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Thursday, 5 May 1994
Page: 291

Senator CHAPMAN (10.22 a.m.) —With the job statement yesterday and the budget due next week, the Banking (State Bank of South Australia and Other Matters) Bill is a timely reminder of Labor's financial incompetence. It underlines a fact that ought to be seared into the hearts and minds of everyone right around Australia: that we cannot trust Labor with the till. Time and again it has been proved that Labor cannot manage money. If it cannot be prudent with government finance, it comes as little surprise that Labor fails dismally when it comes to overall economic management. That is highlighted by this piece of legislation.

  The State Bank of South Australia has proved to be the greatest financial disaster in the history of Australia's public sector. A $3 billion loss for that bank is a shameful legacy left behind by the Labor Party in South Australia. Of course, it was like drawing teeth for the former Liberal opposition in South Australia to drag out the truth about the disaster of the Bannon and Arnold Labor governments with regard to the management of the State Bank in South Australia. Denial and cover up preceded the eventual admission that not all was well with the State Bank, and even then the initial admission regarding the problems of the State Bank was only partial. It was not for some significant period that we found out the enormous extent of the financial disaster and the losses that had been incurred by the State Bank and, indeed, the massive amount that South Australian taxpayers would have to pay to bail out the bank.

  In the face of those massive losses—which, it was finally admitted, amounted to some $3 billion over the period since 1991—corporatisation and privatisation of the bank are certainly the best solution. But even that solution will not prevent generations of South Australians having to pay for Labor's folly as far as its mismanagement is concerned. In the lead-up to the last federal election, both the Liberal and the National parties promised financial assistance to help South Australia reduce the debt burden that had resulted from this gross mismanagement.

Senator O'Chee —It was a huge debt.

Senator CHAPMAN —It was an enormous debt burden, as Senator O'Chee interjects.

Senator Faulkner —It is disorderly to interject.

Senator CHAPMAN —I think his interjection was quite timely, in fact. The present government promised an amount of $600 million on the basis that the bank would be corporatised and eventually privatised, and it is the purpose of this legislation to facilitate that process. First, the bill subjects what will become the Bank of South Australia Ltd, the new name for the State Bank, to Commonwealth supervision, as indeed are all other private sector banks. Secondly, the bill grants several income tax concessions to the Bank of South Australia Ltd as part of the process of including it in normal Commonwealth business taxation arrangements. Thirdly, this bill amends four acts to enable a streamlining of the transfer of assets of the State Bank of South Australia to the Bank of South Australia Ltd. So we see the bank, through this legislation, set up for that very necessary privatisation.

  But we now find that these problems with regard to the State Bank are not the only financial problems which South Australia faces as a result of a decade of mismanagement by Labor. In fact, after its 10 or 11 years in office in South Australia, we now find the true extent of its deplorable financial mismanagement, and the disaster that that means for the South Australian economy is finally revealed. This week in the South Australian parliament we saw tabled the report of the independent South Australian Commission of Audit. This has provided a very detailed and competent analysis of South Australia's finances.

  It is no wonder that the former Labor governments in South Australia of Bannon, Arnold and their incompetent cronies used every means possible prior to last year's state election to cover up the cooked books. Because of more than a decade of Labor, every man, woman and child in South Australia now owes $9,909 in state debt. The unfunded liability for superannuation is now increasing at a rate of $200 million a year, with projections expected to reach more than $7 billion by the year 2021. The bottom line for South Australia is $10 billion worse than the former Labor government claimed.

  Yesterday a senator from South Australia on the other side, the Minister for Small Business, Customs and Construction, Senator Schacht, had the gall in this chamber to accuse the current new Liberal South Australian government of hiding the truth. He accuses the Brown government of this when we have had 11 years of Bannon and Arnold governments hiding the truth and telling lies to the people of South Australia. In fact, it is the Brown Liberal government which is drawing back the curtain and revealing the truth. It is no wonder we are here debating the need for special financial assistance to South Australia to help it reduce this massive debt burden that has been inherited from the former South Australian Labor government.

  Had the former Labor government been prudent in its economic policies and financial management, and in its husbanding of the state resources over the past 10 or 11 years, the federal government would not be footing the bill for this $600 million bale out that is required. Of course, it is not the government at all which is footing the bill. South Australian taxpayers, along with the rest of Australia's taxpayers, will be footing the bill directly through their contributions to Commonwealth coffers.

  Let us make no mistake about who is responsible for creating the $10 billion black hole with which South Australians are now left. That indictment rests fairly and squarely on the shoulders of the former Labor government. It is because of the failed policies of Labor that all South Australians will be forced to endure what will become a very painful reform process. It is because of Labor's failed policies that the Public Service will face cutbacks. It is because of Labor's failed policies that liabilities in South Australia will increase by $14,840 every hour of every day for the next 28 years.

Senator O'Chee —How much?

Senator CHAPMAN —It is $14,840 an hour for every day of every year for the next 28 years. That is Labor's legacy in South Australia. That is what our children and grandchildren will have to bear because of the stupidity and incompetence of Labor administration.

  For 10 years the Labor government in South Australia kept the state's finance books firmly sealed away from public scrutiny or accountability. As long ago as April 1988 the South Australian Auditor-General pleaded with the then Labor government to report on unfunded liabilities. Six years ago the Auditor-General said, `You must give a report. You must come clean on what these liabilities are.' Four years ago the Auditor-General again called upon the Labor government to provide information concerning the accumulated costs of these liabilities. All the while, the Labor government and its mates embarked upon an extravagant spending spree with taxpayers' money, without any heed for the consequences for South Australians or the South Australian economy.

  The former government ducked and weaved its way around answering the hard questions, quite content to leave them to future generations of South Australians. So we are left with this enormous difficulty and problem. There is no doubt that this can be described as a gross act of financial vandalism for 10 years. It was only when Labor was recently thrown out of office in South Australia that a commitment was made to the public to reveal the true extent of the state's finances when the new Liberal government came to office.

  It is not only in South Australia that Labor's incompetence as financial managers has been revealed. In Victoria the former Labor government left its mark with the collapse of the Tricontinental and Pyramid financial institutions, plunging Victorians similarly into financial chaos, from which the Kennett government is now slowly but surely ensuring that Victoria emerges. In Western Australia, Labor's corporate cowboys strangled investment and economic growth through their abysmal financial dealings involving the now infamous WA Inc. Again, it is a Liberal government—the Court government—that has had to come into office to clean up the mess and put the Western Australian economy back on the road to success.

  It is no wonder, then, that the Australian people have little confidence in Labor's capacity to responsibly manage the economy. Next week the Treasurer (Mr Willis) will deliver the government's budget on behalf of the Prime Minister (Mr Keating) and the government. Yet again we will see a Labor government afraid to face up to the hard questions, the real issues, to take the steps required to get this nation back on its feet again, to implement measures for real and sustained economic growth, to stimulate long-term genuine employment to benefit all Australians instead of its usual practice of juggling the numbers, as it has done in recent years.

  The Prime Minister would do well to remember that, while he huffs and puffs about this place next week trying to sell his budget, manipulating figures and fudging statistics to make them look publicly palatable in preparation for the next election, the chickens will soon come home to roost in the federal parliament, just as they did in South Australia, Western Australia and Victoria. Given the experience of Labor mismanagement we have had in those three states, one can only wonder what the next Liberal and National Party government will find when it opens up the federal government's books following the next federal election, after 12 or 13 years of financial mismanagement by Labor at the federal level.

  In stark contrast to that experience of mismanagement by Labor right around this country, we now have Liberal state governments addressing the economic mess that has been left behind by Labor, especially in those three states. Indeed, as I have said, they are already succeeding. Within a year or so of their taking office in Victoria and Western Australia, we see the economy turning around. We see business starting to develop and grow again, in marked contrast to what happened under Labor governments.

  This bill supports the creation by the new Liberal South Australian government of a new corporatised bank to be known as the Bank of South Australia Ltd. Eventually, that bank will be sold off to the private sector in a privatisation process. But it is a tragedy that that has had to happen and it is a tragedy that can be sheeted home only to the mismanagement of Labor in South Australia. As I said, that reflects the mismanagement of Labor right around this country. So, while the coalition supports this legislation and the offer of $600 million to South Australia on the condition that the State Bank is corporatised and privatised, we certainly do not support the economic woes and the financial mismanagement that have been endemic under Labor governments around this country.