In 2010 the economists Carmen Reinhart and Kenneth Rogoff of Harvard University published a paper called 'Growth in a time of debt'. The authors used OECD economic data to show a causal inverse link between a country's debt and its economic growth. Their purported findings were that countries with debt to GDP ratios of above 90 per cent have historically incurred a slightly negative growth rate.

The paper came out at a crucial juncture in world politics. It offered the justification for policymakers intent on a pivot from stimulus to austerity. The paper became a sacred cow of the self-proclaimed guardians of fiscal responsibility. Reinhart and Rogoff's 90 per cent debt to GDP tipping point theorem began being treated not as an hypothesis but as an iron law of economics every bit as durable as the laws of supply and demand.

In April, a response written by Thomas Herndon, Michael Ash and Robert Pollin of the University of Massachusetts at Amherst exposed three methodological errors. Their response showed that Reinhart and Rogoff selectively excluded years of high debt and average economic growth. Secondly, they used a peculiar weighting in their comparisons which falsely equated country data. Finally, and perhaps most damningly, an Excel coding error fully omitted Australia, Austria, Belgium, Canada and Denmark from the analysis—all economies which grew steadily despite assuming debt burdens.

After several unsuccessful attempts to replicate the findings, it was eventually realised that they were obtainable only through flawed methodology. Nevertheless, these results formed not only the thesis of an earlier book, but set in motion ruinous austerity drives around the world. I quote the words of Mike Konczal, an American economist and fellow of the Roosevelt Institute who stated:

Let us hope that future historians will note that one of the core empirical points providing the intellectual foundation for austerity in the early 2010s was based on the accidental omission of spreadsheet data.

The Reinhart and Rogoff debacle contains lessons for policymakers. The catalyst for crisis may have been speculative investment and inadequate financial policing but its propellant has been austerity.

The Leader of the Opposition has been one of the most vocal crusaders on this subject. He has delivered impromptu public sermons in this very chamber, singling out public debt as the biggest danger to our state. According to him, we are in danger of spiralling out of control and consigning South Australia to a moribund economic future.

I would like to take a moment to describe the differences in the societies imagined by the Leader of the Opposition and by the government. As we have so far heard little in the way of a substantive policy position from the leader, this description is, by necessity, somewhat deductive. However, there is still ample evidence of his disinterest in the public good and his debt monomania.

I wonder what the Leader of the Opposition would say when presented with the dual revelations of the Reinhart and Rogoff episode and the news that the European states which most vigorously pursued austerity have had the least success in managing their debt. I wonder what he would say about the release of data which shows that Europe is in the midst of its longest recession. I wonder, in fact, what he would say to the news that, on the eve of the state budget, the IMF released a report on its approach to the Greek economy which amounted to a mea culpa.

The Leader of the Opposition attacks this government's economic management with gusto, all the while hoping that South Australians do not recognise an inconvenient truth: his jeremiads are not supported by reality. Undeterred by an inconvenient reality, the opposition believes that the best way to manage our debt is through deep fiscal cuts, the likes of which have been implemented overseas. This would deprive South Australia of not only the public goods and services needed to enrich our quality of life, but of the economic activity needed to repay that debt. We are told that, in effect, our economy must be destroyed so that it can be saved.

A recent feature in the Australian Financial Review flatly contradicts this approach. In documenting the increasingly rancorous debate between Reinhart and Rogoff and Paul Krugman, the Nobel Prize-winning economist turned newspaper columnist, the article points out that gross government debt in Australia is expected to peak at no more than 25 per cent of GDP. While this sum ought not to be dismissed with a wave of a hand, it demonstrates the fundamental solidity of the Australian economy.

The so-called wanton profligacy, of which the leader spoke today, is actually the cost of providing broad services to the greatest number of people. Nevertheless, this government is working toward key public sector savings which will be made without the undue curtailing of services. Hence it has established the telecommunications taskforce, consolidated administrative functions into Shared Services and committed to the trimming of public sector FTEs. The result will be a leaner, more efficient government sector still capable of high calibre service delivery.

The South Australian Labor government is committed to making the structural reforms needed to keep our economy competitive and our budget sustainable. It is on track for return to operating surplus by 2015-16. However, it knows that these reforms can be made without unduly increasing unemployment and risking recession. Throughout it has observed that the best way to maintain growth is not through the doctrine of austerity, but instead through the expansive social program it has been committed to since its first day in office.

The charting of a sustainable measured path back to surplus does not just displace or defer the costs of structural reform. It lowers them because it does not allow for the emergence of a class of long-term unemployed which find it substantially more difficult to resume from where they left off. To paraphrase John Maynard Keynes, it is the boom, not the slump, which is the time for austerity. Now, this is not an abstract dispute. It is one which will affect the future of many, if not all, of our citizens.

An article published in the InDaily on 23 April tells of the opposition's plan, should it be entrusted ever with the levers of power, to immediately divest itself of all responsibility to govern. Under a Liberal government that responsibility would fall to a throng of unelected and unaccountable private sector-led commissions. This would enable it to evade any responsibility for bad news and to shirk its obligation to make difficult decisions. We are told of a decade-long handbrake on our state economy, but hear of no credible solutions. We are told that the Leader of the Opposition has come from the real world of small business. Speaking as a former small business owner, let me say that no world is more real than this one in the parliament. This is a world that compels us to make decisions which affect the livelihoods of South Australians and to make those decisions every day.

This is your opposition, Mr Deputy Speaker. In his book The Affluent Society, the American economist John Kenneth Galbraith spoke of the need for public services to stay abreast of private demand. By his reckoning, when a society does not provide the goods and services that form the architecture of public life, it succumbs to an atmosphere of private opulence and public squalor. Public squalor is the by-product of excessive thrift.

Since the practice of criticising policy without offering a credible alternative belongs exclusively to the opposition, let me now speak about the legacy so far left to our state by this government. By the reckoning of The Economist, Adelaide is the world's fifth most liveable city. This liveable cities index uses a matrix of criteria across five broad categories: stability, education, health care, culture and education and infrastructure. These categories are then divided into 30 factors to produce a score from 1 to 100, with 100 implying the ideal city.

Adelaide scored 96.6 and was good enough to secure fifth place in the 2012 index, four places higher than a year previous. Our reason for moving four places higher was our commitment to infrastructure. We were below only Melbourne, Vienna, Toronto and Vancouver, not that you would know this from the opposition's unceasing complaints. From this, two points emerge: first, that this is a stamp of approval from a publication which has no reason to either praise or slate Adelaide.

The second point is that the legacy of these cities is the legacy of men and women who believe that government is the primary instrument by which inequality is curtailed and life improved. In South Australia that legacy belongs to this government, which has pledged to provide the means for a generous and inclusive society. This vow has been vindicated many times over. In addition to the livability index, the Chicago Tribune recently wrote in glowing terms of Adelaide, calling it one of the world's best designed cities. National Geographic is filming a documentary, which will feature Adelaide as one of 18 smart cities. This will be an opportunity to showcase the city's thriving urban culture.

Although the acclaim is now pouring in, there was a time when these plaudits were scarce. This is not a coincidence. It is the passion and dedication of this government, the arts community, urban planners and the city council that have earmarked a vibrant city and assisted in our renaissance. Incidentally, the vibrant city concept is one of the seven strategic pillars of this government. The extent of this investment in infrastructure by this government runs deeper still.

Concrete was recently poured on the second storey of our new hospital, while work is nearing completion on the SA Health and Medical Research Institute. The government is making significant improvements to transport infrastructure to develop its trade corridors and improve access. It is enabling an environment amenable to our small business owners by offering payroll tax relief, whilst spending almost $20 million to support art and culture. All the while it is ensuring that advanced manufacturing has a future in our state.

These are some of the fruits of a bountiful public life. The opposition attempts to discredit a record it could not emulate. There is no better way to bequeath our admirable quality of life to the next generation than by investing to keep South Australia at the vanguard of prosperity and opportunity. Liberal democracies are committed to the notion that men and women ought to be in full control of their destinies, yet our theoretical freedom to live life on our own terms means little if society is organised in a way that denies us that opportunity.

Because this is a government that wants more South Australians to attend the best of all possible schools and universities and have access to world-class vocational training, it has made historic investments in education. Because this is a government that wants all South Australians to have affordable access to quality health care, it has spent generously and wisely in that area. Because this is a government which recognises that a decent job not only pays the bills but nurtures the spirit, it has committed to improving our state's infrastructure and industry. If ever you should hear that government ought to get out of the way, understand that claim for what it is, an abdication of duty and a capitulation to ill-informed interests.

We should not shy from the debate about how to extend the privileges enjoyed by some into the opportunities given to all. The opposition would have us believe that we can no longer pay for the world's fifth most liveable city and, by extension, the world's fifth most liveable state, and that we can no longer afford the society which made it so. This government rejects that proposition. This government points with pride to over a decade of providing jobs, infrastructure and opportunity. It affirms a commitment to continue doing so in the service of all South Australians.