NSW: Govt says it has plan to get budget out of trouble

AAP General News (Australia)
12-21-2005
NSW: Govt says it has plan to get budget out of trouble

By Tara Ravens and Alyssa Braithwaite

SYDNEY, Dec 21 AAP - NSW taxpayers will have to wait until February to learn whether
they will be slugged as part of a four-year plan to lift the state budget back into the
black.

Premier Morris Iemma today released the 2005/06 mid-year budget review, which downgraded
an estimated $303 million surplus to $21 million.

After the abolition of the government's property vendor duty helped drive the budget
close to deficit this financial year, Mr Iemma said the state would record a $500 million
deficit in 2006/07.

The premier had foreshadowed the review's findings last week, saying the budget would
be balanced in 2007/08 before returning to surplus in 2008/09.

"The six-monthly update confirms that the NSW budget is forecast to return to surplus
within three years," he said today.

Announcing a four-year plan to correct the budget's bottom line, he said frontline
services would not be cut as the government reins in spending.

Tipped to deliver estimated savings of up to $2.2 billion, Mr Iemma said the first
stage of the plan involves cuts of $300 million from "non-essential" government services.

However, he refused to elaborate, saying details would be released in early 2006 following
the completion of the Audit of Government Expenditure and Assets.

"New South Wales has a strong balance sheet which will allow the government to maintain
frontline services at a time when the budget is under pressure," Mr Iemma said.

"(The plan) involves reductions in expenditures in those areas we do not see as core services.

"There will be savings in ITT (information technology), procurement and further measures
to come with the release of the audit details ... introduced to meet the challenges of
the budget deficit."

But Deputy NSW Opposition Leader Barry O'Farrell said that state should brace itself
for tough times ahead.

"If health and education services are poor now what hope do residents have of those
issues being fixed over the next three years?" he said.

"Residents are in for a hard time in the future as the budget heads into deficit."

The government had overseen a billion dollar budget turnabout, Mr O'Farrell said.

"The $481 million predicted surplus for 2006/07 has fallen into a $553 million deficit," he said.

"It underscores Labor mismanagement ... people are scratching their heads wondering
where the money has gone," he said.

Taxpayers could be hit with more Labor taxes to plug the deepening black hole, said
assistant opposition treasury spokeswoman Peta Seaton.

Meanwhile Mark Bethwaite, chief executive of Australian Business Limited, warned against
increasing the burden on NSW businesses.

"NSW has the highest employment taxes and charges in Australia and the lowest full
time employment growth ... NSW cannot afford to cut expenditure," he said.

Mr Iemma said revenue was lower than expected this year because of a sluggish property
market, a reduction in GST grants from the commonwealth and the abolition of the vendor
duty.

AAP tr/was/jt/de

KEYWORD: BUDGETNSW NIGHTLEAD

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