Budget14: What is right? What is left

WHAT a contrast? Borrow and spend! The ACT budget, reeling from attacks and cost shifting by the federal government, has taken a pragmatic approach to protect Canberrans.

_MG_0233The holy grail of a budget surplus, so much the bailiwick of conservative governments, has been postponed until 2017-18 with the Treasurer stating “we will use our low debt and strong credit rating to invest infrastructure and create thousands of jobs”. That debt will be to the tune of $332.8 million for the coming financial year.

Borrowings are short term and are not enough. More revenue is needed. Treasurer, Andrew Barr, has slammed on a rates hike of 10 per cent. At the same time there are concessions for business including lifting the threshold on payroll tax and yet again reducing the tax on insurance with the aim of removing it altogether.

The goal is to make Canberra an attractive place to conduct small to medium size businesses. Countering the job losses from the federal public service is a key goal for the ACT Government. It is akin to Kevin Rudd using the federal surplus to ensure Australians suffered as little as possible during the Global Financial Crisis.

The Abbott government has pushed the ACT into a corner. A cost shift from the States and Territories has been orchestrated to make have their own budget head in a mad trajectory for their holy grail: a surplus. And this at a time when they pretend there is a national budget crisis. Ha! A triple-A credit rating, borrowings the equivalent of a $15,000 mortgage on the house of an average salary earner – these are not a budget crisis.

The Commonwealth will effectively extract over $370 million from the ACT over four years. Despite this, the ACT must retain its own triple-A credit rating. This local budget does not put the rating at risk. Despite the size of the borrowings, the ACT will still have the lowest proportion of debt of all States and Territories other than resource rich Western Australia. However, this will not stop the right wing screaming about “committing the surplus to the never-never”. They will point to a sharp increase to bring the budget back into surplus in two years. It certainly does look very, very hopeful!

The federal budget called for a major shift in approach. Andrew Barr said: “I was going to deliver a modest deficit followed by two surplus budgets in the following year” until he was forced to react to Commonwealth decisions. He was quick to point out that the borrowings are for capital infrastructure and “will not be used for recurrent spending”. By comparison to an average household, the borrowings are for renovations and improvements to the home rather than using equity in the home to pay for holidays, food, clothes and education.

While the right wing federal government is charging the poor to go to the doctor, the ACT Treasurer has chosen an alternative path by borrowing to make up the expected shortfall from the Commonwealth. In health alone the loss is close to a quarter of a billion dollars over the next four years. This cost shift could have a devastating impact on our hospital and health system.

Preventive health was another federal target. Federal governments of both colours have failed to seriously grapple with the prevention of obesity. Instead of getting serious, the national agreement on preventive health has been scrapped by the Hockey budget. Early indications of the impact are shown in this budget with over a million dollars dedicated to bariatric surgery and the funding of the Healthy Weight action plan.

The ACT budget attempts to appeal to the wider community. Borrowings, yes! But their answer is “investing in Canberra – we are investing in our economy, investing in our people and investing in jobs”. And this ACT budget is replete with actions that will appeal to the left with such goodies as the over-60s home bonus, reductions in stamp duties on homes, “transforming disability services”, over $9 million for housing and the homeless and action on family and sexual violence.

In the end Tony Abbott and Joe Hockey have done what they think is right. And it certainly is to the political right! The ACT has to deal with what is left. And by contrast it is a long way to the left.

Michael Moore was an independent member of the ACT Legislative Assembly (1989 to 2001) and was minister for health.

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