TIM HOLDING – SHADOW TREASURER – BUDGET REPLY

Posted on 05. May, 2011 in Speeches

Speaker, there is an apocryphal story about the novice Treasurer who on his first day in the job, is advised by his predecessor that there are three envelopes in his top drawer, which he can open successively in emergencies to solve any crisis.

The sceptical Treasurer is only partly reassured. But when the first crisis comes and the first envelope opened containing the advice, “blame the
previous government”, he deploys the strategy and the problem disappears.

When the next crisis emerges the next envelope is opened with the advice, “blame the Federal Government”, and again the crisis is averted.
The third crisis comes. The third envelope is grasped and opened, he reads the sobering edict, “prepare three envelopes.”

It is now time for the Treasurer to prepare his three envelopes.

He has blamed the former Government. He has blamed the Federal Government. He’s broken promises – something they vowed they would never do. He’s forgotten the most important thing to Victorian families – their jobs. But most importantly he’s delivered a budget that lacks a vision. A plan for our state. A plan that creates jobs. A plan that builds on Labor’s investment in world class infrastructure. A health plan. A plan to tackle climate change. A plan that continues to make Victoria a fairer place. And a plan that keeps Victoria at the forefront of national reform and economic performance.

A government ought to be a powerful force for progress – what’s the point of 11 years in Opposition and six years of leading your party, if, when
you’re elected, you have no plan, no vision, for where you want to take our State.

This Government needs to learn that the negative, lazy approach that it took in Opposition is not working in Government. A small target is not a powerful force for change. A focus group is no substitute for a real plan to keep Victoria the nation’s engine room for jobs and ideas.

Under Labor, Victoria drove jobs growth in Australia. Indeed in the last 12 months, the Victorian economy created 100,000 new jobs. 92% of the full- time jobs created in Australia in the previous year came from Victoria. This incredible achievement was in the midst of the resources boom that has seen resource-rich states like Western Australia and Queensland surging.

But where is this Government’s plan to create jobs?

The Treasurer spoke to the Parliament on Tuesday for 35 minutes and didn’t mention the words “jobs” or “employment” once.

When he was asked yesterday in question time to identify the Government’s jobs plan, the Treasurer pointed to page 9 of Budget Paper number 2, which is nothing more than an update of economic projections from Treasury.

The Treasurer doesn’t appear to understand that these forecasts are not a plan. He is now the ultimate empty suit. A hollow man confusing Treasury’s role as forecaster with his role as Treasurer.

Where is the Premier’s plan to ensure Victoria’s health system continues to provide the best health care for families in Australia?

So proud were they of their health plan that they delivered it late and under the cover of Tuesday’s budget. The plan itself was a flimsy document – a plan for six more plans.

Where is the Premier’s plan to tackle climate change?

Labor had a plan to cut emissions by 20% by 2020. The Liberals promised to match that plan but for 35 minutes on Tuesday, the Treasurer spoke to the Parliament and didn’t mention the phrase climate change or carbon emissions once.

At a time when our state needs the continuation of bold action, this budget is long on reviews and studies .

As the Herald Sun said, “an extra 30 million trips will be made on Melbourne’s public transport in the next year but there was no new money for trams or buses, nor for any major road projects…there was $37 million set aside for studies…” [Herald Sun, ‘Money for studies, but no new trams, buses travel logjam to stay for now’, p12, May 4 2011]

While the Premier was thinking about more transport reviews, Sir Rod Eddington spoke for most Victorians when he implored the Premier to, “Get a move on” on the front page of The Age on April 9. [The Age, ‘Baillieu told: get a move on’ p1, April 9 2011]

Sir Rod isn’t alone, in the same article Engineers Australia said, “we seem to have a lot of plans but not a huge amount of action.”

Paul Mees has reminded the Minister for Transport that he had, “promised to do far more to sort out the problems before the election of the BaillieuGovernment.” [The Age, p7, April 28]

While Victorians await a decision on Myki, our bumbling Treasurer let the cat out of the bag on Tuesday blurting out, “when we take ownership of
myki, we are going to make sure it works.” [Herald Sun, May 4, p12]

The Premier spent yesterday mopping up the mess, back-peddling and claiming, “we haven’t made a decision.” [Herald Sun, May 5, p13] Please Mr. Wells, just get on with it.

For decades now, Victoria has enjoyed an edge over NSW. Whether it has been in attracting investment, staging world class major events, reforming and improving the delivery of social services or investing in major infrastructure projects to improve our state’s competitiveness and
our quality of life – Victoria has stolen a march on our cousins north of the Murray.

But many Victorians fear this may be about to change.

Many of our key infrastructure projects lie stalled while this government dithers.

The ongoing improvement in our social services marked by the groundbreaking A Fairer Victoria framework has come to a halt.

Even our incredibly successful and supposedly bipartisan major events strategy has hit a hurdle, with this government questioning the value of
Tiger Woods, breaking its promise about the Red Bull air race which has now been diminished to a feasibility study at a fraction of the original cost, and allowing the debate on the Grand Prix to run for days without the strong support from the Government.

I’m thrilled that the Premier’s staff were able to snare tickets to the Logies, but frocking up is not enough, you also need to step up and fight to secure the best events for Victoria.

No jobs plan, no health plan, no climate change plan, transport projects stalled, A Fairer Victoria ditched.

So what is this Government’s story?

This Government’s central premise seems to be that our future prosperity lies in improving productivity growth.

The Treasurer claims that productivity growth is the main driver of higher living standards and economic prosperity. Productivity growth, he claims, is the key to his “reform agenda”. A laudable assertion but what follows is laughable.

The Government’s vision is nothing more than a review that involves asking the Victorian Competition and Efficiency Commission to look at what would make up a reform agenda.

After 11 years in opposition it is unbelievable that this Government has turned to a Labor-created and Labor-appointed commission to write its
reform agenda.

If the Treasurer comprehended his own budget, he would see that once you subtract population growth from economic growth over the forward
estimates period not even Treasury has any faith that productivity growth will actually improve.

The key plank of his reform agenda – improving productivity – is a plan for a review that won’t even be published until 2012. And a set of budget forecasts that has no expectation that the plan will actually improve productivity over the next four years.

Our Treasurer – clearly a man with his hand firmly on the rudder of the ship of State. So – no plan for jobs. A plan for six more plans for health. A target, but no plan for climate change. A transport plan that consists of nothing but studies. A productivity plan for which he holds no expectation of success.

Is it any wonder that according to almost every commentator, this Government had flunked the vision test?

Perhaps the only thing that has occupied this Treasurer’s limited attention has been his attempts to besmirch the reputation of the previous
government.

Instead of crafting a vision the Treasurer has been more concerned with undermining the economic and financial legacy of the Brumby Government.

He’d do well to take the advice of the business figure in last Sunday’s Age who said, “part of his role should be to engage with the key stakeholders
and to get out there and inspire confidence by talking up the Victorian economy. He doesn’t seem to be doing that.” [The Age, May 1 2011, p8].

He’d do well to meet with VECCI chief economist, Steven Wojtkiw who said, “business confidence is the key to investment, growth and taxation
revenues [and] business confidence is plummeting – this needs turning around.” [Herald Sun, May 3 2011, p25] [AFR, May 3 2011, p8].

Instead of inspiring business confidence, the Treasurer is busy sullying the State’s finances and trashing our economic bonafides.


The truth is under Labor Victoria enjoyed a AAA credit rated budget in each and every year that we were in office;

Under Labor, every budget we delivered had a strong operating surplus. We never delivered a budget with an operating surplus as thin as $140 million;

Under Labor, net debt as a percentage of our State’s economy fell from 2.9% when we came to office to 2.5% when we left office;

Under Labor, payroll tax was cut from 5.75% to 4.9%, rewarding Victorian businesses with the lowest rate of payroll tax for 36 years.

Under Labor, Victorian employers enjoyed six WorkCover premium rate reductions. They are now paying an average WorkCover premium of 1.34%.

Under Labor, we laid to rest the lie that the only way to make the WorkCover scheme successful was to drive up premiums or drive down benefits to injured workers. Under Labor we restored common law rights to injured workers and made benefits the best in Australia while driving down WorkCover premiums to the second lowest in the country.

Under Labor, more than $30 billion was invested in infrastructure – the largest infrastructure program in the State’s history. This Government is now managing projects we commissioned – the new $1 billion Royal Children’s Hospital, the Melbourne Olympic Park redevelopment worth $363 million, the Hamer Hall redevelopment worth $128.5 million creating more than 400 jobs during construction, and the Princes Pier restoration worth $34 million with 100 jobs during construction.

More importantly, under Labor, our state led the nation and Victoria became the jobs capital of Australia. In difficult economic times, we supported Toyota to undertake a $300 million upgrade of its Altona engine plant to produce 100,000 green engines each year for its Camry and Hybrid Camry vehicles, safeguarding 3300 jobs.

We supported Mission Foods to set up a manufacturing and logistics hub in Epping creating 470 new jobs.

We supported IBM to establish a world-first global research and development laboratory at the University of Melbourne that will employ 150
highly-skilled staff and PhD students to help solve some of the biggest challenges facing the globe.

In fact one of the only references to jobs that I could find in the Treasurer’s budget was on page 12 of Budget Paper number 2, which lauds Labor’s job creation success when it states, “Employment has continued to increase strongly in Victoria with 3.5 per cent growth over the year to March 2011, representing close to an additional 100,000 jobs.”

Can you believe it, the only real commentary about jobs, is a reference to the success of our job creation efforts.

But Labor didn’t just create jobs, we also managed the State’s finances responsibly and sustainably.

As Moody’s said earlier this year “Victoria’s credit quality reflects a long- term record of sound financial performance underpinned by the state’s
prudent fiscal practices…the state’s sizable and diversified economic base bolsters the rating as it amply supports the state’s financial and debt
obligations.” [Moody’s Investors Services, February 14, 2011, p1]

But the most telling endorsement of the former Government’s responsible fiscal approach comes not from Moody’s or Standard and Poors, it comes not from financial commentators and business groups who consistently praised the Labor Government’s economic management.

The highest praise comes from none other than the Treasurer himself. Not from what he has said, but from what he has done. For while he has wailed about the catastrophe he claims he has inherited, he has done nothing, not a thing to reverse the fundamental financial parameters that he inherited from Labor.

In fact, under this Treasurer, net debt will be higher than it was ever forecast under Labor. Under this Treasurer the operating surplus will be lower than it ever was under Labor. Under this Treasurer expenditure will be higher – $2 billion higher – than it ever was under Labor. Under this Treasurer, more money will be collected from taxes and charges, fees and fines than were ever collected under Labor.

As the Treasurer opens his second envelope he might like to remember that more money will be collected from the GST than was ever collected
under Labor. Next year, $290 million more than in our last year in office and $2 billion more by 2014/15 compared to the last year Labor was in
office.

So judge this Treasurer not by what he says but by what he has done. If he had introduced his promised debt reduction strategy and net debt was
set to fall, we might believe that he was concerned about state debt instead of bringing down a budget that proposes to more than double it.

If the Treasurer was truly concerned about the growth in expenditure, we might believe him if he proposed that expenditure would fall.

If the Treasurer really believed that the “Labor Government had presided over record levels of state taxation” we might believe him if state taxes
hadn’t just reached record levels in his very first budget. [Hansard, 5 Oct 2010 p3911]

The last few weeks have shown that what this Treasurer says and what he does, are two different things.

Why would anyone ever believe this Treasurer again when he sounds the alarm bell at any time in the future?

But the difference between what the Treasurer says and what he actually does, was never clearer than in his release and treatment of the
Independent Review of State Finances – the so-called Vertigan report.

In the one instant, this report was both embraced and shelved by this Government.

This interim report has been pronounced dead on arrival by none other than the Treasurer who commissioned it.

Like a crazed uncle at Christmas, the Vertigan report has been consigned to the attic – an embarrassment.

Why on earth were the recommendations of the Vertigan report bizarrely inserted into page 5 of Budget Paper 2?

Its recommendations about debt not just ignored but comprehensively rejected by the budget strategy itself.

The review’s recommendation that expenditure needed to be slashed to create a budget surplus to fund infrastructure has not just been ignored but ridiculed by the budget the Treasurer himself delivered. Far from falling, expenditure will rise by $2 billion this financial year. Far from running a huge surplus large enough to fund the state’s infrastructure requirements, over the forward estimates period the surplus is forecast to never go above $181 million.

Not a shadow on the massive surplus that would be required to meet the Vertigan report’s recommendations.

Let me make the opposition’s position absolutely clear.

We reject these extreme recommendations. Just as we reject the critique of Victoria’s financial position that the report’s recommendations are based on.

But it is not just the Opposition that sees the danger of the Vertigan report.

Respected economist, Saul Eslake, says of the plan for zero state debt, ““I can’t think of any principle of economics or public finance which says that the optimal level of net debt for a state government is zero…It would appear to be a recipe for under-spending on infrastructure with the same consequences that Sydney now faces for the same reason.” [Australian Financial Review, 28 April p. 10]

Saul Eslake gets it.

The Australian Industry Group agrees, recognising the role that debt plays in paying for intergenerational infrastructure projects. [The Age, 25 April p.2]

The Property Council also recognises that debt has a role to play to fund infrastructure projects that underpin future growth. [The Age, 25 April p. 2]

Even the recommendation that the maintenance of a AAA credit rated budget should not of itself be a medium term financial objective has been
rejected by this government.

Therefore, given that the Government’s own budget rejects each and every one of these extreme and ridiculous recommendations you have to ask what on earth are they doing front and centre in Budget Paper number 2.

The Government promises that it will respond to the Interim Report of the Independent Review of State Finances “in due course”.

In truth, they have already responded.

Their budget strategy comprehensively and conclusively rejects them.

A fortnight ago, the Treasurer released the so-called Victorian Economic and Financial Statement. This was probably the shabbiest document ever to have been issued by the Victorian Treasury.

Unlike the normal Mid Year Financial Report, it was a sparse 11 pages of political rhetoric – full of unsubstantiated claims and political statements. The Age said in its commentary, “You have to wonder if Treasury isn’t ashamed to have its name attached to this so-called ”Victorian Economic and Financial Statement”. If it isn’t, it certainly should be.” [The Age ,15th April, p.5]

Mr Speaker, “You have to wonder if Treasury isn’t ashamed to have its name attached to this so-called ”Victorian Economic and Financial
Statement”. If it isn’t, it certainly should be.”

In all my time in politics I can’t remember Victorian Treasury being dissected in such brutal, surgical terms. The Treasurer should be ashamed
for having put the Treasury in this position.

The Statement singularly failed in its objective of trashing Labor’s record in office because it failed to turn up any real evidence.

A total of $2 billion was claimed to exist in project cost over-runs but almost 90 per cent of the substantive figures were withheld from publication – marked “NFP”.

Many of the claims that projects are over-budget are highly suspect.

The $60 million blow out claimed on the Westgate bridge strengthening is in fact offset by other parts of the M1 upgrade project, of which it is part.

Unless there have been further cost increases under this Treasurer’s watch this project will not incur additional cost to the Government.

The final tranche of funding for the Olivier Newton John Cancer Centre was also listed as a Labor black hole.

This was a commitment made by Labor and not matched by the current Premier.

Predictably, he backflipped after the public outrage at his decision.

It beggars belief that his back-flip can be called a Labor black hole.

As the Australian Financial Review noted on April 5, “Baillieu and Treasurer Kim Wells were apparently astounded to not find the money in the budget for something they had not promised.” The Financial Review went on to note that it prompted them, “ to wonder whether some of the black holes around Treasury Place might have ears on either side.” [AFR, 5 April p. 40]

The truth is the Treasurer’s alarmist and exaggerated rhetoric about the state’s finances is nothing but a grubby attempt to muddy up the reputation of the former government.

He needs to understand that as the State’s Treasurer he has a responsibility to talk credibly, sensibly and truthfully about the State’s
finances and the State’s economy.

In this, he has failed perhaps his most important duty.

As Malcolm Maiden noted in The Age that while discovering black holes is standard political practice, “in Victoria at least the Baillieu Government is starting to test its limits…any attempt to ramp that up into a claim that bad economic governance in Victoria is endemic is going to fly in the face of reality. ” [The Age, 21 April p. 2]

There we have it, even business commentators are putting him on notice that he needs to tread carefully when he peddles such a dishonest critique.

This Government’s greatest claim was that its budget would honour each and every promise it made to Victorians in the lead up to the last election.

Indeed, the Premier promised as much in the first answer that he gave in this place after the election, when he said in answer to a question from a
government member, “the coalition was elected by the Victorian people with a promise that it would deliver on all its election commitments, and indeed that is what we intend to do” [Hansard, Dec 21, 2010, p.6]

The Treasurer said as much when he said, “our priority was to deliver on our election commitments” [Australian, p1, Wed 4 May]

Not ‘some’ of our election commitments.

Not the election commitments we can remember.

Not the election commitments that don’t contradict each other.

But all of their election commitments, each and every one.

This is their own test, and in their own words, a demonstration of their integrity.

When Victorian teachers were promised by the now Premier that, “we must immediately lift the pay of teachers in our school system so they are not just equal to other states, but the highest paid in the nation.” Was this not a promise? [Liberal Party Press Release, 13 April 2008]

When the now Premier matched Labor’s promise to build the Monash Children’s Centre in this term of government, was this not a promise? Who
are Victorians to believe, the Treasurer’s broken promise on Tuesday orthe Premier’s backflip on Wednesday?

When the now Premier promised $165 million for a new Royal Victorian Eye and Ear hospital, was this not a promise?

When the now Premier promised a miserly $2 million for a helipad for the Ballarat hospital, was this not a promise?

When the now Premier promised that protective service officers armed with semi-automatic weapons would be placed in public hospital emergency departments, was this not a promise?

When the now Premier promised Victorian police members they would receive wages that don’t go backwards in real terms, was this not a
promise?

When the now Premier was asked by Paul Austin in the pre-election debate, “how do you bring down debt” and he replied, “well, the first step is
not to allow it to go further”. Was this not a promise? [ABC Stateline, November 6]

When the Premier promised that his Ministers would not attend fundraisers until he released a Ministerial code of conduct, was this not a promise?

None of these promises made hand on heart by the Premier and his Ministers have been honoured.

So the test the Premier set on his first day in Parliament, the test he set for the budget, the test he set for his Government – that they would honour each and every election commitment – he has failed to live up to the most basic test that he set for himself.

The Treasurer claims that, “one of the biggest everyday concerns for Victorian families relates to the cost of living”. [Hansard, May 3]

Victorian families are entitled to ask how does this budget address that challenge?

Victorian families are right to ask how denying almost 100,000 families access to the School Start Bonus helps those families meet the cost of
living.

Victorian families are right to ask how the Government’s decision to bring forward higher municipal land-fill levies helps families meet the cost of
living.

Victorian families are right to ask how the Government’s record state taxes, charges, fees and fines help families meet the cost of living.

The Government has admitted that it knows that these things will increase the cost of living for Victorian families.

But the most breath-taking claim of all, was the Premier’s pre-election promise that he would bring down grocery prices for Victorian families.
Victorians who eagerly scoured the budget papers searching for initiatives that would bring down their shopping bills could find nothing – at least they can sleep peacefully knowing that this is a government devoid of spin.

Seriously, do they take Victorians for fools?

What the Government fails to understand is that the best thing that a government can do to reassure families that “the Government is on their
side” is to have a plan to create jobs.

Nothing puts greater emotional and financial pressure on Victorian families than the fear or the reality of losing their jobs.

This Government has no plan to protect and create jobs for Victorian families.

By failing to develop a jobs plan for Victoria this Government has failed to do the most basic and fundamental thing it could do to ease the pressure on Victorian families.

The pressures on families in regional Victoria are particularly significant.

Fires and floods, drought and fluctuating commodity prices add to the stresses of regional Victorians.

The centrepiece of the Coalition’s pitch to regional Victoria was their $1 billion regional growth fund.

And the Deputy Premier said it all yesterday in Parliament when he boasted, they’ve never seen anything like this before.

He’s right, regional Victorians have never seen a so-called $1 billion fund that only contains $500 million.

That’s right they can have the second $500 million but they have to vote for them again. I mean seriously speaker why not go the whole hog and call it a gazillion dollar regional growth fund.

Even worse, much of the funding in the regional growth fund is not new money but a shabby attempt to spin the rebadging of previous Labor
financial commitments from the Regional Blueprint.

Like some sort of mangled political ponzi scheme, the coalition cuts Labor’s program, makes off with the loot, then hands the same money back to regional Victoria with a blue ribbon on it, and boasts that they’ve never seen anything like it.

Never were truer words spoken.

So much for a budget of honesty and candour, a budget devoid of spin.

For a government that promised that meeting its commitments was its highest priority, regional Victorians will remember not just the unfunded
helipad for Ballarat Hospital, but also the failure to fund the second hospital in Geelong or the promised upgrades to Kilmore, Seymour and
Castlemaine hospitals or the planned introduction of radiotherapy services on the South-West coast.

In education, students from Bairnsdale, Castlemaine, Koo Wee Rup, Mirboo, Romsey, Rosebud and Sebastapol will be wondering what
happened to funding for the upgrades they were promised for their schools.

Regional Victorians have not only been betrayed by the promises that have been ignored, they are also coming to terms with Coalition promises that have been underfunded or delayed beyond what was promised prior to the election.

The Bendigo Hospital, the Geelong Hospital expansion and the program to upgrade regional level crossings all have serious question marks over their status.

It’s not only regional Victorians who are perplexed by the absence of a reference in the budget to the funding of additional V-Locity carriages to
support additional regional rail services.

My constituents in Lyndhurst, who depend on jobs at the Bombardier factory where these trains are manufactured, or at the companies in the
supply chain which are an integral part of building these world class trains are wondering what the Coalition’s plan for regional rail services really is.

So Speaker, Victorians are left with a budget that looks backwards rather than forwards.

A budget that blames the previous government, rather than outlines a plan for Victoria’s future.

Victorians are left with a budget of broken promises.

Is it any surprise that our state’s invisible Treasurer produced such a document.

Hidden away, as senior business figures noted, “virtually impossible to access over the past few months”. [Sunday Age, May 1]

“He’s been impossible to get any sort of meeting with”, one business figure told the Sunday Age.

The Property Council, disappointed that they did not get the pre-budget meeting that they used to under Labor.

The unbelievable revelation that VECCI, the State’s pre-eminent employer association, met with the Treasurer’s staff but not with the man himself.

Our very own bubble boy.

The bubble boy of Victorian politics, not allowed out in case he catches something.

As Stateline reporter Josephine Cafagna asked him last year, “you’re the alternative Treasurer, you don’t seem to have much of a profile, certainly with the public, where have you been?.” [ABC Stateline, 12 November, 2010]

His excuse was, “unlike John Lenders, who has hundreds and hundreds of Treasury experts and hundreds and hundreds of spin doctors, we don’t
have that ability to do that. We have a staff of three…”

Well, since the election he now has hundreds and hundreds of Treasury experts and one key spin doctor – none other than Josephine Cafagna.

She now knows the answer to the question “where have you been?”

Back in the bubble at 1 Treasury Place.

She should know, she put him there.

This is a budget that Victorians will pay for years to come.

Not because of the higher debt.

But they will pay for it through lost job opportunities. Through critical delayed infrastructure projects. They will pay for it as our state loses its national edge. And people will ask the Treasurer, just as Josephine Cafagna did, “where have you been?”

It’s now time for our Treasurer to prepare his three envelopes.

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