1. Victoria 1992 and NSW 2006: compare and contrast
By Stephen Mayne, former spin doctor to Victorian Treasurer Alan Stockdale
The $17.4 billion debt binge by NSW over the next four years will put our largest state on a similar footing to the mess left behind by the disastrous Cain-Kirner government in Victoria, but few commentators have yet comprehended the gravity of Morris Iemma's financial crisis.
Jeff Kennett and Alan Stockdale inherited a basket case in October 1992 because Victoria had a $2 billion budget deficit, public sector debt of $32 billion and unfunded superannuation liabilities of $18 billion. In broad terms that was $50 billion in liabilities rising at $2 billion a year.
In balance sheet terms, NSW is not yet that bad because its gross debt is about $22 billion and unfunded super is about $15 billion although we're waiting to see how much the commodities boom and stockmarket surge has improved the situation in 2005-06. However, adding $17.4 billion to debt will put the total liabilities figure above $50 billion.
The NSW budget situation is now actually worse than in Victoria because increasing debt by $17.4 billion over 4 years is the equivalent of running an overall deficit of $4.35 billion a year – more than double what John Cain and Joan Kirner managed in their disastrous third term.
It's amazing that normally economically rational commentators such as Terry McCrann and Ross Gittins keep coming out and saying there is nothing wrong with debt or deficits. Sure, but isn't borrowing more than $4 billion a year at the top of an economic boom utterly irresponsible? The Feds are more than $10 billion in overall surplus - including capital and recurrent items.
The thing that destroyed Victoria's public finances was the reckless spending during the late 1980s boom which left no buffer to handle the downturn from Paul Keating's recession we had to have. Bob Carr has done precisely the same thing and now Morris Iemma is cranking up the spending rather than winding it back as any sensible administrator would do. NSW public finances are in no position to cope with a recession or a major property bust in Sydney.
McCrann wrote in The Weekend Australian that Morris Iemma still has the luxury of owning his state's electricity industry – something which generated "nearly $30 billion" for the Kennett Government. This isn't strictly correct because Victoria fetched $29.8 billion from its state-owned "energy" assets, but this included about $8 billion from gas and the NSW gas industry is already privately owned by the likes of AGL. The great Crikey power industry sell-off list provides all the details.
Similarly, NSW doesn't have the luxury of owning a lucrative compulsory third party insurance monopoly like the Transport Accident Commission – which has literally delivered a $7 billion windfall to Victoria's budget since 1993. The NSW debt spiral also comes after it has flogged off assets such as the TAB and most of its interstate rail assets through Pacific National.
One advantage that NSW does have is a booming coal industry because state royalties have doubled to almost $400 million over the past couple of years and more rises will no doubt be predicted in tomorrow's budget papers.
However, its fundamental problem has come from granting too many public sector wage rises for NSW teachers, nurses, coppers and the like without productivity trade-offs. NSW has led the country in this regard and its budget is now fundamentally stuffed unless some hard decisions are taken – but don't expect those to come from a decaying third term administration with a former Labor Council secretary as state Treasurer.
12. Phil Cleary's second crack at the sport to politics list
By Stephen Mayne
The Age has this morning reported that Phil Cleary, the VFA legend who replaced Bob Hawke as an independent in Wills, is contemplating a tilt at this year's Victorian election either as an independent or with political start-up People Power. Phil is already on our burgeoning sport to politics list but it would be a rare feat indeed if he managed to crack both state and federal politics.
The names just keep on coming and here are another nine:
Don Chipp: The Democrats founder and former Fraser Government minister played three VFL games for Fitzroy in 1947 and was also a very talented sprinter.
Trevor Sprigg: the Liberal MLA for Murdoch in WA played 152 games for East Fremantle, six games for WA and is a former chairman of selectors at the West Coast Eagles who also played first grade cricket for Fremantle.
Paul Gibson: state Labor Member for Blacktown in NSW for more than a decade, who played Rugby League for Penrith and other teams in the 1970s.
Mike Horan: Parramatta Eels rugby league first grader 1967-69 and former Australian Universities (union) captain. Elected National Party MLA for Toowoomba South in 1991, Health Minister in the Borbidge Government and touted as a future opposition leader after the merger fiasco. Mike's sporting prowess was overshadowed by his son Tim, Wallaby legend and now rugby commentator.
Bob Cheek: former Liberal opposition leader in Tasmania who was a ruckman for Clarence Football Club in the old TFL and even made its Team of the Century – albeit on the bench. Was also in the State side in 1969.
Murray Thompson: the son of former Victorian Premier Lindsay Thompson and Liberal member for Sandringham played for Richmond from 1973 until 1976.
Two more who failed to cut the mustard
Adair Ferguson: the Democrats candidate for the Federal seat of Ryan in 1990 was a rowing world champion who polled a very respectable 19%.
James Roxburgh: played for the Wallabies but became best known not playing for the Wallabies when he was one of seven Australian players who refused to play against the all-white Springbok team on their controversial tour of Australia in 1971. Stood as a Democrat candidate for the federal seat of Hume in 2001.
Once this list is finished, it will be interesting to whether there is another developed democracy which has made so many sporting stars politicians. Keep the additions coming to firstname.lastname@example.org and feel free to start on a comparative international list.
23. Unitab rejects Tabcorp as anti-pokies push gathers momentum
By Stephen Mayne, shareholder in Tattersall's, Unitab and Tabcorp
The board of Unitab has this morning come out swinging against Tabcorp's $14.25 a share takeover offer on the grounds that, unlike with its merger of equals with Tattersall's, a hostile bid against a competitor with big synergies should deliver a decent premium for shareholders in the target.
Tabcorp CEO Matthew Slatter was openly stressing on Business Sunday and Inside Business yesterday that this is definitely not a final offer, so the Unitab board is obliged to go through the process of rejection until that increased offer materialises.
Tattersall's doesn't have the financial firepower to match it with Tabcorp and is also severely disadvantaged by the heavy scrip component of its offer which will expose Unitab shareholder to the vagaries of Victorian politics in an election year when the renewal of its $2 billion pokies licence is rapidly becoming a hot political issue.
Only yesterday Sunday Age columnist and former ABC broadcaster Terry Lane ripped into Victoria's excessive dependency on gaming revenue and today's Herald Sun carries a very strong column from Sally Morrell, a veteran journalist and Andrew Bolt's wife, which began as follows:
I know exactly what Victorian Opposition Leader Ted Baillieu needs to do to lift himself from inevitable loser to a real contender. Just promise to get rid of the pokies. Yes, it's a big call. But I don't think our politicians realise quite how angry we are in the 'burbs about these horrible, horrible machines.Hmmm, if the next Victorian Parliament follows that advice from the highest penetration newspaper in the world, Tattersall's will quickly be a $1 stock. Today it is down another 4c to $2.94 as it again approaches a record low.
Woolies has about 83 pubs in Victoria, making it the biggest single operator out of 1850 pubs in the state. More to the point, its sites house some 42% of the poker machines outside Crown. This means it collects about $250 million of the $2.4 billion in poker machine profits.I'm contemplating a simultaneous tilt at the Woolworths board and state parliament in November this year on this vehemently anti-pokies platform but suspect James Strong won't be around to defend the destruction caused by this "product".