15/07/2013 - 14:08

Cost-cutting conundrum

15/07/2013 - 14:08

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Treasurer Troy Buswell has several unpalatable choices in his quest to ensure that his first budget after last March's election victory meets the government's undertaking to return a surplus.

The recent warning that up to 65 jobs in the Department of Commerce's industry, science and innovation division could be axed confirms that money is tight, and that all options are being investigated to keep the budget in the black.

Other choices include raising taxes and stamp duties, privatising some revenue-raising activities, and contracting out various functions to the private sector.

There is another option, however, which is less painful and therefore less effective – cherry picking by cutting back on grants to specific groups that carry out what are considered to be 'non-essential' activities.

Labor's Jim McGinty tried that when he was health minister. One grant he cut when the health budget was under stress was to a well-organised Mosman Park seniors group, which hired a physical education instructor to supervise classes.

When the grant was cut there was such an outcry from the resultant television coverage that the minister wisely backtracked.

But a nip here and a tuck there rarely achieve the savings sought by governments. That's why a whole function from within the Department of Commerce appears to have been targeted.

The department's role has come into question from time to time. The Chamber of Commerce and Industry WA, for example, has suggested there is significant duplication between their roles, and taxpayers' money could be saved.

Richard Court's government indulged in significant restructuring after the 1993 election, when money was very tight. Probably the major early privatisation was the sale of Bankwest.

But there was also the sale of the Dampier-Bunbury gas pipeline for $2.2 billion, as well as the contracting out of a number of activities including metropolitan bus services. And the Midland Workshops were closed.

What could Mr Buswell sell to ease the current pressure? On the east coast, everything is up for grabs, it seems. Power stations are on the market, as are ports, although Premier Colin Barnett has indicated he does not favour parting with such assets.

TABs have been big money spinners in other states, and the lucrative Lotteries Commission would attract plenty of interest. But the local TAB returns a healthy profit, which is very useful to public coffers, and the Lotteries Commission disperses millions of dollars annually, with useful goodwill going the government's way.

The temptation in the first post-election budget is to inflict some pain and ease off as the next poll approaches. Mr Buswell might find that option very appealing.

Resources movers

WOODSIDE founder Geoff Donaldson and the former chief executive of Peko Wallsend, Charles Copeman, who both died recently, had a profound impact on the shape of Western Australia's economy.

Mr Donaldson, who was aged 99, was an old friend of former premier Sir Charles Court from their WWII army days. They linked up again in the early 1960s, with major consequences for Woodside and the state.

When Sir Charles, as minister for industrial development, moved to award exploration leases for the North West Shelf in the early 1960s, he attracted little interest from the big players in the oil and gas industry. He suggested to Mr Donaldson that he might be interested in applying on behalf of his small Victorian company.

Mr Donaldson agreed, and Woodside won the lease and a crucial toehold in what has turned out to be an energy-rich location. The company is now a major producer, has its head office in St Georges Terrace, and employs thousands of Western Australians.

Mr Copeman, who died in Sydney aged 83, became involved in the Pilbara iron ore industry in the mid 1980s, when Peko Wallsend emerged as the majority owner of the Robe River joint venture. He was alarmed at the management's lack of control over decision making. This seemed to rest with union shop stewards or, if there was a dispute, the industrial tribunals.

It was an era in which the companies tended to cave in to union demands, rather than disrupt production. Mr Copeman was determined that the owners regain control of their company. He confronted the shop stewards in what became a bitter and costly dispute. At one stage, 1,000 workers were sacked.

I recall his arrival in the ground floor foyer of 197 St Georges Terrace to meet then premier Brian Burke over the issue in 1987. He declined to speak to reporters, and we all piled into the same lift headed for Mr Burke's 19th floor office. Unfortunately the lift stalled, but Mr Copeman declined my invitation to break his silence.

Peko emerged the winner from the industrial confrontation, which did much to improve productivity and profitability in the industry. The unions were effectively sidelined, and have only recently resurfaced as a factor in the Pilbara.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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