Budget cushions the hard times ahead

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THE holy grail of Australian politics is only a light at the end of the tunnel in the ACT Budget. The “surplus” has been postponed. 

No one even used the word “austerity”. Thank goodness! The ACT has not been dragged down into the quagmire of slashing, cutting and burning.

There are cuts but not a mad, impetuous drive for a surplus.

“Unlike other State Governments our savings strategy does not slash the size of the public service,” says Treasurer Andrew Barr.

Nor does it affect major programs.

Barr, brought down his first Budget looking to “help us become healthier and smarter, improve our city’s liveability, grow our economy and employment and renew the urban environment”.

What? No austerity!

And an operating deficit of $253.6m. What can the Treasurer be thinking? And, when reality bites, who is going to pay for it?

No surprises. Revenue is increasing and that means just one thing for the “smarter people” of Canberra. Canberrans can expect to see rates increase at an average of $139 per household. We jointly wear the burden.

Barr is continuing with the taxation reform that was the subject of such heated debate at the October election. He sees it as fairer and more equitable. He argues that the rates increase provides the opportunity for a reduction on stamp duties on homes. The rates increases, of course, will be much more if your land value is well above the average.

There is also the contribution of commercial rates. These rates will increase by up by 20 per cent. In a rather clever move this targets the many of the commercial buildings occupied by large Federal Government Departments.

The Federal Government has already cut some 2000 jobs from Canberra in the last few years and it looks like even more will be going. Wringing some minor revenue from them does seem justified while they are in the business of cutting jobs.

The fundamentals are right without the slash, cut and burn of other governments. The priority is not surplus but the “AAA stable” rating.

This is the highest available rating and shared only with Victoria. This is similar to the family that borrows to buy a home. The financial credibility relies on whether or not they can afford the repayments on the mortgage and, particularly, that they do not put the family in dire financial circumstances. With this Budget, Canberra remains in a good, strong financial position.

To keep our economy in equilibrium, at the very least, means creating jobs. Using capital works to create jobs in the building and construction industry is clever expenditure. Firstly, capital money is accounted for as “one off” expenditure. Unlike the recurrent expenditure used in employing people permanently, it does not have to be accounted endlessly into the future. A challenge for job creation facing the Government is the prediction that the increase in population will outrun the growth in employment.

We do need more jobs for a sustainable economy. The main investment in capital works (including investment from previous years that are not yet complete) is $700million to be spent in this coming financial year. However, as part of looking towards the light at the end of the tunnel in getting the Budget back in surplus, these commitments will decline over the out years.

This year, the main two new capital items are the “City to Lake” project and the “Capital Metro” light rail project. The light rail strongly reflects the influence of the Greens as set out in the “Parliamentary Agreement”. Between them, these capital works are intended to create up to 2000 jobs.

Not all the money comes from borrowing. In the good times when budgets were in surplus, according to Treasurer Barr, the ACT Government “put money aside for a rainy day”. He added, “Well! A rainy day is now”. The Government is not just looking to fund the construction themselves. For the first time since Labor came to power in 2001 they are exploring “public-private partnerships”.

A key element in this Budget is seeking to diversify the economy. The second big-ticket item is tourism. The Government will be looking to the Canberra airport going international – with direct flights from the growing Asian middle-class markets. Other tourism investments will be an increasing number of festivals, improving “Brand Canberra” and providing stronger support for the ACT Convention Bureau. Investment in a pod of Skywhales has been ruled out!

The other major investments in jobs will be in the community sector as the reforms take effect with the start of DisabilityCare. Canberra will be the first jurisdiction in Australia to adopt. It also takes into account the continuing health reforms that have been underway for a number of years and investment in the new northside hospital at the University of Canberra. Additionally, there is the introduction of the Gonski education reforms that were recently signed off by the ACT Chief Minister and the Prime Minister under the continuing flurry of flying sandwiches.

Canberra is going to face tough times. As far as possible, the Government is attempting to pre-empt these.

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

 

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Michael Moore
Michael Moore is a former member of the ACT Legislative Assembly and an independent minister for health in the Carnell government. He has been a political columnist with "CityNews" since 2006.

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