NSW: Iemma won't cut services to plug budget hole

AAP General News (Australia)
08-04-2005
NSW: Iemma won't cut services to plug budget hole

By Peter Jean and Nick Ralston

SYDNEY, Aug 4 AAP - NSW Premier and Treasurer Morris Iemma has promised not to cut
frontline services to help plug the state's looming budget deficit.

Mr Iemma, who yesterday gave Finance Minister Michael Costa the job of identifying
possible cuts in government expenditure, has promised there will be no forced redundancies
in the public service.

Mr Costa, who has reportedly said it would make no difference if 20 per cent of the
state's public servants were sacked, has also ruled out forced redundancies.

Mr Iemma said it was not clear how large a deficit the state was facing following his
decision to abolish the vendor duty on the sale of investment properties.

But he said he was determined to rein in expenditure without cutting back frontline services.

"We're about quarantining frontline services," he told reporters.

The 2.25 per cent vendor tax had been expected to bring in $358 million in revenue
for the government this year.

Economic modelling commissioned by property industry groups earlier this year found
abolishing vendor duty could deliver the government up to $200 million in extra revenue,
because the stimulus to the housing industry would increase stamp duty receipts.

Mr Iemma said the size of the deficit would become clear later in the year and the
government was determined to put the budget back into the black.

"It's something that we have to see as we move through the year because there are varying
estimates of just what additional revenues and activity are generated by the removal of
vendor duty," he said.

"The challenge is to ensure that it (the deficit) doesn't become locked in and that's
behind a determined effort to find savings ... and discipline on expenditure."

Opposition treasury spokeswoman Peta Seaton said Mr Iemma's policy of no forced redundancies
was not sustainable.

"NSW's triple-A rating is now threatened because Morris Iemma today ruled out making
the essential cuts to waste necessary to get us out of the red and back into the black,"

she told reporters.

"This will see NSW forced to wind back essential spending on services like health,
education and police and rail and could trigger the very real risk that taxes will be
increased by the Iemma government to fill this budget black hole."

AAP pj/was/evt/tnf

KEYWORD: BUDGET NSW NIGHTLEAD

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