Budget: Public service to work harder, debt not for daily costs

PHOTO: Mr Tollner talking to anti-uranium protesters during the Legislative Assembly sittings in Alice Springs in November, 2009.

 

The NT Budget next week won’t cut many more jobs from the public service, but public servants will need to work harder, running unfunded projects left behind by the Labor government, and bringing to reality new ones promised by the CLP.

 

Borrowed money isn’t a bad thing so long it’s not used for the day to day administration, but rather for assets cranking up employment and the economy.

 

Some of the flood of Canberra money will continue to be used to subsidise the ailing Power Water Corporation (PWC), but the corporation will be required to massively improve its efficiency. We will continue to have some of the nation’s lowest electricity tariffs.

 

So says NT Treasurer Dave Tollner, partly in response to a comment published here on Monday. He spoke to Alice Springs News Online editor ERWIN CHLANDA.

 

Current interest payments are $720,000 a day – more than $260m a year.

 

Lurking in the background of the Budget is the fact that if Labor’s spending had continued, in five years’ time the Territory would have had a $5 billion deficit – roughly the same as all of last year’s budget.

 

Public service wages amount to 40% of the Budget.

 

NT Government income from alcohol is negligible – all taxes of it go to Canberra. Apart from mandatory rehabilitation – regarded by many as ineffective – there is not much in the Budget to prevent alcohol abuse, yet a huge amount is spent to cope with its horrendous results. Alcohol abuse costs the NT $670m, says Mr Tollner, quoting a Menzies School of Health estimate of about two years ago and still current.

 

Mr Tollner acknowledges Canberra’s massive contribution to the NT – $2.8 billion or 5.3% of the nation’s GST revenue for less than 1% of the population. He deplores a $122m cut in that revenue resulting, he says, from new claims of “indigeneity” by people living the big cities: “It is very difficult to compare someone who claims to be an indigenous person living in Sydney with an indigenous person in remote parts of the Northern Territory, and say they require greater services in Sydney.

 

“Horizontal Fiscal Equalisation (HFE) is meant to be about disadvantage, not race,” he says.

 

It’s the CLP government’s first full Budget (there was a Mini Budget last year), and the hottest debate has been about the electricity hikes. PWC is getting “enormous subsidies already” and will continue to be subsidised, says Mr Tollner, but it’s not going to be an easy ride.

 

Fewer than 20 customers across the NT are paying what it actually costs to produce electricity, he says: “There hasn’t been a real commercial imperative for PWC to reform its ways and drive efficiencies within its organisation. It has always been able to fall back on government subsidies.

 

“We are not taking away subsidies from the PWC. We are continuing to provide these subsidies. But there are two things further: PWC would have gone to the wall if we had not stepped in and raised the tariffs. And secondly, we need to drive efficiencies within the organisation. We’re not suggesting winding back or reducing subsidies, and there is a whole range of them that we provide.”

 

NEWS: Assuming PWC becomes more efficient, to what degree would you be happy to subsidise tariffs? And are the current hikes in place for a limited period only?

 

TOLLNER: We’ve fixed prices now for the two to three years, a 20% increase this year, and another 5% each in the next two years.

 

NEWS: Where does that put us in relation to the rest of the nation?

 

TOLLNER: We still have something like the second or third lowest electricity tariffs in Australia. We’re still below the national average. When it comes to electricity usage, certainly in the Top End, we use a lot more electricity than houses interstate. Because of the climate everyone is running an air conditioner all the time, they’re running pool filters and the like. What’s more, the [electricity] reform agenda that has been going on in Australia for the last 20 years, pretty well ceased under the former Labor government. In 2000 a national competition policy came into force requiring a competitive marketing environment for utilities [culminating this year in the] white paper brought out by Martin Ferguson, talking about more deregulation.

 

Mr Tollner says unless the government took action about PWC, the global ratings agency Moody’s would have further downgraded the NT’s rating, says Mr Tollner. In March Moody’s already dropped the rating from Aa1 stable to Aa1 with a negative outlook. A further downgrade would increase the cost of borrowing

 

“The change in the outlook reflects the deterioration in the Territory’s financial performance which emerged in recent years and is expected to persist over the medium term,” The Australian quoted Moody’s as saying, and “there was also expected to be a rapid rise in the NT’s debt burden”.

 

NEWS: What’s wrong with debt?

 

TOLLNER: Nothing – provided debt is utilised to provide income producing assets. When you are borrowing to pay wages then it becomes a serious problem. That is the concern we had with the previous government, and with PWC, for instance. There are a good number of utilities around the country with a greater exposure to debt than our PWC. But they are not borrowing to pay for operating costs.

 

NEWS: In what way is this philosophy reflected in next week’s Budget?

 

TOLLNER: We are very interested in driving the economy, growing the economy. We need to balance out private and public sector jobs. Things like infrastructure, roads, schools, hospitals. If you are going to attract people to the Northern Territory they want to be certain that their children have somewhere to go to school, that there are good health services, access to transport and logistical services, certainly from a business point of view, road, rail, port, airlines.

 

NEWS: So what can we look forward to down here in The Centre?

 

TOLLNER: I suggest there will be money for roads. Adam Giles has already said there is money for telecommunications, mobile towers and the like in remote communities.

 

NEWS: Are there further jobs that can be cut and will be cut?

 

TOLLNER: We’re not really desperate to cut jobs. Other states had massive worker lay-offs. We are not in that situation. We have an enormous opportunity to grow the private sector, our economy, much more so than the more mature economies interstate. We’re looking at driving efficiencies within the public service which doesn’t necessarily mean laying off staff. It just means finding better ways of doing things, delivering the same services with less money.

 

NEWS: Does that mean a reduction in public service numbers will be achieved through natural attrition?

 

TOLLNER: There will be a little bit of this, but it is not our goal to cut public service numbers. There are $100m of unfunded commitments from the previous government. Things like the operational funding for the Alice Springs Emergency Department were never budgeted for. Plus [we need to look after] our own election commitments, including mandatory rehabilitation for alcoholics. We managed to fund all that, with less money, without a massive job shed and cutting services. In Alice Springs we have an enormous number of casual staff in our health system. We need to make more of these people permanent. When it comes to doctors it means fewer locums who cost you a fortune, $2500 a day, plus paying the hotel accommodation, pay for meals, their hire cars and all the other stuff that goes with it.

 

NEWS: We spoke recently to Robyn Lambley, when she was the Families Minister, and she mentioned massive costs for looking after neglected children. Is it time now to force parents to abide by their legal responsibilities of providing the necessities of life for their offspring?

 

TOLLNER: There is a whole range of things in that area. There is John Elferink with his “sentenced to a job” project. Those sorts of things aren’t necessarily costing us more money. Getting someone out of jail into a permanent job, you would expect to save you a lot of money. Like the mandatory rehab and alcohol rehabilitation. If we get the 60 top offenders off the streets, that’s 2500 fewer arrests a year. That’s an enormous saving in police time and resources [which will be reflected in future budgets]. We’re trying to work with the Federal government about welfare reform. People who neglect their children tend to be not working, have alcohol problems, most are in contact with the criminal justice system and depend on welfare, and are much more managed, I suppose. We’ve been doing a lot of work with [Federal families minister] Jenny Macklin.

 

NEWS: What would be the NT’s input?

 

TOLLNER: There are discussions about higher levels of welfare quarantine, currently 50%. [NT families minister] Alison Anderson is more across these matters.

 

NEWS: Why does your government not have a gas and oil reservation policy for local consumption of local resources? We have Mereenie crude oil heading south, travelling past our front door worth maybe 30c a litre, and it comes back as diesel costing $1.70. We had a refinery in Alice Springs some years ago.

 

TOLLNER: A reservation  policy would have been cutting off our nose to spite our face. It would scare off exploration work, including greenfield projects which look like coming to fruition. The Chief Minister is acutely aware of our need for energy. Santos has announced exploration in the Mereenie and Palm Valley areas.

 

We want to provide energy security without scaring off investors.

 

NEWS: How would you do that?

 

TOLLNER: There is an enormous effort across Australia for onshore gas exploration. The greatest problem in the NT, unlike other jurisdictions, is land access, and always has been. In Queensland and WA there are mining opportunities everywhere. In the Territory, a lot can be put down to the Aboriginal Land Rights Act and Native Title, and the way the NT is presided over by the Commonwealth.

 

NEWS: Aborigines, who own half the landmass, seem to have been keen on negotiating mining agreements lately, and earning their 10% statutory royalty. On the remainder of the land, conditions are not vastly different to other states.

 

TOLLNER: In the last 30 years things have changed enormously. One of the reasons we won so many seats in the bush in the last election is because we were talking about economic development in remote communities, something that the other side never did. They seem to support passive welfare. When you get out there on the ground Aboriginal people are saying, we want jobs and economic development. It’s taken the land councils some time to adapt to that.

 

NEWS: Our abundance of idle labor, water and land seem to present opportunities for agriculture and horticulture. Yet the few ventures we have are relying on itinerant labour rather that local unemployed.

 

TOLLNER: We’re also trying to reform a lot of the smaller enterprises. How do you get hairdressing salons, restaurants, greengrocers – all of the things we are taking for granted in the town and cities, how do you get that to happen on Aboriginal land? That’s where our focus is, whether we pick out one or two pilot communities where we say, let’s have a go at developing a local economy here. Not just big projects, large scale farming or mining.

 

NEWS: How come backpackers and itinerant farm labourers from down south are doing most of the work on the handful of horticulture ventures we do have here?

 

TOLLNER: If you’ve got to import the labour, so be it. If you want a market garden on an Aboriginal community and the only people interested are Vietnamese immigrants, why wouldn’t we welcome them? In time they may provide jobs to local people. You show the example in a vivid way how people can get in there, take a risk, and ultimately be rewarded for hard work, rather than just sitting down and saying, the government will provide.

 

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  1. Roger, senior from Darwin.
    Posted May 9, 2013 at 10:29 pm

    Heading towards a year in office still PLAYING THE BLAME GAME, GET OVER IT DAVE.
    Just when does the blame game end and the government take responsibility for their own actions. At the next election?

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