Budget Reply Speech 2019

8 May, 2019

Madam Speaker,

Territorians expect strong leadership, a government they can trust to deliver on its promises, a strong economy, speedier approval processes and action to get things done.

Now, more than ever, the Northern Territory needs the steady hand of a competent government, one which is reliable, accountable and smart, and one which looks deeper than a tag line or a catchy phrase.

Budget 2019–20 needed to deliver a series of programs that are absolutely necessary—fiscal reforms, measures to reinflate the economy through incentives, certainty for private sector investment, relief for Territorians and new policy settings that address and prevent the grave economic and fiscal crisis being repeated.

Budget 2019–20 is another failure of the Gunner Labor government. It does nothing to restore business confidence or encourage private sector investment and does not get one Territorian back to work or bring back those who have already left. It does not grow our population or give us necessary economic reforms.

Budget 2019–20 puts Labor and its expensive social reform first and Territorians last. It is another budget of broken and empty promises. It is little wonder Territorians do not trust this Gunner Labor government that says one thing and does another.

The most important bill to come before this House each year is the Appropriation Bill. It is usual for the Treasurer to set out a vision of where the Territory is headed and to instil confidence that the government is managing the economy, spending wisely and planning for the future.

Budget 2019–20 fails to do this as have the government’s last two budgets. We listened with great concern in years past of the first two speeches by the Gunner Labor government’s Treasurer and now the third. Three important vital budget speeches. None of which have set a vision or a plan for the economy and fiscal health of the Northern Territory. What we have heard consistently from this government is a litany of mistruths and blame attributed to either the federal government or the previous CLP government.

Treasurer, this does not wash, and I say today, that we, the CLP can and will deliver better economic and fiscal results than this government has done.

Let us look at Labor’s record. Treasurer, you said Budget 2019–20 was developed with the following principles: creating and sustaining jobs for Territorians, implementing your election commitments and providing services to Territorians in a smart and efficient way by reducing the costs of government.

You failed miserably on all counts given that there are now 7882 fewer Territorians employed, businesses closing down week after week and jobs lost. The operational cost of government has increased by $478.4m. There is also a litany of broken election commitments, which I will come back to later.

Your 2017 budget stated that savings measures would be $74m for 2017–18, and $828m over the forward estimates. As at 30 June 2018, it has cost Territorian tax payers an additional $478.4m in operational expenditure and we have 903 additional public servants employed to the end of December 2018.

How can this incompetent government be trusted? They say one thing and do another. What a hash you have made of things, Treasurer. You have not delivered certainty or confidence in our economy as you promised in Budget 2017. Instead, we have seen the construction sector halved, residential property prices dropped more than 25%, no major projects or cranes on the horizon, lowest level of business confidence in the country as confirmed by CommSec and Census, Northern Territory bankruptcies are up 67% in just the last year alone, and retail trade growth down since Labor came to government.

I now turn to Budget 2018–19 which had the tag line of: More Jobs, More People and a Brighter Future. Savings were estimated to be $234m over the forward estimates with the spurious claim that this would bring the total savings to $828m and the actual outcome, according to the Treasurer’s Annual Financial Report, for 2017–18 was an increase in operational expenditure of $450.66m from 2016–17 to 2017–18.

Revenue changes included the world’s worst hybrid mining tax; a vacant land and derelict building tax; increase in motor vehicle licencing and registration and the repairs and maintenance program, a historic stimulant for the construction sector, particularly tradies, was reduced.

In our budget reply then, we cautioned the government about its troubling fiscal management. We warned the government its budget was reckless and foolhardy and it decided to respond by attacking and blaming the former CLP government. Labor then bragged that it was creating a brighter future for Territorians, yet just seven months later, just before Christmas, we were hit with their interim budget repair report.

That report detailed and identified:

  • that the current financial position is unsustainable
  • that budget measures have been insufficient to stem expenditure growth
  • a prediction of NT deficit debt of $35.7bn in 2029–30 unless the Territory stemmed the current level and rate of expenditure
  • a prediction of NT debt to revenue ratio of 320% by 2029–30, noting that the CLP got it down to 27%
  • a prediction that interest on debt would be $2bn by 2029–30
  • interest forecast for 2021‑22 of $506m with a quadrupled increase to $2bn per year—that is $5.5m every day in interest.

The Gunner Labor government went to its happy place again, blaming the federal and the CLP governments.

It was also dishonest about the GST and was found to have been so by the Auditor‑General, and to this day, has failed to acknowledge the economic and fiscal crisis that it has caused. The Treasurer has claimed multiple different figures for the size of the reduction in GST payments from the Commonwealth Grants Commission. First, it was $2bn, then it was $3.4bn and again this year, the lame Labor mistruths continued. The Treasurer claimed that GST funds have decreased by $75m.

The truth contained in the federal government’s Budget Paper No 3 shows that GST increased by $42.3m to reach $2.78bn for the Territory. There has been a net reduction of $102.4m, or about $25m reduction per year, not $500m per year claimed by Labor. The Coalition government provided a $259.6m top‑up payment in 2017‑18 to help the Northern Territory government deliver essential services. The Coalition government will provide a further $252.1m top‑up payment in 2019‑20 to help the Northern Territory government to again deliver essential services. Either the Treasurer does not know how to read the budget papers or is deliberately misleading Territorians.

Another fact is the deficit handed to Labor was $78m, as reported in your Treasurer’s Annual Financial Statement. The CLP also had a plan to bring the budget back into surplus, which can be seen in the forward estimates of Budget 2016‑17.

Labor knew the construction phase of INPEX was winding down and our GST receipts would be down. Where was the Gunner Labor government’s plan to deliver what it had failed to do—economic diversification and to tackle the downturn? Our plan included an open‑for‑business attitude, onshore gas development, diversification of the pastoral estate, enhancing the capability and capacity of NT business to supply to major projects and industry, minimising the regulatory and red tape burden, growing and supporting our tourism industry, expanding our trade with countries to our north, developing further links to tap into the growing international student market, major projects including Project Sea Dragon, the Western Hotel and a ship lift, and we supported and continue to see mining as a major driver of our economy.

We published a full policy and plan at the time of the 2016 election. The opposition has called on the Gunner Labor government time and again to show some physical discipline and do the following five things:

  • rein in spending
  • stop the waste
  • free up business
  • support a diversified economy
  • support sustainable infrastructure.

Industry, likewise, after initiating its own economic recovery summit, called on the government to do a range of things to get the economy moving, including the abolition of taxes, fast-tracking projects, getting moving on regulatory changes to provide certainty to industry and reining in government spending.

On 16 April the Chief Minister and Treasurer delivered the final report, A plan for budget repair. At that time, the Treasurer said it was:

… a plan to fix the budget, which will include tough decisions to ensure the government continues to invest in local jobs, generational change and tackling crime.

We say this:

Do not confuse tough decisions with terrible ones.

Not only has the Gunner Labor government failed yet again to make the tough decisions required to rein in spending and stop the waste, it is passing the buck until after the 2020 election and beyond.

The government wants to be seen as doing something, but this plan is over a time frame that includes three Territory general elections. This is a government that said it would reduce public service numbers by 100 in Budget 2018, and yet they increased staffing by 233. In fact, this government has increased public service numbers by 903 since coming to government in 2016, noting this is only up to December 2018.

Operational expenditure has grown by almost $500m since this government took office in 2016.

We have called on the government not to punish Territorians for the incompetence and wasteful spending by lazily increasing taxes on Territorians’ lifestyle.

The government’s move to tax lifestyle, like personalised number plates, camping fees, additional museum fees and fees on fireworks, is lip service to serious decisions which need to be made. This is simply not good enough and Territorians deserve a lot better. They are not tough decision, just terrible ones.

Another out-of-touch decision the government is carrying out is the attack on teachers in Katherine. This government clearly lacks priority when working through its budget and puts wasteful advertisement spending above retaining teachers in the town. What is the cost to the community when these teachers leave town?

The Treasurer was in primary school in 1990–91. I trust she was a solid student then. But clearly she has not done any homework recently. She tells everyone the government’s measures were the biggest changes since self-government. The fact is, the Commonwealth Labor government, which gave us the recession we have, cut 26% in funding to the NT in 1990–91. We know from last weekend’s performance what Labor thinks of Paul Keating. He is their hero.

Those cuts led to a comprehensive estimates review committee process conducted by the CLP government, in which 1223 positions, or almost 10% of the public service, were abolished over a two-year period with all affected staff redeployed through a planned process. That was tough. This government’s members would not know tough if they fell over it.

I do not see the Treasurer making tough decisions; she uses spin to mask the truth. The Perron government had a significant stimulus package, that being the House in which we meet today as well as the Supreme Court. The same government ensured business and industry had the confidence to invest in and commit to the Territory.

Fast-forward to today, and the Langoulant review says:

Government stimulus is not a suitable substitute for private investment, but Labor’s latest moves will further stymie business and industry in the Northern Territory.

For example, we vehemently oppose hitting Territorians with an $80m land tax as referenced in the Langoulant report. We question the value of selling off the Land Titles Office, a move which businesses believe will lead to increased fees for services necessary for development in the Northern Territory. However, we agree with Mr Langoulant when he says that the Territory budget cannot be repaired in isolation.

Government stimulus is not a sustainable substitute for private investment. The Territory urgently needs a concerted whole-of-Territory effort to attract private investment, and uncertainty is deterring private investment.

We welcome the commitment to benchmark against best practice. The effects of regulation. We have called for this for some time. We also welcome the recommendation to establish a parliamentary committee to scrutinise agencies actual financial performance against the original budget given the size of the task to reduce expenditure is a mammoth $11.2bn dollars.

We believe this would be a positive step and one which is surely needed. The big idea in the Langoulant review is to hit hard pressed Territorians with $100m in new taxes, and the insult to injury is the government will then go cap in hand to Canberra again to beg for a bail out.

Where is the leadership? Where are the promised tough decisions? It is no wonder Territorians do not have any confidence in this Labor government to turn our failed economy around. The response from business and industry to the government’s so-called budget repair has been underwhelming.

In the NT News on 17 April, NT Airport boss, Ian Kew said in relation to the idea to charge park entry and camping fees:

If the government wants to upset people this is the perfect way to do it.

The CLP Opposition agrees. This is a terrible idea and shows how out of touch this government has become. There has been no modelling on the short and long-term effects of this decision on the tourism sector and the broader economy.

The CEO of the Chamber of Commerce, Greg Bicknell says, in the same edition.

Look, a lot of this stuff is very long-term and will slip over to at least another two governments.

That is the problem. The Treasurer is kicking the hard decisions into the long grass. The Property Council on April 10, said its members want a ‘solution based approach’. This Gunner Labor government could do well to read the Property Council’s Five Point Plan for prosperity, jobs and strong communities.

The NT Cattlemen’s Association, President, Chris Nott said on April 3, he and his members fear ‘irrational government interventions’ and raised ‘security of tenure and native title’ issues. This Labor government has obstructed diversification on the pastoral estates.

How can pastoralists trust Labor when they pull the pin on non-pastoral use subleases being recorded on the title at the very last minute? This dead of night backflip has left the pastoralist industry “in a state of paralysis”.

Warren Pearce, CEO of the Association of Mining and Exploration Companies, AMEC, called on the Treasurer to scrap the world’s first, world’s worst hybrid mining tax that is costing the Territory $6bn of investment and 4000 jobs. AMEC is scathing of Budget 2019–20 with Mr Pearce saying, ‘The Northern Territory budget has not met the expectations that the government has built with the Langoulant report. The government has pushed nearly $0.5bn of hard decisions out in to the future. Achieving that will demand an unprecedented eight years for fiscal discipline and streamlining of costs. The Northern Territory has the most complex and expensive royalty regime in Australia. It means many small projects do not get the attention that they would in other jurisdictions.’

Dave Malone from the Master Builders Association, says, ‘The headline economic growth figure is 6.3%. If that was the number that we are all going to experience then we would be congratulating the government on a fantastic effort around economic management. It is not, of course. It simply reflects an increase in export earnings from large projects, like INPEX, and very little of that flows through the Territory economy.’

The government’s root-and-branch review is essentially its version of the estimates review process. But it falls short of making any effective change and is a shining example of where Labor has made some terrible decisions. It is making savings from decreasing the Business Growth Program, Business Innovation Support grants and cessation of the employer support incentives for apprentices. At the same time the government is keeping the job-killing hybrid mining tax.

The question has to be asked: does the government want business and industry to grow? How can it seriously say it supports jobs when it is implementing measures which threaten jobs?

I could spend the next hour pulling apart the review’s outcomes from its lifestyle fees and charges to the crazy move of the Mitchell Street Mile to a biennial event.

The so-called root-and-branch review sets out to achieve approximately $503m net savings over the forward estimates. Let me tell you what this means in practical terms and the reaction we have received from some grant recipients who face cuts of 1% to 3% of their funding.

  • Local government is exceeding concerned about what these cuts mean for operational subsidies for remote and regional councils. These are the same councils it brags about, including in its so-called local Decision Making. Will they be able to operate with a 3% cut to the funding?
  • One NGO that provides domestic violence services, has told us that having its funding cut by 1% to meet the efficiency dividend will impact on their operations and could mean reduced staff, office hours or reducing staffed office hours or cutting programs.
  • Another industry group said that it could see no evidence that a baseline analysis was adopted. And while it accepts that in austerity all revenue streams should come under scrutiny it is amazing that such a large share of the burden should be lumped on mostly NGOs and community groups.

These cuts are clearly on Territorians who do not deserve to pay for Labor’s mistakes.

Coming back to Labor’s broken promises—remember, it said in its first year in government that it would honour its commitments. How that tune has changed. Here are just a handful:

  • bring the budget to a surplus position by 2019–20—we now see its latest promise is another 10 years down the track
  • keep Territorians safe—we see a state of lawlessness across the Northern Territory
  • grow the population—the population has declined by 0.18% over the past year, which is the biggest in 15 years
  • create 14 000 new jobs each year, however almost 8000 less Territorians are employed
  • build a new Don Dale—the ultimate back flip
  • not to sell government assets—yet it will sell the Land Titles Office
  • build a national Indigenous art gallery in Alice Springs—after almost three years and a spend of more than $1m you do not even have an agreed site
  • investigate financial models and products that can help people borrow money to build their own homes in homelands and outstations—yet not one private home has been built
  • publish an annual list of interstate procurement to give support to your so called Buy Local scheme—it has not happened
  • build a museum at Myilly Point—$800 000 wasted and the project abandoned. Mind you, it was not a great idea in the first place.

Treasurer, you said that your government was restoring trust, addressing population loss and the classic:

The government will build a bridge to a better future.

And your government was:

… determined to demonstrate ongoing fiscal discipline to improve the budget bottom line.

Budget 2019 is the worst budget in the Territory’s history. It has seen the government’s net debt jump by the highest amount in the Territory’s history. A $2bn increase in net debt in just 12 months proves incompetence and cannot be dismissed by saying it is an accounting standard change. That is simply untrue.

At the end of this financial year the expected debt will be $6.2bn. This leaves our net debt to revenue ratio at 93%. When we handed over the books the ratio was 27%. This is a key measure of the Territory’s to service our debt.

I warned previously that we were on the road to insolvency. This is even worse than I feared. It will take a million dollars a day to pay the interest on the debt. Policy changes, or the government’s social reform experiments, have worsened the Territory’s fiscal position by almost $600m over 12 months.

Our Territory is a house built on shaky foundations. More than 70% of NT Government funding comes from the Commonwealth. In the rest of Australia more than 80% of jobs are in the private sector, in the NT it is not even 50%.

We have enough onshore gas to supply the entire energy needs of Australia for 500 years. We should be building high tech petrochemical or fertiliser manufacturing industries here. We should be incentivising companies to use our extensive gas reserves for manufacturing purposes with inherent wealth and job creation.

The opposition believe that at this time of economic and fiscal crisis, with a government spending $4m every day—more than it has, it should be a government’s priority to make it easier, not harder, to invest in the Territory. The Territory is broke and we are living beyond our means.

Today I pledge to Territorians that a CLP government will end the waste, axe the lazy Labor taxes, and build the roads and other infrastructure of the 21stcentury. Under a CLP government there will be small government, and only programs that benefit Territorians will be funded. It is time to get things done in the Territory. As a community we must show the world that we want private sector investment.

The CLP is the only party with the plan and the track record to deliver a diversified economy. We will be build the foundational infrastructure for a globally significant and competitive onshore oil and gas industry. We will invest in transformational water infrastructure such as dams, off-stream storage, managed aquifer recharge programs and water networks.

Other than the underground car park, which has had no cost benefit analysis let alone an operational model, the opposition supports the completion of the State Square project.

We will put making money before spending money at the heart of our government. We will focus on growing the Territory’s revenue, not through increased taxes and destroying our lifestyle, but by growing our economy through private sector investment.

It is time for common sense and discipline to come back to government. We need to make more than we spend because, ultimately, we cannot provide what we cannot afford. Read my lips: there will be no cuts to frontline staff. We will reduce the price Territorians pay for government service and remove the silos that dominate government service delivery. We will reduce the waste and speed up government approval processes. We will reduce the debt burden and return the budget to surplus sooner than in a decade’s time.

The CLP believe a small government is a good government because we trust Territorians to spend their money better than government can. We make this promise to all small and medium Territory businesses. We will review your payroll tax with a view to abolishing it once we see the true state of the Territory finances.

We will review all the alcohol reform measures imposed by the government to see what has been effective and what has not. We will scrap the floor price for alcohol and bin the useless MyFuel NT website waste. We will also scrap the hybrid mining and the vacant and derelict site property taxes. We will ensure there is strategic investment which creates sustainable employment in the private sector.

We will invest in a diversified portfolio of infrastructure-related projects, such as beef and mango roads that generate real wealth and unlock opportunity. Under a CLP government, with the budget in the black, we would back Police by reinstating work done for the police exam for sergeant, reinstate sworn officers in the intelligence unit and put youth justice back with Corrections. We will cut nine ministers to eight, assistant ministers and their travel and abolish Team NT. We will get the Territory off the road to ruin and back in the black.

These are just some of our ideas. We have more, but in the meantime if those members opposite want to snaffle any of our ideas, they are quite welcome to do so. After all, the sooner there is some real action to address budget repair the better.

This third Gunner Labor government Territory budget is another disappointment for those of us on this side of the House. The CLP can and will do better. We embrace hope and aspiration—a better life is something to aspire to and rise up to. Some political parties, especially those on the left, believe in a culture of dependency and victim—hood. They like it when people are down and dependent. They want the system to fail so that they can build influence and support.

Madam Speaker, the CLP government will never talk down to people. We will always try to offer people a way up and forward. We are the party of aspiration. The CLP can and will do better because that is what Territorians deserve.