Asset Privatisation

Privatisation Public Interest Debate

Mr CLAYTON BARR (Cessnock) (17:11): To help members on that side of Parliament understand what we are talking about today, I will break it down for them. I will provide budgetary evidence for what I am about to say in just a moment. They all know that I read it and I have a few excerpts here. Those opposite clearly cannot understand the budget so I will put it into simple terms that they might be able to follow. Let us imagine a family that is lucky enough to have an investment property which provides a return, and they make a decision to buy a new sports car. They sell off the next 99 years of income from that investment property to someone and say, “Hey, listen, I need a short-term sugar hit. I’ve got to get the new sports car. You can take all the money that that makes for the next 99 years, even though it’s going to be 100 times what I’m going to charge you today, but if you give me a little bit of money today, I’m going to go out and buy a sports car.” Someone says, “That’s a great deal. I’ll take that. I’ll sign the 99-year lease for that.”

So that family has a nice new sports car. The moment they buy the new sports car, it starts costing them money—registration, insurance, tyres, depreciation costs, running costs, repairs, the whole lot. But it is in their shed. Good on them. That is fantastic. However, their household income no longer has the revenue from the rental and their family grows. They have more babies—they are like the Perrottets, for example. As their family grows, the cost of fruit, vegetables, bread and milk keep going up. The cost of new jeans and sneakers for the kids keep going up, but they do not have that old reliable income anymore. So what does that family do?

They have to start making cuts to some of the basics in their household. Then the bank manager comes along and says, “I’m a little bit concerned about your finances because, firstly, you haven’t got the income you originally had and, secondly, you keep on using your credit card to buy the sneakers, joggers, replacement refrigerator and things like that. I am concerned about your credit rating. Can you explain to me how you are going to maintain this lifestyle without the income you used to have?” They say, “We’re going to sell the sports car and buy a motorbike.” But the motorbike comes with the same problems. It depreciates and has expenses from the moment they buy it. The value of the thing is going south and costing them more money than ever before. The bank manager comes along again and says, “Listen, I’m unconvinced. Your credit rating is going to disappear.” That is exactly what is happening in New South Wales.

Don’t worry about the rental property; think of it as our poles and wires, our ports, our Land Titles Office or the retail income from Darling Harbour and Circular Quay. That is what we’ve sold off: regular, reliable income. What we purchased—whether it is a stadium, a road, a tunnel, trains, trams or whatever—costs money and depreciates, but we do not have the reliable income. We have what some people would call a fiscal gap. It is not just me saying there is a fiscal gap. I refer to pages E-1 to E-3 of the Government’sBudget Paper No. 1. The Treasury—and your own Treasurer, who signed off on it—is concerned about the fiscal gap as well. The Treasurer can see that the money coming in is not keeping up with the increase in expenses and costs. Standard & Poor’s has taken away one of the As from our triple-A credit rating. The other two financial agencies are equally concerned about our triple-A credit rating.

When those opposite arrived in government the borrowings of this State were $20 billion. Today that amount is $180 billion. That is a 900 per cent increase. Who is going to pay it off? Will any Government members be around for the next 99 years to pay off that debt? No. They have shifted the debt onto their kids and their grandkids. Meanwhile they are saying to our key workers—our teachers, our nurses—”We no longer have the reliable, regular income so we can’t afford to do that.” That is what privatisation is. I encourage those opposite to read the budget papers because the story is all there.