stamp what the Government is doing. He said that without a careful and detailed analysis we would have no opportunity to work out what the Government is doing in any department. That was the basis on which we proposed, and the House agreed to have, a short inquiry into the mini-budget.
Honourable members will recall that the mini-budget was announced on 6 April and the Treasurer claimed that it was necessitated by three matters: first, financial pressure imposed on New South Wales as a result of what he called "savage financial cuts" from the Federal Government purportedly amounting to $376 million in that year; second, what he referred to as the recently awarded pay rises for nurses and teachers, alleged to have cost $400 million in a year; and, third, a desire on the part of the Government to target savings and implement cost-cutting measures to ensure duplication is eradicated. The hearing found that these three purported reasons for the mini-budget were either lies or distortions of the truth to disguise the Government's mismanagement of the massive tax revenues that it has collected over the past nine years, and the fact that we were moving into deficit.
The Hon. Jan Burnswoods: Point of order: I know that the parameters of take-note debates are fairly broad but Opposition members are using the word "lies" whenever they please. Again I point out that if the Hon. Greg Pearce wishes to accuse the Treasurer of lying, apart from the fact that such an accusation is tasteless and unfair, under the standing orders he needs to make the accusation by way of substantive motion and not as a throwaway line, which happened earlier today in another take-note debate. I ask the Hon. Greg Pearce to withdraw the comment and to cease trying to turn this debate on a committee report into personal abuse of the Treasurer.
The Hon. GREG PEARCE: To the point of order: If you care to inspect Hansard, I did not at any stage suggest or say that the Treasurer told a lie. I would hope that the honourable member would not take up my time.
The Hon. Jan Burnswoods: Who were you talking about?
The Hon. GREG PEARCE: There is no point of order.
The DEPUTY-PRESIDENT (The Hon. Kayee Griffin): Order! I did not hear the Hon. Greg Pearce use the term to which offence was taken by the Hon. Jan Burnswoods. However, if it was used by the member, I ask that he not use it again. Indeed, members should refrain from using unpalatable language similar to that used in another debate earlier today.
The Hon. GREG PEARCE: Thank you, Madam Deputy-President, for your erudite ruling. The key factors in relation to the mini-budget can be summarised in those three areas that I mentioned earlier, the first being the question as to whether the State budget was $376 million in the red because of any so-called savage attacks from the Federal Government. When I asked the Treasurer whether the budget for the current year included $376 million in projections, he agreed that figure did not appear. In fact, as we now know, the 2004 Commonwealth grants from the December 2003 mid-year budget review show that New South Wales expected to receive an extra $127 million from the Commonwealth when the mini-budget was brought down.
In relation to the foreshadowed pay rises for nurses and teachers, during questioning the Treasurer again conceded that those pay rises had already been included in the budget projections in the mid-year review, which was published in December 2003. So that again was not a basis for the mini-budget. As to the so-called savings, particularly in relation to the Department of the Environment, where major savings were to be obtained, and the former Department of Women, detailed questioning showed that no real savings would be achieved purely as a result of the mini-budget. Indeed, the Secretary of the Treasury, John Pierce, conceded that the mini-budget made public decisions that would have been necessary in the normal functioning of the budget. Therefore, the committee evidence did not support those purported reasons for the mini-budget.
What was of real concern at that time was the introduction of the vendor duty and the land tax. Even as late as today I noticed some eminent experts on the property industry lamenting in the media that the property market has slowed and people were investing in States other than New South Wales—something Opposition members prophesised would happen. What was the most astonishing aspect of the vendor duty and changes to land tax was that the Treasurer did not have a model or analysis to support the introduction of these taxes, and I refer particularly to the evidence of the Secretary of the Treasury, Mr John Pierce.
We established also during the hearings that the department did not have any real evidence as to expected revenues from the vendor duty, and again I refer to the evidence of Mr John Pierce, who made it very plain that whilst various tax options had been considered in the lead-up to the meeting of Treasurers—which took place in Canberra the week before the mini-budget was brought down—in the week following, the Treasurer simply came up with this great idea to introduce new and unpleasant taxes without any analysis or model, and on which the Treasurer did not have any real information as to projected revenues. The target of $600 million in revenue from vendor duty simply slotted into the expected budget deficit and made the numbers add up. Because the Government has moved into a deficit this year, we sought a breakdown of the figures that led to that deficit and, again, the Treasurer was simply not able to provide those figures to the committee, notwithstanding that that basic work should have been undertaken prior to implementing the mini-budget.
I shall detail the reasons that the Government was so unprepared for the measures it introduced in the mini-budget, and I refer the House to the evidence of the Office of State Revenue representatives, who made it clear that they did not have the necessary resources to implement the vendor duty and land tax changes before they were introduced. Of course, of great concern was the fact that some of the cuts seem to be designed simply to reduce staffing in various parts of government to achieve savings, which were not supported by any research. I thank the staff and committee members for their fine work in the conduct of the mini-budget hearings and in preparing the report. There was very little time available to do so and, as usual, we had great support from the staff.
The Hon. JAN BURNSWOODS [5.39 p.m.]: I will make a few comments on the report of General Purpose Standing Committee No. 1 on the 2004 mini-budget, which was tabled back in June, just before the budget for this year was produced. First, I acknowledge the work of Reverend the Hon. Fred Nile, as chair of the committee, and other committee members, several of whom were substitutes on this occasion rather than substantive members. This is an unusual report from a general purpose standing committee, in that it is something of a hybrid between an ordinary report and a budget estimates committee report. The Hon. Greg Pearce has already commented on that.
The report does not contain recommendations, because it is not a report in the form that we normally expect from a committee. It is like a somewhat elongated budget estimates committee report. Committee staff and the chair should be congratulated on the report because, on the whole, it is a successful attempt at being a fairly factual statement of the evidence the committee received. The minutes reveal that there was some argument amongst committee members, to which I will return later, about what evidence should and should not be allowed, but in most cases it was probably more a matter of emphasis than dispute as to the facts.
One major exception relates to the point of order I took during the contribution of the Hon. Greg Pearce. Without wishing to engage in a personal argument with him, a lot of it comes back to the old phrase about statistics. Depending on the type of statistics one uses, one can read almost anything into this report, and I certainly disagree with some of what the Hon. Greg Pearce has read into it. For example, if one refers to the real situation with regard to the Federal funds flowing to New South Wales, one gets a different picture from the picture one gets when referring to the financial aspect. One also gets a different picture if one refers to general purpose grants as opposed to specific purpose grants.
I will leave it to members, if they are interested in these matters, to look at them. I simply draw attention to table 1.1, which appears on page 1 of the report. The table quotes the Commonwealth Grants Commission, the report it released in February this year about its review on State revenue sharing activities and the recommendations it made about the underlying changes in the share of GST revenue received by each Australian State. The table shows a reduction of more than $300 million for New South Wales, an increase of $262 million for Queensland, an increase of $230 million for Western Australia, and so on.
The report makes it clear that, as has often been said, New South Wales suffers badly because it is continually called on to subsidise certain other States. As the Treasurer has said on many occasions in this House, many people in New South Wales may resent the fact that the major beneficiary, Queensland, appears to be rolling in money and certainly does not need to impose the taxes that New South Wales imposes.
The inquiry process had some amusing moments. Those who know the Treasurer, and his ability to be on top of his portfolio and make his points very well, will not be surprised to hear that although he appeared before the committee together with a large list of people from Treasury, he dealt with most of the questions himself. He made effective use not only of his voice and his usual stylistic devices but also of a whiteboard that was erected in the committee hearing room. I think it would be fair to say that no matter what was thrown at him, the Treasurer managed to continue, successfully, to reiterate the reasons that the Federal Government's treatment of New South Wales had made the mini-budget necessary. By the time the report was tabled, of course, we were well on the way to the budget, and many of the allegations originally made about the mini-budget had been disproved. One of the more informative parts of this slim report is the minutes. I draw members' attention to the view of one Opposition member regarding the budget process. Towards the end of the inquiry the Hon. Catherine Cusack moved that the following paragraphs be included at the conclusion of the report:
The Committee expresses concern at the decision making process used by the Government for identifying savings measures. All five agencies that were asked how savings were identified indicated they were selected by the Ministers' Offices …
Such a method exposes the decisions to the perception that they were political and not properly considered. The result is unjust and even perverse outcomes.
The amendment was lost, only the two Opposition members having voted for it. At that time the Hon. Catherine Cusack announced that she would incorporate those paragraphs in a dissenting report, but no dissenting report materialised. I draw the attention of honourable members to this because, on any reading of the two paragraphs, it is apparent that the Hon. Catherine Cusack, or perhaps the Hon. Catherine Cusack and the Hon. Greg Pearce—the Hon. Greg Pearce can speak for himself—fail to understand the kind of democracy in which we live, and the Westminster system in particular—
The Hon. Greg Pearce: Point of order: I followed the Hon. Jan Burnswoods' comments about the minutes of 2 June 2004. Nothing in those minutes indicates that the Opposition proposed to prepare a dissenting report. I certainly did not give any such indication. I draw attention to the motion moved by the Hon. Tony Burke—
The Hon. JAN BURNSWOODS: That is not a point of order; it is part of the debate. The Hon. Greg Pearce may give a personal explanation if he likes, but what he is saying—
The Hon. Greg Pearce: Madam Deputy-President, I have the call.
The DEPUTY-PRESIDENT (The Hon. Kayee Griffin): Order! The Hon. Greg Pearce may continue.
The Hon. Greg Pearce: Thank you, Madam Deputy-President, I appreciate your getting the Hon. Jan Burnswoods back in control; she is very difficult to control on some occasions. I simply make the point that the only motion in relation to a dissenting report that appears in the minutes of the meeting of 2 June is a motion of the Hon. Tony Burke, who is no longer a member of this place, that members wishing to make a dissenting report provide the dissenting report to the secretariat by—
The DEPUTY-PRESIDENT (The Hon. Kayee Griffin): Order! The Hon. Jan Burnswoods said that the Hon. Catherine Cusack said she was going to put in a dissenting report, not that it was in the minutes. There is no point of order.
The Hon. Greg Pearce: Point of order: The Hon. Jan Burnswoods specifically said what I have referred to, in the context of reading from the minutes. I simply sought to correct the minutes by pointing out that the Hon. Tony Burke moved a procedural motion and that that motion is referred to in the minutes. The Hon. Jan Burnswoods should not mislead the House. She is very good at trying to stop other people from misleading the House, so she should not mislead the House herself.
The DEPUTY-PRESIDENT (The Hon. Kayee Griffin): Order! That is not a point of order.
The Hon. JAN BURNSWOODS: To the point of order: The Hon. Greg Pearce's comments do not constitute a point of order. I read very carefully from the Hon. Catherine Cusack's motion, which is set out on the last two pages of the committee's report. The point I was making in reading those words is that they demonstrate that the shadow Minister has a fundamental misunderstanding of the Westminster system.
The Hon. Greg Pearce: Point of order—
The Hon. JAN BURNSWOODS: I am speaking to the point of order.
The Hon. Greg Pearce: To the point of order: The Hon. Jan Burnswoods is not taking a point of order but engaging in debate. I have risen on a point of order. She has to sit down.
The Hon. JAN BURNSWOODS: In continuing to speak to the point of order, the point I was making is that fundamental misunderstanding of the Hon. Catherine Cusack—
The DEPUTY-PRESIDENT (The Hon. Kayee Griffin): Order! I ruled on this point earlier. No point of order is involved in the matters raised by the Hon. Greg Pearce. When speaking to the point of order the Hon. Jan Burnswoods referred to the Hon. Catherine Cusack saying that she would move a dissenting report. That did not happen. There is no point of order.
[Time expired.]
The Hon. PETER PRIMROSE [5.50 p.m.]: I recall that, a few years ago, General Purpose Standing Committee No. 1 held an inquiry into the budget process. I considered it to be a very valuable exercise and members on all sides of the political spectrum learned quite a lot. Officers from Treasury and relevant departments appeared before the committee and we went through the matters step by step. I know that the Hon. John Ryan and those who participated took a great deal of interest in that committee, which was chaired by Reverend the Hon. Fred Nile. I believe we learned a lot about the budget-setting process that occurs in this State, its complexity and importance.
What distressed me, and it has been alluded to by the Hon. Jan Burnswoods, is that those Opposition members who were present during recent committee hearings and discussion on the 2004 mini-budget would have learned a lot and would have benefited from participating also in the earlier inquiry. A reading of the papers, particularly the comments on pages 55 to 60 of the minutes, reveals the proposition that because decisions were actually being made by Ministers and not by public servants this was, in some way, deleterious to the political process.
My understanding of the Westminster system is that Ministers make decisions on advice. The buck stops there. The principle of the original British Exchequer was that part of the Executive made the decisions—not public servants, not the Sheriff of Nottingham, but the King's men. Now that we have the Crown and an Executive, Parliament is responsible for allocating funding and the Ministers make determinations on how that expenditure occurs. To suggest that this is in any way a perversion of the Westminster system is a gross misunderstanding of the budgetary process, not only in this State but in all parliamentary systems based on the original Westminster system.
Motion agreed to.
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