“Andrew Barr can hardly blame the public service for the budgetary and policy choices he, along with his coalition partners, have made over more than a decade.” JON STANHOPE & KHALID AHMED despair at the state of the ACT.

Early in January, the local media reported Chief Minister Andrew Barr deflecting responsibility for a raft of policy failures on to the ACT Public Service, in particular, senior executives, and called for a debate about the size of the public service and the taxes it collects.

The timing of the comments – ie the Christmas/New Year break – about issues that are substantial and contentious does seem odd, especially when debate on their substance is surely warranted. 

The quiet time, together with an unquestioning media provided a soft landing for Mr Barr’s thought bubbles and averted any serious analysis of his claims.

The intended audience in this instance was likely the crossbench, as was noted by our fellow columnist Michael Moore who surmised that with minority government, discussions previously held in cabinet will now likely be held on the floor of the Assembly. 

Mr Barr’s comments not only provide an insight into cabinet discussions between the Labor/Green coalition partners, but also the disturbingly shallow nature of the discourse.

Referring to the changes announced in December, Mr Barr said, in a surprisingly acerbic attack on the ACT Public Service that they were necessitated by: “The ACT public service’s limited ability to develop and implement policies had been frustrating government decision-making.” He went on to say: “We want good advice in a timely way, and then once decisions are made, we want them implemented effectively – and that’s not always happening.”

To someone unfamiliar with Australia, it would appear that Mr Barr had only recently walked into government, and having been frustrated with the capacity for policy advice, made a raft of major changes to reform the public service. 

The said changes, reported in the media before Christmas, merged (a) Community Services Directorate with ACT Health, and (b) Transport and City Services with the Environment, Planning and Sustainable Development Directorate.

While these mergers may result in a slight reduction in executive jobs, it is most unlikely that they will have any effect on policy capacity or implementation. 

Deep deficits and a mountain of debt

In any event Mr Barr can hardly blame the public service for the budgetary and policy choices he, along with his coalition partners, have made, in the sanctity of the cabinet, over more than a decade, that have resulted in persistent and deep deficits, a mountain of debt and a deterioration in services in a myriad of portfolios from better than average to the worst in the country.

The decision to cut hospital funding and beds that resulted in the worst waiting times; the decision to sell-off public housing stock to pay for the tram; the decision to cut land supply to extract supernormal profits; the decision to increase land tax when it was to be abolished that contributed to highest rents in the country; and the decision to impose double and triple-whammy taxation under a fabled “tax reform” were all decisions the responsibility for which rests on Mr Barr’s and his partner in government Shane Rattenbury’s shoulders.

It is ironic that before Mr Barr blamed the public service, one of the most senior ACT health officials had laid the blame at the feet of, wait, “the system”. That deflection, which became the object of some well-deserved ridicule along with this “diagnosis” by the Chief Minister begs an obvious question, who is in charge and who is accountable for the terrible mess in government finances and service delivery? 

The public service and its leadership should of course be held to account. Numerous auditor-general’s reports have highlighted major failures in implementing programs and delivering projects, including examples involving the expenditure of tens of millions of dollars with virtually nothing to show for the largesse. 

To date, there is no evidence that there have been any repercussions for officials. However, there is clear evidence of ministers, without exception, not being on top of their briefs. 

It is unlikely, for example, that they were not advised that selling off thousands of units of public housing stock would result in higher costs for renters on low incomes in the private market, or that their housing renewal program was premised on evictions of vulnerable, old and/or disabled women, or that with debt growing at more than 20 per cent annually any budgetary flexibility would inevitably simply evaporate, as indeed it has. 

The December changes, while giving an appearance of action, will not avoid any of these major failures.

Public financial management is complex

Mr Barr’s call for a debate was accompanied by his observation that “any debate about the size of the public sector and the territory’s tax base should consider every Australian jurisdiction had a budget deficit, with the exception of Western Australia”.

There we have it – there are only two choices: increase taxes or cut services, after all, according to Mr Barr, any problems with the public sector (in)efficiency and waste have already been addressed through those mergers.

Public financial management, however, is much more complex. It involves choices between competing priorities, between options of different efficacy, between policies for today and those for a later time, and between meeting the needs of some and the wants of others.

As an example, any sensible discussion about expenditure priorities would compare how many public housing dwellings could be built with the $577 million committed to the construction of a 1.7km tram line; how many households will benefit through lower rents; and how many vulnerable people will not need to be forcibly evicted from their existing home? 

Are there better and cheaper ways of transporting people from Civic to Commonwealth Park while at the same time meeting the basic human needs of vulnerable Canberrans? 

Questions may, in fact must, also be asked about whether all of that money, or some of it, could be better or more appropriately spent on our hospital emergency departments and urgent surgery. 

These questions are not unique to the ACT, and all jurisdictions grapple with sectoral allocation and prioritisation decisions. Such choices, while informed by “technical” analysis, are also reflective of the “values” of a government and the community it serves.

The only justification Mr Barr has provided for the binary choice is that all jurisdictions (except WA) are in deficit. Some premiers may in fact dispute this assessment. SA’s budget is in surplus, in 2024-25 and across the forward estimates. Even Victoria, the state referred to in the national media as a basket case, will start its 2025-26 budget in surplus.

All jurisdictions have posted surpluses in the past and have forecast some in the future. Notably the ACT is the only Australian jurisdiction that has not posted a surplus in the 14 years since Mr Barr became Treasurer, in 2011, a quite staggering outcome unmatched, we believe, by any Australian jurisdiction. 

Barr’s run of deficits will continue

Worryingly, it is almost certain that the run of deficits delivered by Mr Barr will continue, at a minimum, for as far as the estimates are published.

We have written extensively and provided data from independent sources such as the ABS, the Commonwealth Grants Commission and the audited financial statements to highlight that the ACT is the highest taxing jurisdiction in Australia. 

This was not always the case, and in fact the ACT moved from a below-average taxing jurisdiction to the highest in Australia in the decade after Mr Barr ascended to the Treasury.

Regrettably, the tax increases imposed by Mr Barr and his Labor and Green colleagues have disproportionately and unfairly impacted lower to moderate income households, and contrary to the tedious claim of being a progressive government, the changes to the taxation regime have been deeply regressive.

Notwithstanding the above comments, we will welcome a debate on taxes and the size of the ACT public service. Any such discourse should, of course, include a detailed assessment of the distribution of the taxation burden and the efficacy of existing planned expenditure. 

The release of the business case for stage 2a of the tram would be a good start to such a conversation.

Jon Stanhope is a former chief minister of the ACT and Dr Khalid Ahmed a former senior ACT Treasury official.

Barr’s ‘dictatorship’ ends with the new Assembly