“I am not an economist, but I understand enough to know that the ACT Budget is, as they say in the classics, stuffed!” writes former chief minister JON STANHOPE.

THE ACT’s Budget is the sickest in Australia and has been so for most of the last decade. 

This becomes apparent in the published chart from my colleague and friend Dr Khalid Ahmed, which is based on data published by the Australian Bureau of Statistics, on the Government Finance Statistics (GFS) measure of all state and territory budgets in Australia.

When Andrew Barr became Treasurer, just under a decade ago, he inherited from outgoing Treasurer Katy Gallagher a Budget with negative net debt of $736 million and a GFS net operating balance not only in surplus but higher than the average of all other states and territories.

A decade later and net debt is approaching $4 billion (a dramatic turn-around of more than $4.5 billion or approaching $500 million a year). That is, mind you, before the advance of COVID-19. Because of the exigencies of the pandemic, it is conceivable that the ACT’s net debt will climb to $5 billion.

Net debt of $5 billion would, depending on how long it may take us to get there, likely equate to more than 75 per cent of our operating revenue.

A quick look at any of the other major Budget metrics will tell you that there is no joy to be had there. 

To take just one example, a couple of months ago Barr tabled the General Government Sector Operating Statement as at April 2020 that revealed at that time, i.e. before covid had settled in, that based on the nationally agreed measure of budgets, namely the UPF operating balance, that the ACT Budget was in deficit to the tune of $543,718,000 or an amount equivalent to almost 10 per cent of operating revenue.

I am not an economist and have never pretended to understand the detail of economic theory or principle, but I understand enough to know that the ACT Budget is, as they say in the classics, stuffed!

Which brings me to my point, which is, I would have thought that with net debt conceivably on the road to $5 billion and with a Budget deficit of more than half a billion dollars and growing that the three main parties jockeying, in the lead up to the imminent election to be granted the honour of governing us, namely the ALP, the Liberals and the Greens, would by now have set out how they plan to address the parlous state of our finances, pay down our debt, continue to meet all of the primary needs of the community and avoid the ACT becoming bankrupt.

I do not think it is alarmist to suggest that if the Budget trajectory we have been on for the last six or seven years continues over the four years of the next term of the Assembly, then the only way to avoid going bust will be by further major cuts to the central and essential services of government namely health, housing and education. 

My concern, of late, has been triggered by the lack of detail, particularly in the costings, of the “election” commitments which are beginning to flow from the parties. 

I think it is revealing that the ALP and the Greens are being unusually coy about the cost of the promises they are rolling out. I assume because they know the true state of the Budget and are aware that whatever it is they are promising isn’t affordable. 

I note for example media reports in the last week that the commitment by Labor and the Greens to proceed with the reclamation of West Basin was “not costed”. The fact is the Chief Minister has advised the Commonwealth that the works will cost $100 million. 

It is fair to ask: where will that $100 million come from? In light of the state of the Budget there are three possible sources of funds for a capital project such as this, namely: defer a competing project (say) the renewal and expansion of Canberra Hospital or a social housing initiative; hit ratepayers with the cost of servicing extra borrowings or pass on the $100 million in the price of the land to be sold to developers for the construction of apartments. What’s your guess?

The people of Canberra deserve to be treated with respect in relation to the costing of commitments. They also have a right to be told where, with a Budget already burdened by massive debt and a frighteningly large deficit, the money will come from. This should include being open about which existing services will be cut, or whether extra charges will be imposed, noting that while the major parties have promised a rates freeze the promise has not extended to a freeze on other taxes or charges.

However, the bottom line is whether any of the parties seeking election have a plan for getting us out of this mess.

Jon Stanhope was chief minister from 2001 to 2011 and represented Ginninderra for the Labor Party from 1998. He is the only chief minister to have governed with a majority in the Assembly.