ALAN Mitchell is too kind in suggesting (Fiscal reforms put NSW back on track, AFR, October 11) that the Carr Government's first Budget "represents an important step in the direction of fiscal retrenchment". In fact, the Budget missed the opportunity to pare away "fat" inherited from predecessors. I make the following points:
- Excluding interest payments, current outlays are estimate to increase by 1.8 per cent in real terms on top of the 5.7 per cent real increase in the "reconstructed" figures for such outlays last year. However, the real increase in outlays may be understated by about 2 per cent. Budget sector employment increased by over 5,000 (2.3 per cent) during 1994-95 and there will almost certainly be a net increase again this year.
- The estimated savings of $206 million in 1995-96 are more than offset by the $321 million cost of new initiatives.
- To achieve best practice among the States, NSW would need to cut spending by around $2 billion and this would be concentrated in areas such as health and education where the Government is increasing spending the most in 1995-96.
- For 1995-96 the estimated increase in revenue from the State's sources (excluding one-off equity restructure payments from the non-Budget sector) is 8.2 per cent. Like so many NSW governments of both political complexions, the Carr Government has succumbed to interest group pressures. Union "capture" is unfortunately particularly evident in this Budget.
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