29/07/2013 - 16:08

Buswell targets embedded imbalance

29/07/2013 - 16:08


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The treasurer has a four-stage plan to reform what he calls the 'government business model', and ensure the budget stays in the black.

Treasurer Troy Buswell will unveil a plan for a concerted assault to rein-in public sector spending when he delivers the first budget of the Liberal-National government’s second term next Thursday, August 8. He is expected to promise another surplus, although more modest than in recent years.

Mr Buswell is concerned at what he describes as the ‘embedded structural imbalance’ in the budget, resulting in expenditure growth continually outstripping growth in revenue. Since the GFC in 2008, for example, annual spending has increased by an average of 9.9 per cent, compared with only a 7 per cent rise in revenue.

“That means at some point your actual spending passes your revenue and you go into deficit,” Mr Buswell said.

“We have been working hard to make sure we don’t do that … and that has been a big focus of this government.

“Going into deficit on the way we report our financials means that you effectively borrow money to pay public sector wages and to keep the doors open. It’s not sustainable. Most people would accept that you borrow money to build an asset.”

The good news for business is that there will be no increase in stamp duties.

Mr Buswell has a four-stage plan to reform what he calls the ‘government business model’, to ensure that future budgets – unlike the Commonwealth’s and that of most other states – remain in the black.

He said stage one built on the initiative unveiled last year, which gave the not-for-profit sector a significant cash injection aimed, in part, at enabling it to pay higher wages and retain valued staff. It was also designed to help the sector relieve the government of certain responsibilities, and costs, in the welfare sector.

The second stage deals with the public sector workforce. Wage and salary increases will be capped in line with the consumer price index, although the government will have to be more disciplined than in the past, when it has caved in to public sector unions, such as the nurses union during the election campaign.

Mr Buswell will have to repel all attempts to circumvent this policy, including by Premier Colin Barnett, if he is to succeed.

The government will also amend the Public Sector Management Act later this year so that public servants can actually be made redundant. That will be in addition to the voluntary redundancy target to trim the workforce by 1,000 by next March.

“From time to time you employ people who just aren’t suited to the job,” Mr Buswell said.

“It is also the case that the nature of the services we deliver changes, so you need different skill sets. And it is the case … that sometimes programs we have historically delivered, we say we are not going to deliver any more.”

The treasurer also flagged interest in identifying publicly owned assets that could be sold to reduce debt or help fund capital works projects to which the government was already committed.

“I don’t have a list of assets (for sale) in my back pocket,” he said, while noting that other states were selling asserts to fund major infrastructure projects.

Power stations and ports are on their lists, while TABs in some states have already been sold to the private sector.

“This is an agenda supported by the Commonwealth,” he said, “because we have to make sure our capital base is being used to deliver the best outcome for taxpayers today. I think it is entirely appropriate.

“There will be some histrionics from people in and around politics, but we simply need to make sure that our capital base is being used to ensure the best possible services that it can. And community needs and expectations change.”

Mr Buswell said the government needed to become more energetic in pursuing issues dear to Liberal hearts – microeconomic reform and the reduction of red tape.

For example more needed to be done to achieve a smoother planning and appeals process for the mining sector, including a reduction in unnecessary paperwork.

“I don’t want a highbrow list of stuff that looks good,” he said. “I want practical stuff that means, as a business operator, that is one less piece of paper work I have to fill in, and one less waste of my time.”

A safety valve in the surplus quest is expected from Royalties for Regions revenue, with more emphasis on essential works such as country roads, rather than small, localised projects.

And there will be a response to calls for action to counter the growing congestion on metropolitan roads. The budget is expected to include the long-awaited timetable for meeting the Liberals’ election promise on the return of light rail services in Perth, and a railway link to Perth Airport.


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