24/06/2013 - 15:57

Libs’ money management in question

24/06/2013 - 15:57


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Taxpayers can quickly turn on a government that’s perceived to be squandering taxpayers’ money.

Taxpayers can quickly turn on a government that's perceived to be squandering taxpayers' money.

THREE recent events, which potentially involve cost blowouts of hundreds of millions of dollars and delays in completing projects, have seriously challenged the claim that Liberal-National governments are better economic managers than Labor administrations.

The claims are linked with the fact that many MPs on the Liberal and Nationals side of politics have a business background. They ‘know’ what is required to control costs and get projects done on time – the penalty is a hit to the bottom line.

Very few Labor MPs have that experience. They might have impressive academic qualifications, and even be extremely competent in their fields of expertise before entering politics. But according to their critics, that doesn’t compensate for the skill required to ensure that a business is kept in the black, and shareholders – in this case taxpayers – get value for money.

Take for example the debacle over the recommissioning of the old Muja A and B power stations at Collie. Premier Colin Barnett’s announcement in 2009 that the two stations would be brought back into service came after the power scare with the interruption to gas supplies caused by the explosion on Varanus Island.

At the time, Mr Barnett gave an assurance that the job would cost taxpayers nothing. The expected cost of $100 million would be borne by Geelong engineering firm Kempe, which had entered into a joint venture with the publicly owned Verve Energy.

Things did not go as smoothly as hoped, however, and after Labor questioning it was revealed that cabinet had approved three injections of taxpayers’ money to get the project back on track. Two injections, totalling $70 million, were given before the March election, and a further $5 million early in June. None was announced at the time; so much for open government.

The Barnett government hasn’t covered itself with glory in the way it has handled the disclosure of the problems either.

Energy Minister Mike Nahan, who admittedly inherited the shambles from his predecessor, Peter Collier, attempted to distance himself from the initial decision, telling parliament the matter had come up in 2009 and was considered by the “government of the day”. That government, of course, is the same Liberal-National government that is in charge now. But to give him his due, Dr Nahan has undertaken to “reveal all” when he gets the details.

Mr Barnett said the decision to proceed in 2009 followed a report from Verve Energy. However problems with the boiler pipes at the old power stations had since emerged. Governments should always make decisions on the best available information, which sometimes proves to be faulty. But what had happened to ministerial responsibility?

The other issues are linked to the health portfolio. That has proved to be the spending black hole for years. And despite the best efforts of the Treasury and dire warning of spending and staff freezes, nothing seems to have changed.

The Health Department has flagged it may need a $150 million budget top-up to meet its burgeoning expenses. At the same time it has 100 staff on the ‘redeployment’ register, with only six indicating they will apply for the latest round of public sector redundancies. It remains to be seen whether they will have to be tapped on the shoulder if meaningful work can’t be found.

Then there is the new Fiona Stanley Hospital at Murdoch, now nearing completion. It is a mammoth project, and it’s not hard to see why health is such a major item in public sector spending.

Under the heading ‘Fiona Stanley Hospital opening schedule confirmed’, a recent statement from Health Minister Kim Hames confirmed that the hospital would open for business – that is, accept patients – in October next year, six months later than originally scheduled.  The reason for the delay was given as “the scale and complexity of the project, particularly with the advanced information and communication technology (ICT) system”.

Of course the ‘government of the day’ is at the mercy of a number of factors, including many outside its control, when it comes to cost and meeting completion targets. But all these things can add up to a perception of its competency, and that is always an issue a vigorous opposition wants to dent.

Mr Barnett made much of the previous Labor government’s loss of the multi-billion dollar Inpex LNG project from WA to Darwin as a measure of its competency, or rather incompetency. But right now, at the start of its second term, Mr Barnett’s team is in danger of being perceived to have dropped the ball.

Whether this is confirmed will depend on Dr Nahan’s detailed reasons for the cost blowout at the Muja A and B power stations, and the capacity to rein-in the potentially massive cost increases in the health area. The danger for any government occurs when perception becomes reality.


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