A TOWN that depends on one industry faces grave risks if that industry suffers a downturn.
So it is with Canberra. Half of all employment in the ACT is in the public service, either Commonwealth or Territory.
Both governments acknowledge they have been spending beyond their means and can’t afford any more “stimulus packages”. At the same time they are facing the prospect of declining revenue growth, but are still committed to returning their budgets to surplus – which is code for cutting expenditure and public service jobs. Canberra is in for a hard time.
Many public servants can see this coming, which is why, quite sensibly, they are cutting back spending and saving more. This prudent response to the expectation of a downturn is already having a devastating impact on the retail sector.
A new report highlighted the fundamental problem confronting the people of Canberra. The report by Deloitte Access Economics warns us about the dangers of being a one-company town when that company ceases employment.
If Canberra is going to be a preferred place to live, do business and provide gainful employment the ACT Government must reduce its high risk reliance on greater Commonwealth spending and instead do what former Treasurer Ted Quinlan advised in 2003 and adopt policies which are “unashamedly pro-business”. That doesn’t mean subsidies or special programs; it simply means freeing up business from excessive rules and regulations and getting rid of punitive taxes such as the new lease variation charge.
The only hope for Canberra in the longer term is in productivity growth from individuals and groups innovating and taking risks with new and better ways of doing things. Being smarter will not come from government departments, but from individuals “having a go”, provided the rewards from taking a risk are not taxed away.
Catherine Carter is ACT executive director of the Property Council of Australia