“The unbroken string of 12 deficits delivered by Andrew Barr, as Treasurer, is not only a record for any Australian jurisdiction, but also for a single treasurer.” JON STANHOPE & KHALID AHMED summarise the performance of 12 years of Labor-Greens government. It’s not pretty.   

For some years now, this column has commented on the ACT budget and a wide range of the government’s policies, programs and administration. 

Our views on the ACT’s finances, government policy choices and service delivery have been formed by analysis of data published by either the government or the national reporting agencies such as the Productivity Commission and the Australian Bureau of Statistics. 

We have been guided in our commentary by the accepted principles of public financial management, social justice and inter-generational equity. Our purpose has been to explain, elaborate on and clarify the ACT government’s policies and actions.

With the ACT election looming, we have sought in this column to provide an overview of the ACT government’s performance based on our previously published analyses. 

This overall picture is in three domains: (a) over time, ie since the Greens-Labor coalition took office in 2012; (b) across jurisdictions; and (c) against the government’s claims and pronouncements.

Financial management: from best in the country to the worst

The ACT is the only jurisdiction in Australia not to have posted a surplus since 2012-13. 

The ACT recorded consecutive surpluses in the three prior years to then and was in fact one of the few jurisdictions to have done so – on the same accounting basis.

The unbroken string of 12 deficits delivered since then by Andrew Barr, as Treasurer, is not only a record for any Australian jurisdiction, but also for a single treasurer. 

Before the pandemic, the ACT’s deficits from 2012-13 averaged 5.8 per cent a year while the national average was a surplus of 1.5 per cent. Notably, the forward estimates also forecast deficits, which will extend the run of deficits under the Greens-Labor government and the direct stewardship of Mr Barr, to 16 years. 

Persistent deficits need, of course, to be financed through increased taxes and borrowings. 

“Interest costs are rising at a staggering and unsustainable average rate of 21 per cent annually and are forecast to reach $823 million in 2027-28. 

Net debt has ballooned since Mr Barr became Treasurer from a negative $473 million to a forecast of $12.4 billion. The Net Debt to Revenue ratio is forecast to increase to 128 per cent, the second highest in Australia. Interest costs are rising at a staggering and unsustainable average rate of 21 per cent annually and are forecast to reach $823 million in 2027-28. 

The increase in interest costs consumed 12 per cent of new spending in the 2024-25 Budget and is forecast to rise to 26 per cent in 2027-28. This massive debt burden will be carried by future generations of Canberrans (our grandchildren and great grand-children) well beyond the economic life of current infrastructure.

The Financial Management Act 1996 requires prudent financial management and adherence to the principle of intergenerational equity to ensure sustainability of services and that future generations are not burdened with undue costs. The government has clearly failed on both counts and one wonders when the Auditor-General or the Integrity Commission will pursue this issue.

Taxation: from below average to the highest taxing jurisdiction

The ACT was a below average taxing jurisdiction in 2012-13 at $3228 per capita (ABS data). With the highest taxation growth in the country (averaging 5.8 per cent annually per capita, compounding), it was one of the highest taxing jurisdictions in 2021-22. 

The ACT has a limited tax base for which it is compensated through the GST distributions. It cannot tax Commonwealth activity and does not have the bases available to other jurisdictions. Relative to its taxing capacity, it is the highest taxing jurisdiction in Australia, as assessed by the Commonwealth Grants Commission.

Taxation reform has failed miserably with severe social and economic consequences. The ACT government collects more in stamp duty now than it did in 2012, while property transactions have decreased. Municipal rates have more than tripled over the decade, growing at a compounding annual average rate of 12.1 per cent. Land tax (a tax on renters) has increased at 10 per cent a year. 

An increase in taxation has an inevitable impact on household spending and business investment. Unsurprisingly, both retail spending and business investment in the ACT have been suppressed relative to their long run rates.

Regressive policy choices

The Greens-Labor coalition’s three terms have been characterised by four major policy choices with regressive impacts. Three of those choices have been driven by the Greens, but actively accommodated by Labor, hence the order in which we identify the coalition partners.

1. Light Rail: The project was included in the 2012 Parliamentary Agreement to the extent of specifying a Public Private Partnership as the procurement method long before a business case was developed. The Auditor-General determined that the Cost Benefit Analysis for Stage 1 delivered a mere 49 cents for every dollar expended. The Stage 2A contract, for $577 million, was awarded without bothering to test the market or proceeding to tender. Hundreds of bus services were withdrawn reducing public transport choice particularly for the elderly and those unable to afford cars. According to the ABS, there has been virtually no increase in public transport patronage, with travel by tram merely substituting for bus travel but at a much higher unit cost.
2. Public Housing: Under an agreement with the federal government, more than 1000 units of public housing stock along the Light Rail route and the inner suburbs was sold off by the ACT government with proceeds directed to the light rail project. The stock lost has not been fully replaced nor has Housing ACT been fully compensated for the loss of its assets. Stock condition has deteriorated significantly and is among the worst in the country. There are currently fewer units of public housing in Canberra than there were when the Green/Labor coalition was formed 12 years ago
3. Land Supply: The Greens and Labor have massively cut land supply, in particular, for stand-alone sites, in order apparently to achieve rapid densification. However, the government has also, by strangling the supply of land for detached housing, achieved record revenues from homebuyers, resulting in larger mortgages and financial stress. The land supply agency’s profit margins have soared to an average of 70 per cent per block compared to 24 per cent when the coalition took office.
4. Public Hospitals: We have written extensively on this matter with data from a range of sources. Investment in hospital infrastructure has been massively scaled back and repeatedly deferred. There were beds closures in 2017-18, resulting in a bed shortage of 182 beds in 2021-22. There have been real cuts to recurrent funding, and overall, the ACT public health system has suffered the lowest growth in health funding in Australia. The operational performance of the public health system has, unsurprisingly, deteriorated from better than average to the worst in the country. Frontline staff are overworked, stressed and disengaged.

The above outcomes and policies and the general neglect of other social services have resulted in relatively poor outcomes over time and compared to other jurisdictions.

Despite the massive level of debt, key service infrastructure has not received the appropriate or necessary investment resulting in dilapidated schools, uninhabitable police stations, inadequate health facilities, unliveable public housing and potholed roads.

Waste and mismanagement

The waste and mismanagement of public funds, for example, the failed human resource system, unchecked spending on the digital records project, questionable spending on a failed project in the office of Public Trustee,”‘think garden” procurement in CIT and the tender for Campbell Primary School, are sadly well known and symptomatic examples of a deterioration in the culture of the public service.

Perhaps more worryingly the notion of ministerial accountability has been redefined whereby being ignorant of a failure has been repeatedly presented as an excuse. There have been no repercussions and accountability for the wasted hundreds of millions of public dollars.

Progressive government? Only in name

The government can claim credit for progressive positions on a number of social and environmental issues, for example, gay marriage, transgender rights, end-of-life choices, climate change and the vote on the Voice. While commendable, those positions are in large measure consistent with mainstream social and political thinking across Australia.

Notwithstanding the relatively higher average incomes in Canberra, there are significant levels of poverty and hardship in the ACT. The government has, however, regrettably and consistently failed to acknowledge or respond to the existence of material deprivation within the Canberra community, which we believe has been aggravated rather than ameliorated through government policies. 

“The degradation suffered by the ACT public health system over the past eight years is estimated to have added more than 2500 person years’ wait for health services.

There is clear evidence that its taxation and service delivery – policies relating to income redistribution in a social democracy – are regressive. There has been a substantial increase in the number and scope of flat taxes and levies that unarguably have a greater negative effect on low-to-moderate income families and residents. The value of concessions have also substantially reduced since 2012.

Median wait times within the public health system for planned surgery have increased by 39 per cent over the last two terms of the Greens/Labor government, with some patients waiting years for procedures that are accessible within weeks in the private system. The degradation suffered by the ACT public health system over the past eight years is estimated to have added more than 2500 person years’ wait for health services.

Aboriginal people have been incarcerated at an increasing rate. In 2013 the rate ratio of Aboriginal to non-Aboriginal incarceration in the ACT was below the national average at 14.4. In 2023, this had climbed to 22.9, the highest in the country. Aboriginal people also wait longer in emergency departments and for elective surgery.

A most worrying sign is the loss of trust in service delivery agencies and institutions. Aboriginal Canberrans are 1.6 times more likely not to wait, 2.2 times more likely to leave A&E or health facilities at their own risk, and 2.8 times more likely to discharge themselves against medical advice.

Thomas Jefferson famously said: “The government you elect is the government you deserve”. We wait with interest the verdict of the people of Canberra on the government we deserve.