CANBERRA will bear the brunt of an “overwhelmingly negative” federal budget, according to the Canberra Business Council.

National measures announced last night by Treasurer Wayne Swan include raising the Medicare levy to pay for DisabilityCare Australia, scrapping the baby bonus and deferring tax cuts.

Canberra Business Council chief executive Chris Faulks says the budget will “have a significant and disproportionate impact on Canberra”, with an estimated 1,262 public service jobs to be lost in the next year.

“Both sides of [federal] politics seem to continually ignore this fact when they look to the public service as a constant source of budget savings,” Ms Faulks says.

“The ACT will bear the brunt of $148.4 million in savings being sought through a reduction in expenditure on Executive Level and Senior Executive Service staff. Forty per cent of the ACT’s workforce is employed by the Federal Government. However, 62 per cent of the EL and 76.8 per cent of the SES is located in Canberra.

“This will increase unemployment in the ACT, reduce retail spending and lead to a further weakening in business confidence.”

Faulks says the biggest problem is that the majority of the ACT’s 25,000 businesses rely heavily, either directly or indirectly, on the public service to survive.

“Cuts to the public service, and the subsequent reduction in procurement, mean less work and income for the private sector,” she says.

“The last time a Federal Government pursued such major public service cuts, the ACT went into recession.”

ACT Liberals oppose APS cuts, while Abbott and Hockey propose more

THE ACT Liberals largely echo the Business Council’s budget assessment, saying Canberra will be worse off due to reduced family tax benefits and cuts to university and public service management numbers.

While federal Opposition Leader Tony Abbott and shadow treasurer Joe Hockey have pledged to let the public service lose at least 12,000 jobs through “natural attrition” if they win government, ACT Opposition Leader Jeremy Hanson has accused Julia Gillard’s government of “economic vandalism” for the loss of just 3,000 public service jobs in the second half of last year.

“Just next year, 1,262 public service jobs are going, with more hurt to come,” Mr Hanson says.

“This is on the back of efficiency dividends that have been cutting deep into the public service and almost 3,000 jobs that were lost in the six months leading up to December last year. The full extent of job cuts still remains unclear.”

The Greens’ ACT Senate candidate, Simon Sheikh, said in his budget response that Canberrans should worry more about “the brutal job cuts proposed by Tony Abbott and Zed Seselja”.

“If Tony Abbott gains balance of power of both houses we can expect to see house prices drop and small businesses suffer,” says Sheikh.

The Canberra Business Council sees a few initiatives in the budget that will specifically benefit Canberra businesses, such as $22.4 million for ACT roads, as well as some nationwide measures with “the potential to trickle down to the ACT”.

Ms Faulks says the local business group supports the introduction of paid parking in the parliamentary zone – one area where they disagree with the ACT Liberals – and says the estimated $73.3 million it will raise should go to Canberra’s “key cultural institutions”.

The Business Council also welcomes $180 million for local tourism, $230 million for the CSIRO to upgrade its Black Mountain laboratory and other funding that will create work in the ACT building industry, including $7.6 million for safety upgrades at Parliament House and a $200,000 contribution towards a Boer War memorial on Anzac Parade.

Ms Faulks says $1 billion “to boost innovation, productivity and competitiveness” through a program called “A Plan for Australian Jobs” may also assist ACT businesses.

“Funding of $121 million over four years for skills and workplace development is also supported by the Council.” she says. “The ACT has an underlying skills shortage. This should help address this issue.”