Debates Day 2 - Wednesday 14 February 2007
Parliamentary Record 12
Debates for 10th Assembly 2005 - 2008; 10th Assembly 2005 - 2008; Parliamentary Record; ParliamentNT
2007-02-14
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Debates
Legislative Assembly of the Northern Territory
Darwin
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DEBATES Wednesday 14 February 2007 3840 The key fiscal highlights include: the cash targets being unchanged across all years; the operating results surpluses predicted from 2006-07 ongoing; a further increase of investment in the Territorys infrastructure in 2006-07 and all forward years from that announced in May 2006; nett debt down to $1681m by 2009-10, which will represent the $89m improvement on the May 2006 estimates; a nett debt revenue ratio of 48% in 2006-07, reducing to 45% 2009-10; and, importantly, nett debt plus employee liabilities to revenue ratio continuing to fall despite getting regular increases by the actuaries in our superannuation liabilities. I want to go to some of the comments made by the member for Blain. He has, on a number of occasions in debate on the economy and the budget, talked about the preparedness of this government to do very well in the good times, which we are experiencing now. But he asks: what we do in the tough times and what have we done if times are tougher in the future? In fact, those attacks on our debt bottom line, that ratio of nett debt plus employee liabilities to revenue continuing to fall, in itself tells Territorians that this government is looking to the future so that when times are tougher, we will have those nett debt liabilities continuing to be driven down while times are good. That will serve us well if, at a time in the future - and there will be that time - things are not as strong economically as they are now. If we look at the Access Economics five-year forecast of what might be ahead, on gross state product alone, they are forecasting 6.4% for 2006-07, 4.9% for 2007-08, 5.2% 2008-09, 3.9% 2009-10 and 4% in 2010-11. Access Economics will tell you beyond the three-year outlook, it starts to get a bit rubbery, but they are still strong growth figures considering the strength of the economy in the Territory today. They are strong growth figures coming off a strong base. It is not as though we are a basket case now and looking to strengthen in the future. We have a very strong economy at the moment, very buoyant, and these figures suggest that the buoyancy is there for the next five years. If we want to be a bit careful, let us say the next three definitely. Of course, Access Economics rotate these figures so that we will always have a five-year outlook and some certainty around the three years, given the experience of Access Economics in the past. In relation to the public sector, the member for Blain suggested that there have been caps put on the public sector. I wish! There have been no caps put on public sector numbers. There have been no cuts to the public sector, as was suggested by the member for Blain. In fact, the growth of the public sector over the past 12 months, December 2005 to December 2006, has been curtailed certainly compared with the previous year. The figures as provided by Treasury are: December quarter 2005 - 15 135, December quarter 2006 - 15 156, an increase over the whole December to December of just 21. If we compare that with the growth that we saw from the December quarter 2004 to the December quarter 2005, it was 544. We have marginally increased over 12 months, December 2005 to December 2006, compared with the quite dramatic increase that we saw in the 12 months prior. Nevertheless, numbers in the public sector still need to come down. I am happy that the growth we are seeing is now curtailed and we are virtually holding the line. We now need to see a steady and orderly reduction of numbers over the next 12 months. How that might be achievable will be subject to debate in Budget Cabinet over the coming weeks when we prepare the budget for a May release. However, it does suggest that the first step is to curtail extraordinary growth. That has been achieved. The next step is, without banging service delivery and the public sector around, to start to see an orderly decrease, which can be readily achieved through the steady churn that the public sector experiences. Over 3500 people leave the public sector each year, which suggests strong recruitment to stay ahead of that. We did stay ahead of it over the December 2005 to December 2006 period, but just. Numbers went up just 21. The member for Blain was talking about housing, inflation and so on. Inflation at 5% was measured for the December quarter only. It spiked at 5% in the December quarter. The year to year, December 2005 to December 2006, was 4.4%, which is the more reliable movement. That is the movement across the year. A quarterly figure on its own, of course, is not sustainable; you have to take the longer-term view. December to December was 4.4% with a spike in the December quarter to 5%. Over 2% of that 5% was directly related to the surge in housing prices over the 12 or 18 months prior. If you take that over 2% - 2.1% or 2.2% - it brings the underlying rate of inflation, if you take housing out, to below 3%. The national average throughout the calendar year was 3.3%. In the five years prior to that, the Territory was running along at 2.7% or 2.8% up to 3%, which is traditionally way below the national average. If you take the December quarter spike out, we are still under the national average and would expect to resume a CPI below the national average by about mid-year. Why do I say that? The Real Estate Institute of the Northern Territory in its last publication, which is not long out, showed that the median house price in Darwin over the December quarter reduced by 3.9%. REINT says the median