NSW Budget Paper 1 - 1995-96
NSW Treasurer's Budget Speech - (Part 2).
CONTENTS
-
Part 1
- Introduction
- Fiscal Framework
- Economic Context
- Budget Result -
Part 2
Major Initiatives
- Health
- Education
- Crime Prevention
- Community Services
- Environment
- Forestry and Natural Resources
- Rural Sector
- Public Transport
- Sport and Recreation
- Olympics
Savings
Winning Jobs
Equity Restructuring and Asset Sales
Conclusion
MAJOR INITIATIVES
I now turn to some of our major new spending initiatives.
Health
Our recurrent spending on hospitals and health this year will total a record $5,008 million, which includes an 8.8 percent, or $344 million, increase in Budget support.
A key feature is the additional $64 million to slash waiting lists.
Other priority areas, include the upgrade of emergency departments and additional funding for aboriginal health, mental health and women’s health, more nurses and ambulance officers.
A capital program of $483 million will finance a wide range of new facilities, including construction of new public hospitals at Blacktown, Lithgow and West Wyalong, as well as a new ambulatory care clinic at the Prince of Wales Hospital - a facility that was to be privatised by our predecessors, but will be publicly owned and operated under Labor.
Education
Recurrent spending for the education and training portfolio will total $4,751 million, an increase of $308 million or 6.9 percent.
This enables us to make a significant start on our plans for additional teaching positions and our other commitments.
Specifically $86 million will be provided over three years for the Computers and Technology In Schools program.
As a first step to fulfilling the Government’s commitment to increase teacher numbers, an additional 339 teacher positions will be funded in 1995-96.
They comprise literacy, community languages, technology, small schools and HSC coaching and advice positions.
Also, the cleaning standards for primary schools will be considerably enhanced by an additional annual allocation of $18 million.
In TAFE, we will create 5,000 additional student places by 1997.
Crime Prevention
Recurrent spending for the police portfolio will total $911 million, an increase of $46 million or 5.3 percent. This enables the Government to fulfill its commitment to increase police numbers.
Our priority is putting police on the street to protect the community from crime.
We will provide an additional 650 police officers by the end of 1997-98. The objective is to halve the delay in police response to crime.
By the end of this financial year more than half of these additional officers will be available for duty.
The Council on Crime Prevention has been established to develop a strategic crime prevention framework for New South Wales.
We will also revitalise the Neighbourhood Watch Scheme and the Safety House program.
We will intensify the focus on reducing delays and backlogs in the courts area, while enhancing the community's access to the justice system.
Additional funding has been provided -
- for extended sitting hours and night court sittings in Local Courts,
- to enhance the use of arbitration as a means of alternate dispute resolution,
- to introduce family mediation in Community Justice Centres, and
- to increase funding for the Legal Aid Commission.
The Attorney General has asked the NSW Law Reform Commission to undertake a review of sentencing laws in New South Wales.
Following the Sentencing Review, the Government proposes to introduce legislation designed to divert from custody fine defaulters and those offenders sentenced for six months or less for non-serious crimes.
This not only honours our commitments, but the previous Government’s unfulfilled pledge to divert fine defaulters from the prison system.
The consequential lower inmate population will further reduce costs of incarceration.
The Government proposes to reform the Victims’ Compensation Scheme to speed up payments to victims of violent crime and eliminate abuses. The proposed new Scheme will make it easier for the victims of violent crime to receive compensation and place a strong emphasis on counselling support services for victims.
Savings made by overhauling the scheme will be directed to a new $6.8 million victims’ support initiative.
A Victims of Crime Bureau is to be established within the Attorney General's Department. The Bureau will provide support and referral services to victims of crime and coordinate the delivery of victims' support and counselling services by Government and community agencies.
Community Services
Recurrent spending for the Community, Aged and Disability Services portfolio is $1,105 million, an increase of $157 million or 16.5 percent. Capital payments are $46 million, an increase of $30 million.
Our key initiatives and priorities in the 1995-96 Budget include:
- additional funding for child protection;
- expansion in child care, with an additional 13,000 child care places to be provided over the next 3 years;
- additional funding for drought assistance for needy families; and
- expanded funding for supported accommodation for people with disabilities, with an additional $24 million per annum to provide 300 new places in community-based accommodation.
Environment
Recurrent spending for the environment portfolio for 1995-96 total $214 million, an increase of $18 million or 9.3 percent.
Key initiatives in the 1995-96 Budget include:
- delivery of the Government's Clean Air Strategy;
- establishment and funding of Regional Waste Authorities to monitor the impact of waste reduction, reuse and recycling strategies;
- $50 million commitment over four years for the creation and management of 24 new National Parks funded through the Environment Trusts; and
- $3.9 million this year for the establishment and management of Horsley and Rouse Hill Urban Parks.
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Consistent with our Forestry Policy released in March 1995, the Government has embarked upon a number of strategies to transfer logging from old growth to regrowth and plantation forests.
The Government recognises that these reforms will impact on the forestry industry and on forestry workers.
Accordingly, as set out in the Government's Forestry Policy, $60 million will be made available over five years to assist in forestry industry restructuring. This initiative will be funded from the Environmental Trusts.
In addition, in 1995-96 the Government will provide State Forests with $8.5 million to fund the development of 3,000 hectares of additional hardwood plantations. This grant will be funded from an increased dividend to be paid by State Forests.
The Government will also consider further funding for hardwood plantation development in future years.
In line with our commitment to a comprehensive approach to land management, there will be a major expansion of the Total Catchment Management initiative at a cost of $5 million per annum.
This initiative will consolidate the benefits achieved to date in addressing natural resource management issues through community participation.
Funding will assist 41 Catchment Management Committees and some 800 Landcare groups, as well as allowing for strategic planning.
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Rural Sector
Many people in rural New South Wales are struggling under the combined effects of drought, high levels of farm debt and a decade of volatile commodity prices.
They needed help and the Government responded.
One of our first moves on coming into Government was to boost the State’s drought assistance to a record $78 million in 1994-95.
Despite the recent rainfall, many rural people remain in real financial difficulty.
So in 1995-96 the Government will spend $84 million on drought relief and rural assistance measures.
The Government will also fund a range of measures to repair damage to land and waterways that has reduced the long-term competitiveness of many farming businesses.
The Government will spend $19.3 million on a land and waterways repair package for irrigators, and a further $23.9 million to improve infrastructure and resource management for irrigators and other water users.
These intitiatives more than fulfill the Government’s commitment to spend $27 million on irrigation areas in 1995-96.
Public Transport
The Government is committed to providing an environmentally sensitive transport system which allows for increasing patronage on safe public transport and efficient movement of freight, and is based upon sensible land use and transport planning.
The quality of life for all New South Wales residents will be enhanced by a safe, reliable, clean and efficient transport system which meets our State's social and business needs.
The Government will ensure bus, ferry and train services cooperate fully to maximise the benefit to the community.
Funding from the Budget for the State Rail Authority's capital and major periodic maintenance works, amounts to $595 million compared with $506 million in 1994-95.
The Authority's capital program includes continuation of the New Southern Railway which is being jointly funded by the private sector and a State contribution of $544 million.
Work will also start on the $60 million amplification of the East Hills line between Turrella and Riverwood. The Richmond line amplification is being accelerated.
We have restored passenger services to Broken Hill and the Riverina at a cost of $3.5 million a year.
The Homebush Bay rail connection to the Olympic site will also be commenced.
Provision has been made for signal renewal and modernisation and City underground fire safety and ventilation improvement projects.
Sport and Recreation
This Government will further its commitment to the development of the State's athletes by establishing a New South Wales Institute of Sport at a cost of $3.6 million and provide further assistance for the development of Regional Academies of Sport. It is committed to increasing the community’s involvement in sport and recreational activities.
In all, the Budget provides an increase in recurrent funding to the Department of Sport and Recreation of 9.6 percent in 1995-96.
Olympics
The Government has moved quickly to get ready for the Olympics.
Already, we have -
- called tenders for the Olympic Stadium,
- committed $60 million to a rail system for Homebush Bay,
- released a Masterplan for Homebush Bay,
- negotiated the purchase and remediation of the land at Newington, and
- asked for expressions of interest from the private sector for the Olympic village.
For the first time spending has been consolidated into the one cost structure.
While these projects are all included under the Olympics Budget, they are, in reality, projects that will be used by millions of Australians.
Over the next three years, we will be spending $830 million on facilities, venues and infrastructure at Homebush Bay.
Importantly, the amount of money allocated to the redevelopment of Homebush Bay, the new Showground and the construction of sporting facilities over the next five years will account for approximately one percent of total State Budget outlays over the corresponding period.
These projects are well within our means and will last us a lifetime.
They are an investment that our children will thank us for.
SAVINGS
To pay for Labor’s priorities in health, education and other key services and to rein in the deficit, it has been necessary to undertake a rigorous review of overheads, programs and priorities across portfolios.
Savings of $70 million per annum will be achieved by 1996-97 through a 10 percent cut in corporate support costs.
The Budget also reflects substantial cuts to Government advertising, use of consultants and office relocation and refurbishment.
Agency restructuring, implemented shortly after our election, will save $60 million per annum by 1997-98.
Major savings amounting to $100 million a year by 1997 will also be made by reining in the blowout in the School Student Transport Scheme.
Even after the reforms, the scheme will remain the most generous in Australia.
Without the savings, the Scheme would cost over $350 million this year alone, $260 million more than in Victoria or Queensland.
Savings will come from:
- extending the distance criterion, for high school students only, from 1.6 kilometres to 2 kilometres;
- paying operators for actual usage; and
- from the beginning of the 1997 school year, applying a maximum annual subsidy per student of $450, in urban areas only.
In view of the Commonwealth’s responsibility for employment programs, the very substantial increase in Commonwealth funding for these programs and continued employment growth, the State Government will redirect expenditure from most State-based employment schemes, to training and education.
In 1995-96 we will be providing 1,000 more training places in technical and further education while retaining employment schemes for mature age worker, aboriginal people and migrants.
Budget Sector capital payments will increase significantly this year to $3,399 million. The capital program has grown substantially in real terms over the years and is substantially higher than in most other States.
If the same per capita expenditure were undertaken in New South Wales as for Victoria, the capital program would be some $850 million lower.
The Budget Sector capital program will be pared back by $200 million or approximately 5 percent by 1997-98 and will involve a delay in some projects that may otherwise have been undertaken.
However, we hope to be over the Olympic expenditure hump by the end of 1997-98, which may allow, depending on overall budgetary considerations, a reevaluation of the capital program around that time.
In the area of freight rail, we will be expecting significant ongoing savings following corporatisation and the reining in of noncommercial programs.
In some areas, we expect both to achieve better operational outcomes and budgetary savings from a consolidation of activities.
NSW Agriculture will refocus research programs to major sites known as `key centres’ and, where possible, integrate them with universities and the CSIRO.
We will work harder to make research relevant to industry needs, develop sustainable agricultural systems and focus on import replacement industries.
The major research facility at Rydalmere in Sydney will be decentralised to boost research at `key centres’ in more than 15 towns in regional New South Wales.
In my own area of State Development, significant savings will be made from the amalgamation of the Department of State Development and the Department of Business and Regional Development, yet I believe the consolidation of activities will lead to much better results.
The merged department will ensure the very best result for jobs and investment in regional New South Wales.
WINNING JOBS
I now turn to the wider challenge facing the New South Wales economy.
Our overriding goal is, of course, to provide an opportunity for everyone in this State to enjoy a good and improving quality of life and standard of living.
That requires the availability of satisfying and rewarding jobs for those who seek them.
And it requires also a level of community prosperity that gives us the financial wherewithal to fund the quality of services and infrastructure, public and private, social and economic, that is necessary for a civilised and fair society.
But none of those things come automatically. They have to be worked for, they have to be achieved.
Unless we can maintain or establish a competitive advantage, there is absolutely no reason why the world should buy anything which we produce here in New South Wales.
If people can buy goods and services elsewhere at a better price and quality combination they will.
New South Wales is but a small part of a vast and now fiercely competitive world economy.
We’ll only have jobs, we’ll only have wealth, we’ll only maintain and improve our standard of living if we’re competitive.
That’s why we have to constrain the level of taxes and charges that impact upon our business costs.
And that’s why, in the June Financial Statement, the Government announced that it was embarking on major reforms across the New South Wales public sector -
- in ports,
- in rail,
- in energy,
- in water, and
- in the budget sector.
Those reforms are not driven by academic fascination with abstract theories. They are driven by a common sense determination to win the investment, the business and the jobs that we need.
As part of our drive for business and jobs, the Government will be taking advantage of the show casing potential the Olympic Games offer to market New South Wales as a business, investment and trade location.
Early next year, the Government will be releasing a Green Paper on its state and regional development strategies.
1996, in particular, will be regarded by the Government as the Year of Regional Development.
As a first step, the Government will fulfill its commitment to hold summits in each region to listen to regional businesses and community leaders.
As part of this process, the Department of State and Regional Development, in conjunction with regional industries and local government, will be required by June next year to undertake an audit of the current economic strengths and potential of all the regions.
With a strategic blueprint for each region we will then be identifying the industries and firms, national and international, small and large, forwhich our regions offer natural synergies.
This is a vital task given the changes that have taken place in the State’s farming industry, the traditional backbone of non-metropolitan New South Wales.
We will then be targeting those industries and firms with a major marketing onslaught to highlight the natural advantages we have and the competitive advantages we’re forging, particularly during the period of international focus which the 2000 Olympics gives us.
EQUITY RESTRUCTURING AND ASSET SALES
All Australian Governments have committed themselves, under the Council of Australian Governments' resolution on competition policy, to the principle of competitive neutrality and commerciality with respect to their Government Trading Enterprises.
An important element of the competitive neutrality principle is the implementation of commercially appropriate capital structures.
The previous Government developed and approved a policy on the capital structure of Government Trading Enterprises. We endorse that policy and the broad approach that was developed on commercialisation and corporatisation.
These principles have been applied to a range of entities, as part of an ongoing process of review and reform.
As I announced in the June Statement, principal among the areas identified for equity restructuring is the electricity sector, where the Government is implementing major structural reform. To date there has not been a commercial capital structure for the distribution and transmission sectors, a situation which needs to be rectified prior to the establishment of both the State and national electricity market.
The distribution sector has had very little debt while the debt of the generating sector has fallen significantly in recent years to or below a commercially appropriate level.
The net result of these two factors is an assessed return of surplus capital from the electricity sector to the Consolidated Fund of $1.5 billion spread over the next two years.
Other capital restructures to be effected over the next two years include
- the Public Trustee,
- Lotteries,
- Building Industry Long Service Leave Payments Corporation,
- Treasury Corporation, and
- Darling Harbour Authority.
And as I indicated earlier, these returns are being treated as extraordinary revenue items so as not to mask the underlying Budget position.
In addition, the Government has decided to sell a number of non core assets, subject to full financial assessment. The State Office Block will be sold rather than refurbished.
It is also intended to vacate commercial land development activities undertaken by LandCom and to gradually realise the large land bank built up over the years.
In total these measures will return about $1.5 billion to the Budget sector in 1995-96 and almost $700 million in 1996-97.
In subsequent years they will have a significant impact on the debt servicing costs of the general government sector.
However, in the case of the equity restructures they will also have an offsetting effect on the commercial dividends which the Government, on behalf of the taxpayers should expect from them.
It is important to note also that these changes should have no effect on the prices consumers will be charged.
As these businesses are expected to earn a commercial rate of return and pay a commercial dividend, the debt servicing costs they incur will largely be at the expense of dividends.
That’s why the forward revenue estimates project reduced dividend and other payments from Government Trading Enterprises.
In the area of electricity, for example, significant price reductions for consumers will occur. Over the next five years electricity prices will drop in real terms by 7 percent for households, 25 percent for large businesses and 51 percent for small and medium businesses - a massive boost to our competitiveness and a massive boost to jobs.
The capital restructures, therefore, are designed to meet the principles of competitive neutrality and drive efficiency gains in the business enterprises.
The capital proceeds will be applied to debt reduction, not consumption spending.
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CONCLUSION
Mr Speaker,
As I foreshadowed well before the Budget, this is a Budget that is tough on spending. It had to be.
But it’s a fair budget, and I believe a far-sighted Budget.
It delivers our responsible fiscal targets.
And, more importantly, it delivers our core priorities -
- better hospitals,
- better schooling,
- better policing,
- a cleaner, greener environment,
- a helping hand to the less fortunate.
It’s a Budget aimed at setting things right, right from the start.