Budget Reply Speech 2017

Gary Higgins MLA, 3  May 2017

 

The Treasurer yesterday said this was a budget for optimists.

But I say, more than at any other time, this is when we need the government to be realistic.

A budget needs to be factual and realistic.

We have seen what happens if one relies on overly optimistic estimates. 

The Government has continued to make announcements seemingly based more on hopes and good feelings than about a cool, rational assessment of facts.  Announcements are based more on what sounds nice rather than what stacks up financially.

Perhaps it is the Treasurer’s blind optimism, that has prevented her from acting in her first 8 months to reign in the deficit.

Every week the Treasurer would have received updates about how dire the deficit was looking. 

When there were calls for a mini-budget, when the Treasurer was getting warnings on the deficit,  she was optimistic, and did nothing.

It continued yesterday.  The Treasurer has not outlined a plan to start to pay back the government’s debt.  Her optimistic approach is it will work itself out.

On this side of the chamber, we have unbounded confidence in the future potential of the Northern Territory.

This is tempered by our grave concerns that the Gunner Labor Government is not acknowledging the true economic and fiscal burden it is placing on all of our shoulders, and that of our children and grandchildren.

We have again reached the projected $5.5 billion dollars in debt, which saw Labor lose government in 2012.

It took the last Labor Government 11 years to be in a position to be forecasting a debt of that level.  This time, it has taken them just 8 months.  They inherited a debt to revenue ratio of 27%, and are projecting that this will rise to 87% in the forward estimates.

The Treasurer is an optimist,…   

Yet, the Treasurer’s budget yesterday marks the end of a period of economic prosperity.

An era which ran from the introduction of the GST back in July 2000 – almost 17 years ago.

We are now entering a new, more volatile and more depressed period.

Unemployment is rising, the deficit has tripled, and Territorians continue to suffer from a huge increase in crime. 

Territorians are hurting, and what do we get from the Labor Party?  We get a museum-led recovery.

We get announcements on museums, art galleries, arts trails and cultural centres.

An economic recovery led by museums, sorry, by cultural institutions?  An economic resurgence led by art galleries?  An economic rally led by cultural centres?

On our side of the chamber, we see no problem with museums, art galleries or cultural centres.  But, we know you can’t go around building these centres willy-nilly, because there is a limited market and they are extremely expensive to maintain.

We also know that museums won’t deliver the economic recovery the Chief Minister and his ministers are claiming it will.

And we also know that really great museums of the world are based around private investment. 

To claim that spending on art galleries is what the Territory needs to improve the economy is delusional.

The Gunner Labor Government legacy will be huge debt for decades, money which needs to be repaid.   The only thing we hear from the Government about the massive deficit is the Bart Simpson defence: the “I didn’t do it” line.

It’s hard to utter that with a straight face at the same time announcing massive government spending across the CBD, but it ignores the issue.

That issue is the highest deficit on record in the Territory’s history.  This is the highest deficit since self-Government.  It is a clear and present danger to the Northern Territory Government’s ability to provide services and representation to Territorians over the next generation and beyond.  An excuse is not a plan to deal with it.  The only plan the Gunner Labor Government has to deal with the debt is a media plan.

 

The last Country Liberals Budget focused on stimulating the Territory economy with substantial investment in infrastructure.

The $1.7 billion infrastructure spend was aimed at creating job opportunities while improving public facilities across the Territory.  Investment in strategic infrastructure for future generations of Territorians.

That Budget provided additional resources for frontline services, diversification of the economy and encouraged private investment in the Territory.

The 2016-17 Budget also put downward pressure on the cost of living:

-        through a 5% reduction in household electricity tariffs from 1 January 2016;

-        through a continuation of the Sport Voucher scheme;

-        through a continuation of the Back to School payments scheme; and

-        through a continuation of the early childhood services subsidy.

 

The previous Country Liberals Budget invested directly in services and infrastructure to support Indigenous Territorians and provided initiatives that focussed on economic empowerment and delivery of essential infrastructure and key government services to regional towns and remote communities throughout the Territory.

Since their election, the Gunner Labor Government has cancelled the successful Home Improvement Scheme and then after a four month hiatus reinstated the measure, the CLP contributed $20 million in the last budget for this stimulus package

Labor has banned a national anchor tenant Dan Murphy at Darwin International Airport sending a clear message to them, a dozen other businesses and at least nine construction companies who expressed an interest in the project that the NT is NOT OPEN FOR BUSINESS. And now we have yet another review, another expert panel and another considerable time delay before this government makes a decision.  And this has now been escalated to an inquiry.

They have imposed an onshore Gas moratorium and set up an independent inquiry which will not report until December 2017 and at the rate this government makes decisions there won’t be one until well into 2018, again sending a message that the NT is NOT OPEN FOR BUSINESS.

Here in the NT we have estimated gas reserves of 234 trillion cubic feet and what does this government do, not meet the challenge to provide a climate for private sector investment……..but put in place processes to stop investment and lose the opportunity to create long term sustainable jobs.

The Gunner Labor Government is heard too often saying that the former government did nothing to create jobs after the Inpex construction phase.

Well what I say is the former government commissioned Dr Allan Hawke AC to undertake two inquiries with the result that certainty was provided to investors and a roadmap to reform the environmental regulatory framework was produced.

If you had any idea  how to manage the economy you would immediately call a halt to this moratorium and let the private sector get on with developing the territory under a best practice regulatory regime recommended by Dr Hawke.

I remind honourable members of this house that the inquiry’s major recommendation was ---consistent with other Australian and international reviews … that environmental risks associated with hydraulic fracturing can be managed effectively subject to the creation of a robust regulatory regime.

And further the substantive weight of agreed expert opinion lead the Inquiry to find that there is no justification what so ever for the imposition of a moratorium of hydraulic fracturing in the NT.

 

The Territory economy is facing two key challenges: (1) an imminent chasm in major project investment from when the Ichthys construction period ends to when the Defence infrastructure spending, as outlined in the 2016  Defence White Paper, starts to ramp up.  Our economy is already slowing in anticipation, and Territorians are being laid off as we speak.

And (2) an incredibly dire deficit situation which is making it harder and harder to provide Territorians with the services they need because of the debt repayments at a level unprecedented in the Territory’s history.

So, these are the two major factors: the gap in private investment between Inpex and the Defence White Paper, and the massive deficit.

When you identify the problem clearly, it helps to identify a clear solution.

We need an increase in targeted government spending to sustain the economy until the defence spend comes online, and then we need to wind down the stimulus spending as efficiently and harmlessly as possible.

We need this targeted spending to develop  economic infrastructure, the kind of infrastructure that will help and grow the economy and create sustainable jobs.  New roads will increase opportunities for tourism, for our beef and mango exports, and more importantly connect Territorians.  For too long we have accepted substandard infrastructure in the regions as part and parcel of living out bush.  We shouldn’t, and there are potential innovations, ideas and potential businesses, waiting to be unlocked when we connect Territorians with each other, and we connect those isolated places and communities with the rest of us.

We need infrastructure that leaves the Territory wealthier and more productive after it is built.

 

When seen from this perspective, we know what needs to be done.  We need targeted expansionary spending on economic projects over the next two years, economic projects that generate ongoing and sustainable employment and then the government needs to return to living within its means and aim for a surplus as soon as possible after that.

Unfortunately, the Budget just announced is the absolute worst possible budget for this time.

While the next two years have limited new spending, after that the Government is planning the largest amounts of spending after when we assume the defence spending will already be in full force.  And that, spending is targeted on building uneconomic infrastructure – in fact spending which is likely to be a drag on the budget after construction, not that which grows the economy. 

We need the spending now, we need the money out the door now, and for the spending to be winding down in two years to tackle the debt situation.

It seems that for the next two years, the government will be merely making announcements, continuing its reviews and moratoriums, conducting feasibility studies and doing consultations.  When we need to be winding down the spending to tackle the dangerous levels of debt, that’s when the Labor party’s budget again does the opposite of what is needed.

Labor’s budget is exactly the opposite of what people want and what the Territory needs.

If we look at the forward estimates we see that our debt only gets worse.  Even when we should be aiming for a surplus.

 

Much has been made of the various levels of deficit.  The last Country Liberals budget predicted a deficit of $413 million today, and, more importantly, a plan and pathway for tackling the debt and achieving surplus in 2019-2020.

This was a calculated and calibrated response to macroeconomic pressures at that time.  In that Budget we also had the highly-successful Home Improvement Scheme stimulus.  As we have witnessed what has unfolded since that time, and we may well have expanded that program.

But what the Labor Party is proposing is not wealth-creating infrastructure.  This is not infrastructure which will help unlock private investment and private industry.  This is spending for spending’s sake, without business cases, without determining the projects viability and without a plan.  It is the “Field of Dreams” approach to infrastructure spending – build it, and they will come.

Another example of missing the point with spending is with Tourism.  Cutting funding to tourism will cause a decrease in the number of visitors to the Northern Territory.  Cutting the infrastructure grants, cutting funding to regional tourist associations is not the way to grow the number of tourists.  Improving our tourism infrastructure is what is needed.  Visitors come to the Territory looking for a product, something to engage in, something special that they can’t do anywhere else.

We still have no details about what all these announcements mean?  What does $50 million get us for the Old Hospital site?  How much of an underground car park will the $20 million get?  How many degrees lower will the temperature be?  Will the temperature be lowered in other parts of the city? Or just in the Supreme Court carpark?  Why start there?  Will the new museum have a car park? Why hide one car-park and build another free at RDH?

What will the $20 million in work in Alice Springs provide?  I understand there are no details, and the first meetings regarding this vital plan were organised for Alice Springs after the announcement. The Treasurer announces the figures with pride as if bigger is better, but surely planned, researched or thought-through project identification and expenditure would be even better still.

And what happens when all these galleries and centres and museums open?  Who will pay the running costs?  Are these envisaged as profit making ventures?  What happens to the current Museum and Art Gallery of the Northern Territory at Bullocky Point.  Are there any studies or research to suggest that there is more demand for museums and art galleries than is currently provided?

If there is a museum to be built, we need it to be iconic, we need it to be a drawcard, and bring visitors to the Territory.  The one striking example of a newly built museum being a drawcard to a town is the Museum of Old and New Art in Hobart.  The difference is that the MONA is privately funded.  You may recall that the Country Liberals in Government proposed a new art gallery in State Square.  It was designed by a local architect in conjunction with the designers of MONA, however we did not proceed with that art gallery as it was clear the Territory budget would not allow that spending at that point in time.

 

A budget is not just announcing spending.

That’s the easy part.

Anyone can put out a media release, or make a speech with big numbers included.

The skill in the budget is when it comes to stopping spending, managing spending and prioritising one project over another.

The skill in the budget is making sure the money gets out the door when it is needed, and stops when it isn’t.

It is against these criteria that we assess the Budget.  And it is against these criteria that the Treasurer has been found wanting.

The Labor Party has missed the point of the budget.  It’s not a competition as to how much money you can spend.  You don’t win, by spending more. 

Going around and spending money is the easy part of government – it is the fun part.

The hard decisions are where the Chief Minister and Treasurer are earning their salaries.  And we are yet to see evidence of those hard decisions.

Against any criteria for a responsible budget, it is clear that the Gunner Labor Government has failed.  And Territorians will pay the price … now and into the future.

The Labor Party has again failed the economic test. 

They have not only failed the test of economic strength of character, they have also failed their own tests, and they have manifestly failed to live up to their own rhetoric around transparency, evidence-based approaches and about accountability.

There was plenty of rhetoric about consultation. For 8 months now the Labor Party has kept the hamster wheel of government turning through inquiries, committees, committees of inquiry, panels of experts, economic summits, audits, surveys, advisory boards, consultation boards, and feasibility studies.

Yet finally, when the rubber hits the road, they announce major infrastructure upgrades, with no plan, no business cases, no test of viability, no studies, no vision, no money for their ongoing expenses, but just very large amounts of money from the back of an envelope.  $50 million here, $100 million here, $20 million over there, and four lots of $10 million as well.  Aren’t we lucky that reality adds up to such round numbers?

 

Let’s go through some of Labor’s broken election commitments.

Obviously the most relevant election commitment was the commitment to balance the budget.  I applaud that Labor actually recognised the importance of balancing the budget.  I wish they had put some effort into finding a path to a surplus, or could at least tell us the plan for decreasing the deficit.

I know many public servants will be shocked when they read of the savings the government is basing their budget on.  The budget states that there will be savings made of $789 million across the budget cycle.  That is a huge amount, and planning on making this saving, and actually making this saving are two very different prospects.

Apparently, these will be made by limiting wage rises, not filling vacant positions, and through cuts to “frontline agencies”. “Frontline agencies” is quoted from the budget. 

Another commitment from the Chief Minister was that Labor would close Don Dale immediately.  Eight months in, and Don Dale is not only still operating, it is being revamped at a cost of some $11 million. 

Another commitment was the 24 hour 7 days a week police station in Nightcliff, which of course, the Member for Nightcliff has repeatedly promised her electorate.  Once again it appears the Member for Nightcliff was unable to sway the Treasurer.

Revitalising the Darwin CBD is an excellent idea, but there is more to be gained from rental prices dropping and working with landlords to introduce more flexible leasing arrangements, than from building white elephants.  The best way to go about revitalising Darwin’s CBD is not through building more unfunded buildings, but by the Government doing its core business, which is policing and tackling crime and anti-social behaviour.

Another commitment from my electorate, Chief Minister, you made a commitment to build Weddell.  Where is the money for that commitment?

We in the Opposition want to see development.  But we don’t think the government should reach into its own pocket every time it wants a new building, especially not with such a huge deficit hanging around the government’s neck … around Territorians’ neck.  These areas are prime bits of real estate and there may well be private investors who have ideas and plans for these areas.  Ideas which might generate money, rather than cost money.  

 

The only way for the Territory to grow is to allow private enterprise to invest, to take advantage of our natural advantages of geography, climate, people and resources, and to do what private industry does best: get on with the job. 

The Government’s complete antipathy to private investment comes when we throw-in the extra part day holidays and the ridiculous ban over Dan Murphy’s, a company wanting to come here, invest their own money, build and construct now.  Not a few years in the future like the government plans, with public money, but right now.  Private money, which will grow our economy.

Think about what these messages send interstate and overseas investors.

This Labor Government fails to understand investment and fails to understand how investment works.   The signals it is sending only drive jobs away from the Territory.  It is the opposite of being open for business.

With the two extra part-time holidays, it has let its employment agenda be set by the Unions. This hurts small business, the largest employer in the Territory. And remember the rationale for doing this – to grow the population, something not borne out in the budget papers.

With the Dan Murphy’s decision, it has let its alcohol policy be set by the AHA.

With the 50% Renewable Energy Target, it has let the Federal Labor Party set its energy policy - despite the very different energy generation mix in the Territory.

The only time we see determination, focus and zeal from the Gunner Labor Government is when it comes to announcing another review and spending other people’s money. 

The only time we see any gumption from the Chief Minister is when it comes to announcing more debt for Territorians.

The Chief Minister and Treasurer have stated many times, that the Country Liberals did not have a post Inpex plan in government.  We did.  [Here it is.]  It was a direct and straightforward plan to diversify our economy, into the seven key pillars: energy, minerals, tourism, agribusiness, international education and training, defence, supply and service.  On our side of the chamber we want to pursue priorities which help, not hinder Territory businesses, which grow, not burden Territory taxpayers.  We would like to see strategic infrastructure to support defence and civilian service capability.  We want to see a safe and regulated onshore gas industry.  For Tourism, we want to see increased marketing and upgraded infrastructure.  We want to see the government get back to the Northern Territory’s strengths on trade with Asia.    

We want a realistic government, that is what Territorians deserve.