Well there’s a turn-up for the books. Michael Egan, the NSW Treasurer is retiring. Well, we know normally he’s not at all shy.
But no, he’s leaving politics and later this week he will resign all his government positions and then quit the NSW Upper House a little while later, according to this story from the Fairfax website – NSW Treasurer Egan resignss
With the NSW Government of Bob Carr very much on the nose with the state’s voters, is Egan the first ‘rat’ to abandon ship?
You can bet that he will say no, and so will the Premier. But Egan has been an ALP stalwart and a solid influence in the government since it came to power in 1995.
It is a curious and surprise decision given his intransigence when confronted with criticism over topics such as the tax on property investors in NSW.
Egan could very well leave politics before Mark Latham which would be a right turn-up for the books.
What makes it odder still, is that he wasn’t implicated in the Waterfall rail disaster.
That’s the lot of Bob Carr, Carl Scully and to a lesser extent, Michael Costa (he’s been involved in the clean up). Here’s a good comment on the Waterfall disaster’s final report, released Monday – Ghost of Glenbrook puts Carr off track
Not that taking responsibility for a disaster like Waterfall (or Glenbrook before it) has been taken seriously in the NSW Government. It has been all about avoiding or deflecting responsibility.
Westminster is somewhere in London!
Egan can claim to have helped put NSW’s finances on a conservative and solid foundation, but yet he’s also been responsible for driving a couple of the great rorts of NSW business and political life.
Firstly the concentration on slashing debt held directly by the government and forcing state owned operating enterprises(such as Energy Australia, Sydney Water, the various energy generators and the Sydney Catchment Authority) to borrow more to pay higher dividends to the government.
Some of the dividends (so-called ‘efficiency’ dividends in some cases over the years) have seen these authorities forced to payout more than half, and sometimes more than 80% of earnings as a dividend to the government, with little left in the way of retained earnings to fund new capital expenditure.
Capex is limited in many cases by the Independent Pricing Tribunal which fixes the returns the authorities can make.
These pricing decisions have had the appearance of okaying the very high level of dividends extracted from the authorities to pay the government.
In many cases the authorities are forced to gear up their under-geared assets and borrow from the NSW Treasury Corporation. That has the effect of lowering the debt levels of the government (Treasury Corporation is the only borrowing authority for the government), increasing dividend and interest flow to the Treasury Corporation and Treasury, and boosting the bottom line of the budget.
Those debts are not simply intra-government debt and book-keeping entries. Real money is borrowed and real dollars flow back to the government in the higher interest charges, taken from the levies and charges imposed on the water, power and other consumers of NSW.
This has also had the effect of putting the lowering debt ahead of spending money on infrastructure, a problem that now confronts the NSW Government with underspending on schools, hospitals, energy generation and distribution and roads a real political issue.
But for all his hard work in government finances, Egan has presided over a worsening in NSW Government finances in the past year with the state surplus disappearing to be replaced by a deficit. That’s because of a sharp slowdown in the income from property especially stamp duty and continued overspending in health, transport and education, the three most politically sensitive portfolios.
Egan has been a sharp opponent of Crikey in the past, as this exchange shows – Egan calls Crikey “a little creep”
That was in part over the problems in the state superannuation schemes where there’s a big unfunded liability (which should have been closed a bit by the stock market boom last year).
Egan has proposed restating the government’s monthly statement of its budget position in a way similar to that used by the Queensland Government.
This will have the favourable effect of allowing the state’s finances to be reported in a better light at the moment with a surplus being recorded.
SMH writer, Ross Gittins explains what is essentially a sensible decision by Egan – NSW Treasurer announces end to an era of debt phobia
But a month after revealing this important reform, Egan is departing politics, rather than stay and defend it and all his other changes and continue in his vital portfolio of Treasurer.
Hopefully a better explanation will be produced than the early statement from him and hopefully he’s given one to his colleagues in the NSW Parliamentary Caucus and to Premier Carr.
Given the bad press Mark Latham is generating and the NSW Government’s own problems, the last thing Carr and his fellow MPs need is a senior figure like Egan departing for mysterious reasons.