Page 2490 - Week 08 - Tuesday, 9 August 2016
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One of the significant areas in the directorate is, of course, treasury, and the fact that treasury has been swallowed up by the Chief Minister’s directorate does, I think, pose
some issues. Whilst there are certainly going to be some benefits in having treasury incorporated into a larger agency so that you do not get those corporate overheads and those corporate issues that a stand-alone agency would have to meet, having the treasury agency within the Chief Minister’s directorate I think means that you do not necessarily get the competitive tension that would be preferable. Ideally we should have a treasury that is separate, that is able to give independent advice to the other agencies. I think that is especially so when you have got the Chief Minister’s agency, perhaps somewhat in the economic development area, putting forward a proposal and then you have treasury, who is in the same directorate, meant to give independent advice.
I do not doubt the ability of the staff of treasury to give independent advice but I do think the actual circumstances in which they are giving that advice are not necessarily conducive to being able to be as independent as I think they need to be. To that end I would be very interested if the Chief Minister and Treasurer was able to address in his remarks exactly how it is that you still get that competitive tension between treasury and the other agencies, especially the Chief Minister’s economic development directorate, so that you actually get all the competitive tensions that a government needs in order to get the best possible outcomes.
Of course there are some serious issues, I think, in the budget. One of them is the valuation liability. This is something that we talk about a great deal at this time of year but it is something that I think in the presentation of the budget in particular does need to be addressed. It goes to the discount rate of six per cent in the outyears. Of course the six per cent discount rate is nowhere near what the actual interest rate needs to be and because of that you are seeing, in effect, a blowout in the liability each year as the actual percentage comes in as opposed to six per cent.
I know that this has been an issue that has been discussed within government for some time but I think it really does need to be addressed because there is, I believe, a real issue with the presentation of the budget, to the tune of $3 billion. Instead of there being a $3 billion shortfall in the year of the budget it is $6 billion and it always is $6 billion. So you always get this massive blowout in actual liability and it all goes to the fact that we have a six per cent discount rate in the outyears which really should be more reflective of the actual interest rate which is going to be achieved. And I am sure that there would be many actuaries that would question the reason for that six per cent discount rate.
Further to this there is the medium-term outlook particularly with regard to the deficit and we seem to have repeatedly had a government that promises that in two or three years time we are going to miraculously have a budget surplus. But the surplus never comes. They keep on promising and they keep on abandoning that promise. Once again we are seeing the government commit to a surplus, this time in 2020, but I think we all know that they will not achieve it. This is a Labor government that is absolutely incapable of delivering a surplus, it seems, despite these promises. Actually the Pegasus report does discuss this in some detail whereby they actually show that year after year a promise is made.
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