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Legislative Assembly for the ACT: 1996 Week 9 Hansard (27 August) . . Page.. 2641 ..

MRS CARNELL (Chief Minister and Treasurer): Mr Speaker, I seek leave of the Assembly to make a ministerial statement on the implications for the ACT of the 1996-97 Federal budget.

Leave granted.

MRS CARNELL: Mr Speaker, the 1996-97 Federal budget contained no major surprises. It was expected to be extremely tough, and it was. It was clearly the toughest Federal budget since the ACT was granted self-government in 1989. Given that Federal Government spending is the single greatest influence on the ACT economy, it makes preparation of this year's ACT budget more difficult than any since self-government.

From a national perspective, Mr Speaker, the 1996-97 budget has been structured to show an underlying deficit of $5.6 billion, reducing to $1.5 billion in 1997-98. This is a major improvement from the $8 billion black hole left by Keating, Beazley, Willis and co. Mr Speaker, the Federal budget is premised on national forecasts that indicate that economic growth will continue to be strong, but slightly lower than in previous years; inflation will be firmly controlled, falling from 4.2 per cent in 1995-96 to only 2 per cent in 1996-97; investment is expected to remain strong, with business investment rising from 9.7 per cent in 1995-96 to a steady 14 per cent in 1996-97; the housing industry is not expected to recover until after 1996-97; employment growth will moderate, from 2.6 per cent in 1995-96 to only 1.5 per cent in 1996-97; and unemployment will not dramatically improve, remaining at 8.5 per cent.

Mr Speaker, from an ACT perspective, we have been well aware for some time that the spending cuts required to produce the dramatic reduction in the Federal deficit would have a significant impact on the ACT economy. The Federal Government certainly has not done us any favours in this budget; but it must be said that, after six months of rampant speculation about the scale and likely impact of public sector cuts, it is a relief to have the Federal budget behind us. We can now get on with the job of rebuilding confidence in the future of our city; that is, if those people opposite would be a tiny bit positive occasionally as well.

As Treasurer, I am well aware that our own ACT budget will play an important role in that confidence-building process. I can assure members that the Government has been mindful of the changing economic circumstances in the ACT over the past eight months in framing our budget, which is due to be brought down next month. The combination of cuts in Federal grants to the ACT, Federal public sector cutbacks and reductions in revenue due to lower levels of economic activity has required a reassessment of the Government's budget strategy. The Federal budget has only confirmed the need to give higher priority to commitments we have made to promote private sector growth, to maximise the benefits of tourism and to look at our own resources to manage a dramatically changed outlook.

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