“There is an election looming and borrowing heavily at this time in the electoral cycle makes political sense. Financial sense – no! Political sense – yes!” writes political columnist MICHAEL MOORE.

TRUMPETING expenditure on health and housing marks the start of the speech on this year’s ACT budget by Chief Minister and Treasurer, Andrew Barr. 

Expenditure of taxpayers’ money is not enough on its own to solve Canberra’s problems. It is time for his government to take a careful look at their administration of the territory and to get the ACT house in order.

Mr Barr proudly argued “through this budget we are delivering local solutions”, and went on to state “it starts with one of the biggest investments in housing in the territory’s history”. 

The investment of $345 million outlined in the budget for his housing package “will deliver new social and affordable homes for Canberrans; and accelerate major repairs and maintenance across thousands of our existing public housing properties”.

Accelerate major repairs! They certainly need it. Look at the example of “Terowie” in Lowanna Street in Braddon. This disgrace of a half-completed apartment building has been a blight on Braddon for more than five years. Despite being in the media several times, the government has done nothing to the fenced off, semi-built edifice. It ought to have been meeting the housing needs of the people of Canberra.

Investment in health is also incredibly important. Purchasing Calvary Hospital and committing a billion dollars into a new northside hospital may well have administrative advantages. 

However, the extent of such advantages will be hard to determine if the cultural and administrative problems of the Canberra Hospital are not resolved as step one.

Even so, the treasurer argues: “In contrast to the one that came before us, this is an ACT government that builds hospitals. Through this budget we will complete and open the major expansion of the Canberra Hospital and take significant steps to commence construction on the new northside hospital”. The budget provides more than $540 million in new funding for healthcare.

At what point do families realise the futility of increasing and increasing investment in their homes without doing the repairs needed to ensure comfort and usefulness? The same question can be applied to the ACT. At what point does the government concentrate on getting things right before spending money?

A key indicator of Canberra’s economic stability is retaining the ACT’s Standard and Poor’s AAA/A-1+ credit rating. This rating was reconfirmed in November. It is a good indication that the government has not extended beyond sensible borrowing focused particularly on capital works. However, if that rating is reduced, interest rates on borrowing will increase.

The fallout will invariably mean increased taxes. This budget should not be putting that rating at risk, particularly at a time when the ACT is already on “negative watch”. This might not seem to make financial sense, but there is an election looming and borrowing heavily at this time in the electoral cycle does make political sense. Financial sense – no! Political sense – yes!

Having enough money to spend on health, education and housing, along with the three Rs of rates, roads and rubbish of local government, makes very good sense politically. It ensures the look of the city and social justice elements of the government’s commitments are delivered and are apparent prior to the October election next year. But at what price?

Forecasts in the budget predict a turnaround delivering a bottom line of $600 million over a period of just three years from 2023-24 to 2026-27 are fanciful. Such a turnaround has never been forecast, let alone achieved. The 2019-20 budget forecast a turnaround of around $500 million. Thanks to the advent of COVID-19, the government was saved from the embarrassment of delivering on such a forecast.

A commitment of this kind indicates that operating cash surpluses will be very strong, reaching $700 million. If it really is that strong, why is the net debt growing from $5.8 billion in 2022-23 to $10.6 billion in 2026-27 – effectively compounding at a rate of 16 per cent a year?

According to the treasurer, the commitment to significant capital works in areas such as housing and hospitals “have immediate and long-term payoffs, boosting our productivity, creating jobs and building a better and healthier society”. He does not mention the other payoff – improving chances of re-election.

What about the long-term consequences? When will ACT governments deliver sustainable economics in their budgets?

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