Liberal porkies on budget hole

The NSW Liberal government is gearing up for severe budget cuts, with reports that some departments are facing spending cuts of 25 per cent.

According to The Daily Telegraph, 400 jobs in the NSW Health Department head office and 300 in Corrective Services face the axe, with more jobs in community services and other departments to be outsourced. Eleven of the 31 jobs at the Forest Science Centre have already been abolished.
O’Farrell’s promise to increase school maintenance by $60 million also looks set to be broken. And he has left open the possibility of full privatisation of electricity (including poles and wires) and the ferries.
To justify the cuts, the NSW Liberals are claiming the budget is in dire shape, citing falling revenue to justify claims they face a multibillion dollar deficit.
But Premier Barry O’Farrell has already been caught fibbing about his supposed budget problems. First, just days after the election, he claimed to have found a $4.5 billion “black hole” that the previous Labor government had hidden. Then it became a $5.2 billion hole. But a review by Treasury found the budget “hole” was only $1.93 billion, rising to $2.5 billion if the government covered the cost of the solar bonus scheme.
It turns out this is not actually a “hole” but an estimate of future state government income over the next five years, up to 2015. Plenty of things influence such estimates, such as booms and slumps, property sales and other things that influence tax revenues. As Crikey put it, the claim of a black hole was “a load of statistical noise and rubbish”.
So there is no reason to believe the Liberals when they claim budget cuts or austerity on public sector wages is necessary. They have tried to claim their 2.5 per cent wage cap and their new IR laws are needed because the previous NSW Labor government did not hold public sector workers to making productivity trade-offs.
O’Farrell claims the state government’s wages bill is too high. But what he is really saying is that he will make public sector workers take wage cuts to cover the Liberals’ budget. We should demand that big business foots the bill through higher taxes on corporate profit.


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