These are unprecedented days in NSW. As this press release
from the central borrowing authority T-Corp points out: “Based on
projections from TCorp’s clients (the debt-laden government), it is
anticipated that loan outstandings will increase by $6.5bn in 2006/07.”

How’s
that for an election pitch – after 12 years of uninterrupted growth our
government is spending this election year borrowing $18 million a day
to stay afloat, not that far below the $27 million a day that Paul
Keating was borrowing when his government got turfed out seeking a
fifth term back in 1996.

Meanwhile, check out the first page
of the budget section dealing with the NSW balance sheet. When talking
about assets, the government is happy to go with nominal figures
claiming that the $41.3 billion infrastructure spending spree will
increase gross assets from $173 billion now to a record $199 billion in
2010.

The Cain-Kirner government tried the same trick in their
dying days and one of my old bosses, Kennett Finance Minister Ian
Smith, forced the public servants who dreamt up these delusionary
figures to try and itemise the actual assets. They never got near the
claim.

However, when it comes to talking about liabilities, the NSW government
quickly falls back to a ratio analysis claiming that net financial
liabilities will only increase from 15.9% of GSP to 16.9% by 2010. We
know that $17.4 billion in new debt will be taken on over the next four
years to fund the infrastructure push, but these are the actual raw
liability figures over the past five years:

Year2001-022002-032003-042004-052005-06
Gross debt$24.83bn$25.29bn$26.36bn$28.01bn$30.25bn
Unfunded super$11.72bn$13.81bn$13.01bn$12.49bn$18.29bn
Total liabilities$36.55bn$39.1bn$39.36bn$40.5bn$48.54bn

That is spookily similar to what the Cain-Kirner Government achieved by
1992 when Victoria’s gross debt peaked at $32 billion and unfunded
super reached $18 billion. How on earth will NSW fare when the total
liability figure surges past $60 billion by 2010?

The public finances of our largest state are careening off the rails.
Surely it’s time for a change of government, although the choice for
voters next March looks a bit like Tweedledum and Tweedledumber.

Peter Fray

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Editor-in-chief of Crikey

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