Labor 'cooked the books' Sean Nicholls March 29, 2011
O'Farrell fury at budget hole
THE Premier, Barry O'Farrell, has announced the discovery of a $4.5 billion hole in the budget hours after taking office, and accused Labor of ''cooking the books like never before'' to hide the true financial position of the state.
In one of the first signs of a shake-up to the senior ranks of the public service following the election, the secretary of the Treasury, Michael Schur, has been sent on ''immediate leave'' while an audit of the state's finances is carried out by Michael Lambert, a former Treasury secretary.
Mr Schur's removal came as Mr O'Farrell clashed with the state's largest public sector union over the dumping of another senior public servant, Michael Coutts-Trotter, the director-general of education. Advertisement: Story continues below
The Public Service Association said the decision by the likely education minister, Adrian Piccoli, was related to Mr Coutts-Trotter's Labor Party links.
It criticised the move as at odds with Mr O'Farrell's election promise to judge public servants by their performance (see report, page 5).
The budget black hole was revealed by Mr O'Farrell following briefings by Treasury officials yesterday, shortly after he was sworn in as Premier by the Governor of NSW, Marie Bashir.
''We all expected the finances to be worse than Labor portrayed but I am angry at the level of deception and incompetence,'' Mr O'Farrell said last night. ''They have cooked the books like never before and treated the public like fools.''
The updated briefings show a steep decline in the state's finances of $1.3 billion by 2013-14 compared with figures published in December. It is being attributed to a sharp drop in revenue from GST receipts, transfer stamp duty, payroll tax receipts and dividends from the electricity businesses that were sold by Labor early this year.
In 2012-13, GST is forecast to fall by $224 million, payroll tax by $66 million, stamp duty by $217 million and dividends by $418 million.
Mr O'Farrell said Treasury officials told the meeting that if the figures were revealed by the former treasurer, Eric Roozendaal, to the ratings agencies during his trip to New York in December they would have triggered a review of the state's Triple-A credit rating.
In December the half-yearly review of the budget forecast a surplus of $432 million for 2012-13 and $129 million in 2013-14 (see report, page 4).
However, yesterday's briefings revealed the updated prediction is for a deficit of $405 million in 2012-13, which is forecast to rise to $1.2 billion in 2013-14.
The Treasury briefings show that by 2014-15, the budget will have fallen $2.4 billion into deficit. However, this is beyond the scope of the forward estimates, which only run to 2013-14.
The government reached its $4.5 billion figure by adding up the forecast deficits between 2012-13 and 2014-15.
Mr O'Farrell said the discovery would not affect delivery of its promises. ''We are going to get the NSW economy going again so that revenues lift and we can reduce the deficit,'' he said. ''We will do everything we can do to protect the state's Triple-A rating but this will make it even harder.''
Mr Roozendaal accused Mr O'Farrell of politicking and said it was unrealistic to use figures beyond the forward estimates.
''I can say that we have relied on the advice of the Treasury since the midyear numbers were released,'' he said. ''This is typical politicking and an always predictable strategy''.
