Democrats' Response to the Budget through the Supply Bill

Extract from Hansard

Legislative Council
6 June 2001

Mike Elliott
Leader Australian Democrats
Member of the Legislative Council

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The Hon. M.J. ELLIOTT: In debating the Supply Bill, a bill that supplies money for the public service of the state during the period under which the budget is under consideration, we need to consider how well the money is being spent and how well the state is travelling. In so doing, we need to take a look at the budget that was presented in this place last Thursday. It was an issue that I attempted to address earlier in the evening in terms of discussion about whether or not we needed an estimates process, and I sought to give examples as to why. However, I was stopped from doing so, so I will recount some of the story so that we can take a complete overview of the position in which South Australia finds itself at this time.

The Treasurer has suggested that we were turning a new page and entering a new chapter, and I have to say that I just cannot see that anything is changing in this state in terms of our overall position. We are in significant difficulty in a financial sense and, in my view, have made no progress relative to the rest of the nation in the past eight years. In fact, there are some significant indicators to suggest that we have continued to lose ground. We are lucky that the national economy has been moving along quite nicely for the past couple of years, although the international money market seems to have some trouble understanding that and has driven the dollar down.

Basically, South Australia has coattailed on that, and that is all you can really expect for a state. State governments really have to be very dependent on international and national economies and how they are travelling. What state governments can do is make things a little better or a little worse and, unfortunately, what we can see as we look at this budget is that progressively things have been made a little worse each year. There have been a few bounces here and there and it does not mean there have not been some bright spots, and I will comment on those, but overall we just have not made the progress that we would have hoped for.

This government, elected some 7½ years ago after the State Bank debacle, has not, I believe, improved the net position of this state at all. It talks about inheriting a net debt level of just over $10 billion, but this is the government as usual playing with numbers. That was not the debt: it is trying to say that that is the debt in today's dollar terms. You cannot play it both ways: with growth in the economy, growth in GSP, the relative debt compared to the way we were before is actually getting less. But the government wants to play some other games, which suggest that the debt in the past has been made worse in today's dollar terms, and note that it has been reduced to $ 3.3 billion.

The Hon. M.J. ELLIOTT: He is playing with figures, because when one looks at debt in this state one sees in this budget that the financial public sector net debt has actually increased by some $122 million. One also notes that the unfunded superannuation liability has actually blown back out by another $ 98 million. What we are in fact talking about is a deterioration of some $ 200 million. That is before you take into account the fact that the government raided SAFA. On my understanding, the SAFA nest eggs are actually outside the non-financial public sector debt and, as such, the government has bought some $92 million in from SAFA and some $40 million- odd dollars in from the South Australian Assets Management Corporation.

The underlying situation is one of deterioration in terms of debt, and it is only asset sales that have actually hidden what has been a continued deterioration during this term of government. In fact, if one takes into account the size of the reduction in debt and at the same time looks at the value of assets sold, our net position over the past 7½ years has deteriorated in excess of $1.5 billion. And that is being extremely conservative: it could be closer to $ 2.5 billion.

Year after year the government talks about producing balanced budgets. The claim this year, as I recall, was for a cash balance of $3 million. When one looks at the Budget in Balance document, that is the figure that is given on page 3 and that is the figure that the government referred to and gave to the media. I guess it is a question of which number you want to use. The government did not choose to go to the last page of its Budget in Balance document, which looks at the accrual outlook and which indicated a net operating balance of a negative $38 million; in other words, that the state's debt in accrual terms, in terms of net operating balance, is $38 million.

When we are talking about that net operating balance, what we are talking about is including non-cash costs such as depreciation. Unfortunately, it has been a habit of governments ( not just this present government but really since the Bannon years) to underspend on infrastructure maintenance and the like, and the depreciation has been running at a very high level. That trend has continued and is one of the reasons why the South Australian infrastructure is in such great difficulty.

The Hon. M.J. ELLIOTT: That is right. But I was talking at this stage just about the maintenance of the assets themselves, let alone what the government has done to people. We will get to that later on. If one decides to look at the net lending or borrowing, one finds that the situation is even worse. In fact, our net borrowing is some $209 million this year. That tends to match off against the changes in the debt and the position of superannuation that I alluded to earlier.

Basically, this government has been under every rock where a cent would be stored, pulled it out and that is what it could find. `Captain Sensible' was talking about this responsible budget, but the fact is that he simply did not have any money to spend. In fact, we already had a budget that in real terms was a deficit budget of some $200 million. The reason he could not go on a spending program was that he had nothing left to spend. He still increased the debt. That is what `Captain Sensible' and his government have done to South Australia.

The Hon. M.J. ELLIOTT: I presume that was an interjection from Gilligan there. I am just waiting for Ginger: she will start up pretty soon. While the government attempted to put a spin in terms of how the debt was travelling and in terms of how the budget balance was going, it was nothing more nor less than spin. In fact, South Australia is in significant difficulty. I feel sorry for the next government coming in, because we have a situation where we still have a significant debt, where there is a very high level of spending commitment and where there is no income source remaining because all the income sources have been flogged off.

At the same time, we are seeing increasing costs of utilities, for instance electricity costs, with questions being asked in this place of a minister who simply refuses to answer the questions. This shows a total contempt of question time and a contempt of this parliament. When a minister is asked a question that he has the ability to answer without any great research and he simply fails to provide the answer to the parliament, that is a contempt of the parliament.

The Hon. M.J. ELLIOTT: If he does not know the answer then he should be sacked. We have a significant electricity bill that is now in the contestable market, and that bill is about to explode. I know that one public hospital has an electricity bill normally of about $1 million so that one hospital alone will be looking for some $300 000 to $800 000 extra to pay its electricity bill. Many of the state high schools are going to be looking for $40 000, $ 50 000 and $60 000 extra to pay their electricity bills. What the totality of the risk is at this stage the government simply will not tell us.

As I said, that is a contempt of the parliament and a contempt of question time. I have argued for some time that the standing orders need to be changed to require ministers to answer questions within a reasonable period. Unfortunately, that sort of change is becoming increasingly necessary.

While the government talked about spending, there was very little spending increase. The government put out the spin that this year's education budget is $105 million more than last year's education budget but then decided not to mention the fact that what it was talking about was clearly the budget figure. The fact that there was a pay increase for people working in education meant it was $105 million higher last year, and this year's budget contained nothing extra at all.

In terms of class size and all the other problems that exist in schools right now, the government is not putting in extra resources. It has conned many schools into Partnerships 21 and, if the primary schools say-as they are saying-that they need school counsellors, resources for physical education or extra computers in our schools (which they do), they will be told, `You have your budget: you find the money.' That is the trap of P21, and there will be enormous regret over the next couple of years-although the Labor Party will get a chance to wind that back. It has not so far made any public commitment in relation to that, but I would hope and expect-

The Hon. M.J. ELLIOTT: Well, it needs a little assistance, too. So far, it has not publicly said what its policy is, so I am sure all suggestions will be gratefully received at this stage. In the budget the government talked about a $10 million school improvement program which will provide funding for external maintenance. I can think of one or two high schools which could gobble up probably $500 000 each to address the deterioration they have suffered. The sum of $10 million will not touch the sides in terms of maintenance problems in our school system. It is an absolute pittance, and I referred earlier to the fact that we are not maintaining our assets in this state.

The government proudly boasts another $ 36 million for computers, but if you read the print it says `from government, schools and parent contributions'. Indeed, the parent contributions have been a significant part of all that. The government forced the schools into using a single contractor when many of them had contractors who were supplying computers at cheaper rates. That was a little deal which the government struck up a couple of years ago and which is still running today. In fact, parents are paying more to get computers than they would otherwise have paid. The fact they must pay at all is an absolute outrage. In relation to the economic conditions, the Treasurer talked about `overseas exports of goods remaining remarkably strong'. Well, he is absolutely right. They have remained remarkably strong and there has been some good news in relation to cars-

The Hon. M.J. ELLIOTT: I will get to that-and the wine industry and, at the end of the day, they are both commodity goods. That cannot be ignored. The bad news for Australia in terms of the decline of the dollar has been good news for South Australia, but there are some potential long-term problems. Most people acknowledge that the future growth in the economy-and this is an international trend-will not be in manufacturing but in services. South Australia's growth, so far as it is occurring at this stage, is predominantly in manufactured goods-

The Hon. M.J. ELLIOTT: -and not in services. There is no criticism about the growth in manufacturing. The concern is that that is where all the significant growth is occurring. It is very dependent on the Australian dollar. If members do a tour of Mitsubishi right now, they will see that the number of left-hand drive vehicles is phenomenal. You would think, `This is good, this is export dollars coming in, and jobs for South Australians'-and it is. There is no question that the ability to export to the US market right now is because the Australian dollar is hovering at a little over US50¢ rather than US82¢ which was the case a couple of years ago. At US82¢ those cars would not be going into that market, or indeed other markets, because so many of our trade deals are in US dollars.

We have been very fortunate that the Australian dollar has been down because, if it had not been, what else would have been happening in South Australia? The wine industry, while it would have grown, would never have grown to the extent it has now. The costs in Australian dollars are staying the same, while the price in the export market is lower because of the decline in the Australian dollar. That makes us more competitive. That is great but, if the Australian economy picks up relative to the American economy and we appreciate against the American dollar, the very goods that have been able to ride the decline will also struggle against the rise of the dollar. We hope, of course-

The Hon. M.J. ELLIOTT: Obviously, you are listening in and out-that's the problem.

The Hon. M.J. ELLIOTT: The point I make is that in the future we need to concentrate not only on goods but also services.

The Hon. M.J. ELLIOTT: I am not saying there is a problem with export. The problem is that the predominant part of export growth is in commodity goods and not in services. While we are getting some growth in education and tourism and a minimal amount of growth in health services, those three areas have phenomenal capacity for growth in South Australia. The government is addressing those areas but, frankly, I do not think it is addressing them with sufficient vigour. I am not saying that the government is not doing the right thing in some areas but I suggest that, even when it is getting things right, it is not doing them well, if I can make the distinction between the two.

There is no doubt that South Australia should have an advantage over the other states in a number of ways in relation to education. We have quality institutions that can match the others; we are a cheap state in which people can get housing and travel around; it is relatively safe; and I have spoken with parents of Asian students who do not want their kids going to the big, sinful cities of Sydney and Melbourne. They see a place such as Adelaide as quieter, with the kids more likely to get on with their work. It is all about marketing advantage. However, it is only in recent times that an education group has been set up in South Australia. Who set it up? Adelaide City Council, the body which at one stage the government wanted to abolish, was the driving force behind its establishment.

There needs to be more of that. Good things are happening in relation to tourism, and I notice in this year's budget, when I looked at the environment portfolio, there is a plan to expand ecotourism. I looked carefully at the National Parks and Wildlife Service budget and there is not an extra dollar in real terms; it is a marginal increase but not as great as inflation. How can the government pump all these extra tourists into national parks and other sensitive areas but not be prepared to spend money on infrastructure to support it? It is a nonsense. It is great for ecotourism but, for goodness sake, we have to get it right. If we do not get it right, we will not maximise the potential for this state.

Health services are lagging even further behind. While my wife was at university, she was doing some work experience with a company that was bringing in patients from Asia for medical procedures. On one occasion I joined her when a couple came from Indonesia. They came for fertility treatment-although the treatment for which they were here is not important, other than it is one of a range of medical procedures we do well in South Australia that at this stage are not done well in many Asian nations.

Travelling with the couple were a mother and a brother. While they were here, not only did they have the medical procedure but they also did the full tourist bit. They were hiring taxis and did not think twice about travelling to the hills and Victor Harbor. They also looked at educational opportunities. The brother was checking out Flinders University because his wife wanted to do some postgraduate study. They were business people and they were looking at opportunities here as well. What I am saying is that in that one family I saw education, health and tourism opportunities.

At this stage it has been done separately. We have been promoting tourism but until very recently it has been dispirit. Even in recent times I have spoken to tourist operators who themselves have gone overseas to market individually to wholesalers. There is not enough coordination going on at this stage in terms of pitching into the overseas markets.

I know that the universities are largely doing their own thing, particularly, in many cases, individual departments of universities, and some of them are doing quite well. The Waite Institute is a phenomenal success and has been for years with more postgraduate than undergraduate students. But the rest of it has been pretty disparate. There is a move to bring them together now but, in my view, it is still moving far too slowly and health-

The Hon. M.J. ELLIOTT: All the health groups act a bit like country towns, and anyone who has lived in the country knows what it is like: Mount Gambier does not trust Millicent, which does not trust Naracoorte, which does not trust Nangwarry and Tarpeena; and Berri does not trust Renmark or Loxton. And they never cooperate.

The Hon. M.J. ELLIOTT: The Hon. Mr Dawkins, who has lived in the country for many years, says that he has never come across that. It is only in recent times, with the concept of regional development, that we have seen towns cooperating. They have learnt by working together. The first job is to attract something to the region and the second job is to have the argument about where it goes; whereas, previously, there were arguments about who was going to get it from the start, and often they got knocked off by someone from somewhere else. In my view, education, health, tourism and marking are really all the same.

Some of that is being addressed in South Australia right now, and government is giving some support. Last week I attended a business breakfast convened by Business Vision 2010 on industry clustering. There must have been 500 or 600 people at the meeting. I think that I also saw the Hon. Paul Holloway there. It was a huge meeting; there was a lot of interest. Business Vision 2010 is doing a lot of fantastic stuff and clustering is one of them. Do members know that the state government has put $2.5 million into clustering? Clustering, bringing together, whether it is an industry cluster of a manufacturing sort, whether it is tourism, whether it is medical, whether it is health-

The Hon. M.J. ELLIOTT: Or the arts. Those clusters are being built right now, but I am sure that we can do more. Sometimes governments and some bureaucrats try to do too much themselves, but the important role for government, in my view, is to make sure that it is happening and to be facilitating it, but not necessarily always to do it. The Government should be putting a whole lot more into areas such as industry clustering rather than these rather vague investment attraction strategies that we have at the moment.

This budget talks about $29.5 million to ensure a continuation of recent successful investment protraction. What is not at all clear is whether that $29.5 million is an increase on what was spent last year or whether that is the total amount intended for this year. We have no idea precisely how much was spent and the form that it took in the past. The Premier, a couple of weeks ago, said that this would be more open in the future, but this budget, already, just leaves a lot of vague shadows.

I must ask the question: while there is value in trying to attract new industry to South Australia, and I am not opposed to it per se, I wonder, in terms of bang for the bucks, whether or not we would do a lot better in this economy if we concentrated on the existing small and medium enterprises within the state through clustering and those sorts of initiatives, and whether we do what we can to encourage new businesses through business incubators. Again, the government is putting some money into incubators. I question whether or not we are doing it well enough and whether we have identified all the opportunities for incubators.

I have been arguing for a couple of years that there is a place in South Australia, I think, for incubating areas, such as aquaculture. There is a very small incubator operating in Wallaroo but, in my view, there is the capacity to build quite a large incubator where the government supplies much of the infrastructure: rather than having individual aquaculturalists sprawling along the coast, each having to get their own three-phase power, each having to get their own roads and each having to do their own water treatment works, etc., why does not the government install a significant system for pumping water which then can be used by a range of businesses all operating off the one pipeline?

The government could, perhaps, then take responsibility for the clean-up before return to the sea so that, at the end of the day, we are guaranteed there is no pollution as well. I would think that there would have to be efficiency of scale with that. Businesses could come into that, first, perhaps, as very small enterprises and be incubated to become quite large. There is no question that there is potential for a lot of up side in aquaculture. That is another example of an industry that is being supported by the government, but I think that it has not done it well.

The government can certainly point at numbers that look impressive, but one must realise that almost all those numbers are predicated on one industry, that is, tuna, and the reason why we have the tuna industry here is that the tuna happen to swim past. We already had the industry. We were already catching the tuna. Now we are dragging them into a bay and fattening them up. That industry has very little growth left. Unless we successfully manage to spawn the tuna, there is no capacity of current stock to allow further expansion. My concern is that it was handled so badly, particularly the environmental aspects, that it has probably set aquaculture back in terms of where it could have been otherwise.

As I said, it is not to say that the government is not right in supporting aquaculture: it is. Frankly, I just think that it has not done it well. In terms of aquaculture operating within the oceans, the mistake that governments have made too often is that they have not been clear enough about where and under what conditions aquaculture can go. They could have zoned the coast much more clearly than they have. People are going through the planning process to the very end and then being told, `No, sorry, you are within two kilometres of a fur seal haul-out site. You cannot go there.'

Frankly, there is something really wrong with planning if the authorities could not have said that anything within 10 kilometres of a fur seal haul-out site is not acceptable at any time and that person should never have gone there in the first place. It was a matter of ensuring clarity. Sometimes one is so keen to fast-track things and so keen to get things moving along that looking at little things like the environment are seen to be a negative when, in fact, if you do it properly you can give very clear guidance, which can be to the benefit not just of the environment but, at the end of the day, of the industry itself.

Frankly, I think that our aquaculture industry could be much further advanced if only we had gone about it in a far more professional manner than we have. I still think that there is a lot of up side there. I do not think there is capacity for much more expansion within the ocean. There are places already where the density is a bit too great. We will start striking significant disease problems within our pens, but I will not explore that further at present.

I hope that I have responded to the interjection of the Hon. Diana Laidlaw in terms of whether I am opposed to exports. No, I am not. There is room for huge expansion in exports. My concern is that, so far as we have growth in exports, it has largely been fortuitous on the back of a declining dollar. That is not to undersell the fact that we make quality wine and quality cars-

The Hon. M.J. ELLIOTT: No, or the enterprise as people. For anyone who makes the most of an opportunity, good luck to them and well done. I am saying that, in terms of the overall South Australian economy, we seem to be pushing against commonly agreed knowledge, if you like, that the future growth in economies, particularly in first world countries, will be in the services and not in goods. South Australia is heading in the opposite direction and can we sustain it? I doubt it.

The Hon. Diana Laidlaw: There are big consumer markets, middle class markets, in South-East Asia for consumer goods.

The Hon. M.J. ELLIOTT: I think that it is worth noting that, overall in consumer goods, we do not seem to be travelling quite so well. It is interesting-

The Hon. M.J. ELLIOTT: Yes. It is interesting to look at gross state product in South Australia over the last 7½ years since 1993. We see that the GSP in South Australia has been growing, on average, about 1 per cent a year less than the gross national product, year after year and, of course, that is cumulative. So the GSP in South Australia in 1993-94 was something like 23 400 against the gross national product then of just under 27 000-a gap of pretty close to $3 000 per capita. Now, the figures for GSP are close to 28 000 and GNP a little over 32 000 and the gap is now a little over $4 000 per capita.

The growth in GSP has been behind GNP. So far as we are being somewhat successful with our commodity goods in the export markets, the question that must be asked is, `What on earth is happening with commodities that we have been selling into the interstate markets?' Somewhere along the line we have been falling further behind. I suspect that the other states, particularly New South Wales, Victoria and Queensland, have been achieving most of their growth outside the commodity areas and much more in the service areas, and that should not come as a surprise to anyone.

It is interesting to reflect on the variation in gross household income per capita. In South Australia, household income has risen from a little under $21 000 to about $21 500, whilst at the national level it has risen from $21 400 to nearly $29 000. Initially, the gap was a little over $1 000; it is now closer to $2 500. So the gap in per capita household income has more than doubled since 1993- 94. That does not indicate that things are travelling well out there in the community. The worrying thing is that, when one looks at the trend graph, one sees that this is not something that happened back in 1993 when things were grim; the fact is that the gap has continued to widen every year for the past seven years.

The next thing I should look at quickly is employment, which the government made something of in the budget. It looked at employment in South Australia and suggested that, despite the fact that there has been a bit of a slowdown in recent times- this is also happening nationally-we are travelling very well. That depends on whether you want to look at the raw employment figures which show that the gap between national and state unemployment is about .4 per cent, which is only marginally more than the situation when this government was first elected in December 1993. It was much more at one stage, but recent trends suggest that the gap is narrowing.

That is all very encouraging but, when one starts to look at other breakdowns of what is really happening out there, one finds that there is a very different picture. If one looks at employment participation rates, one finds that back in 1993 the participation rate in South Australia was about 61.4 per cent, which was pretty close to the national average. In a period of seven years, the participation rate has plunged to about 59.7 per cent. That means that a whole lot of people have given up looking for work.

The government tries to suggest that this is because of our ageing population. We have always had an older age profile. Seven years ago we had an older age profile and, at that stage, we were at the national average in terms of the participation rate. Now it has plunged. When the state unemployment rate was 7.5 per cent, the South Australian Centre for Economic Studies looked at the participation rate and noted that, if the participation rate in South Australia matched that of the rest of the nation, the unemployment rate in South Australia would then have been 11.2 per cent.

Interestingly, in March this year the Morgan poll research people looked at the unemployment rate in South Australia, and their judgment was that the real unemployment rate in South Australia was 12.2 per cent. I encourage members to look at the Morgan poll website which gives a detailed analysis and compares the states. From that, members will see that there has been a very steady widening between the official ABS data and what is happening in the real population. It has a lot to do with the tests that are applied to qualify a person as being unemployed. The real unemployment rate has been rising dramatically, and the Morgan poll people go into some detail to explain how the figures are derived.

I find it interesting that the figure derived by Morgan closely match the sort of figure that we see in South Australia being derived in quite a different way by the South Australian Centre for Economic Studies. The other matter of concern in South Australia, which, whilst it is a national trend, is happening more so in this state, is that there has been a change in the proportion of people in full-time work versus the part-time/casual sector. In fact, in the past seven years there has been virtually no growth in full-time employment. In fact, in percentage terms, there has been no growth in full-time employment at all. If there has been growth, it has been in the part- time/casual sector.

Whilst it is true that people such as students prefer part-time work and do not mind casual work because they do not intend to do it for the rest of their lives, I must say that in my day it was a bit easier for a student to work during their holidays and concentrate on their studies the rest of the time. That is no longer an option for many. The fact is that there are many people in the part- time/casual sector who are not there because they want to be but because that is now what is on offer for so many people.

What we are seeing in South Australia is a lot of people giving up, and the people who are finding work are doing so in the part-time/casual sector. That has significant implications in terms of the ability of families to make long-term plans about whether or not they want to own their own home or by a car or whether they can afford to give their children an education and what sort, etc. These are not minor matters. To simply concentrate on the raw unemployment percentage in the way that that has been done is, at the very least, misleading.

The Democrats are pleased to see reform in relation to payroll tax. Since the party's inception 23 years ago, we have advocated the abolition of payroll tax. The government is steadily phasing it out. I note that a significant amount of its commitment is for not just this year but also after July next year-so it has already made a commitment for the next government. That may be as strong as the L-A-W law tax cuts of the Keating government some years ago. The government has also abolished the financial institutions duty-which I recall was part of the agreement in relation to the GST-and stamp duty on the transfer of listed marketable securities, which I believe may have also been part of that package. The Democrats support those changes.

I note that the government is now talking about Partnerships SA. Having flogged off most things, it seems that it is now going to go into partnership to get other things. Some of this proposal is as much of a mystery to me as some of the other proposals that the government has come up with over the years. The argument and belief that, in some way, the private sector is able to do it better does not necessarily have backing in fact. Generally speaking, governments have access to funds cheaper than the private sector. In Australia, generally speaking there is not a lot of money around. So, we are even seeing that when we start to put up assets for sale it tends to be overseas investors who are interested, and of course their profits eventually leave our economy. So, in my view we lose twice.

In summary, I say that, if one wants to say that this is a responsible budget, it is responsible insofar as if the government had gone on a spending spree we would be in a damn sight more trouble than we are already. However, there is no doubt in my mind that we are still in trouble with a deficit budget. It is a real and significant deficit, one which will continue for a couple of years to come because of the loss of all of our former income deriving assets with increasing costs from some of those things that we have now sold which will impact on not just the government but also private industry.

There is no question that the packages in the budget in terms of cost reduction will not offset the rises in the cost of electricity. Already most small businesses are exempt from payroll tax, so they are not being offered any relief at all. We are in some difficulty. I think the only hope that we have in terms of trying to draw up future budgets that are going to balance is to get behind the budget-I am afraid that these budget papers do not inform terribly well-to find exactly how much wastage is in there that could become real spending money.

We have any number of examples: the radio network, which has been an absolute debacle in terms of costs, and we have not seen the last of that yet; the Hindmarsh Stadium; and the Glenelg development, which has cost us in terms of assets and other spending probably some $50 million, and now over $2 million a year on sand and seaweed movement. And the government announces this wonderful park along the coast of Adelaide. I would have been excited if I had not known that the Glenelg development was in the middle of it. I will not hold the minister who made that announcement directly responsible, but I do hold her government responsible for that. The problem never was about whether there should be a development at Glenelg: it just had to be a responsible one. We did not get that and we are going to be paying for it. It will be a budget debt in perpetuity.

We do not know how efficient the industry attraction has been or how much it has cost us because nothing in the budget lines really tells us that. We do not know how well it might have been done or how well the contracts have worked, contracts such as the one concerning EDS, the Mount Gambier jail and the hospitals. That select committee is yet to report, if it ever does, but, as a member of that committee, I believe that, having looked at the EDS contract, in particular, for some seven years, we have obtained so little useful information that I do not feel any the wiser now than when the committee first started. The contract has always been

withheld and the sort of numbers really necessary to make any judgment about whether or not there has been a real benefit at the end of the day are simply not there.

Any aspiring government would be struggling at this stage to know precisely how much slack there is in the budget that can be fixed-slack quite different from the announced five per cent cut in middle management across all government agencies. I am not sure where that five per cent came from but, obviously, somebody did some research and found that exactly five per cent wastage existed in each of the departments and all that had to be done was to sack the number of middle managers to match five per cent, and suddenly there were efficient departments with better delivery.

I have no problem with governments seeking efficiencies but to begin the budget paper by saying that there is five per cent in each department and that it will be found is something I find quite extraordinary. If the government wants to talk about the magic pudding of the opposition, which believes that not only should you spend more money but that you should lower taxes as well, then I think perhaps the government has the magic pancake, which is pretty flat and there is not much in it.

The Hon. M.J. ELLIOTT: No, as I said, it is extremely difficult to get down and write a fully detailed prospective budget when you do not know precisely what size the wastage is: there is no question that it runs to probably $150 million to $200 million a year, but one is forced to make an estimate on the basis of those things that we know are going astray at this stage.

I support the second reading of the bill but express disappointment that, after seven years of pain, there has been no gain at all and that, indeed, while I do believe that we have too much going for us not to succeed in the long run, we are still going to have to spend some time digging ourselves out, because we are still very much at the bottom of the hole. If anything, the government has just dug a hole sideways: it has certainly not dug us out. The Democrats support the second reading of the bill.