NSW asset sales expensive

The NSW Audit Office, in its annual ‘Report on State Finances’, has generally given the state a clean bill of health.

But much of NSW’s sound financial position is because of its continued sale of government assets, which it has paid consultants hundreds of millions of dollars to facilitate.

Revenues, assets, and net worth are up. Liabilities, including unfunded superannuation, are down.

The state’s revenues in 2016-2017 were $83.5 billion, up $5.3 billion (6.3 percent) on the previous year. Expenditure was $79.4 billion, up $3.9 billion, giving a surplus of $4.1 billion. Wages and salaries accounted for $30 billion (37.8 percent) of this.

The fastest growing area of expenditure is transport and communication – spending has grown 68 percent since 2012-13. It is now just behind education, which remains the second largest area of expenditure after health.

Financial assets are up by 88 percent, largely through the sale of public assets and businesses. To help with these sales, the state has spent $298 million over the last five years on financial and legal advice.

That includes $175 million on consultants for the electricity network and generator transactions alone. Other significant consulting costs include: ports transactions ($71.6 million), disability and customer care services transfers ($31.1 million),  land and property information ($14.8 million), and the sale of the Pillar superannuation business ($5.5 million).

The state ALP Opposition has called these consultancy fees obscene and a “feeding frenzy at the top end of town.”

It gives examples:

  • A firm of accountants paid $17 million for accounting and tax advice on the sale of electricity poles and wires.
  • An investment bank paid $14.9 million for financial advice on the sale of Ports Botany and Kembla.
  • A firm of lawyers paid $11.5 million for legal advice on the ports sale.

The Chair of the Opposition’s Watchdog Committee Dr Hugh McDermott said the figures demonstrated “just how warped this government’s priorities are, when it had presided over cuts to the family and community services budget and regional disability services.

“The money should have been spent on upgrading schools and hospitals and employing more teachers, nurses and police.

“Most people would be shocked and angry at this level of waste when many families are really struggling under the high cost of living.”

The Report on State Finances is available here.

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