“CITYNEWS” columnist Michael Moore is usually very perceptive when it comes to political analysis, but he has missed the most important impact of the ACT Budget in his recent column “Labor fires first election salvo” (CN, June 14).
He has fallen for the short-term trick of getting over the line at the next election by running a “temporary deficit of some $400 million”.
He failed to point out that the $400 million is withdrawn (in the form of rates, taxes and liabilities for government borrowing) from the private sector, so any retention of employment by the Government is at the expense of employment in the private sector.
The key test of the Budget is not simply whether there is a surplus or deficit or whether it gets the Government re-elected. Rather, the most important question is: “What does the Budget contribute to productivity through the way the Territory’s resources (physical, technical and managerial) are combined to create wealth and improve the community’s well-being?”
In focusing on the “temporary” operating loss, Moore overlooked the figure in the Budget that best reveals the impact of the Government’s activities on the rest of the community – that is, the fiscal balance.
When the fiscal balance is negative, it means that the Government has effectively or actually borrowed from the rest of the community to fund its operation and capital spending. In other words, the negative amount is money which is no longer available to the rest of the community to spend.
In the 2012-13 Budget, the fiscal balance was estimated to be -$1016 million. By 2014-15, it will accumulate to more than -$2700 million over a six-year period. That massive drain to the community shows the high cost of the Government living beyond its means.
That is the key message of the Budget.
Catherine Carter is ACT executive director of the Property Council of Australia