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Legislative Assembly for the ACT: 1996 Week 11 Hansard (24 September) . . Page.. 3301 ..

MRS CARNELL (continuing):

We have all learnt the painful lesson that this city and its economy have been too reliant upon the Commonwealth to generate growth and employment. In the past few months we have been forced to reassess fundamentally our priorities to take account of this changed political and economic environment, but we have done this in a financially responsible way. This budget is the product of a government that is determined to see our city finally realise its potential as a great place in which to live, to bring up a family, and to do business.

The ACT is experiencing its worst economic downturn for more than a decade. Uncertainty surrounding the Federal election and the Commonwealth's decision to reduce the size and expenditure of its agencies in Canberra have flowed through to reduced investment and consumption in 1995-96. Put simply, the confidence that many Canberrans had in their city and the confidence that others have had in our future has been dramatically shaken. Low economic growth resulted in a shortfall of more than $20m in taxes and charges collected in 1995-96. While the extent of the impact of Commonwealth cutbacks upon the ACT economy is far from clear, it is estimated that this year alone 3,500 jobs will be lost in the Australian public sector. These across-the-board reductions will affect Canberra more than any other city because the Commonwealth is by far our largest employer.

Highlighting the need for strategies to generate employment growth, the ACT's unemployment rate reached 8.9 per cent last month. This is the highest unemployment rate on record in the ACT and the first time in more than a decade that the rate in Canberra has exceeded the national average. After strong employment growth in the first eight months of this Government's term, when more than 6,800 new full- and part-time jobs were created, total employment in the ACT has been falling since speculation about a looming Federal election began to have a dampening effect on the ACT economy. In summary, the major issue facing this Government and the community is meeting the challenge posed by rising unemployment and low growth.

The task of framing this budget has not been made easier by further reductions in Commonwealth funding this year. Total general purpose funding was reduced by $13m, to more than 3 per cent below that received in 1995-96. The ACT has also been required to contribute a further $10.4m as its share of payments by all States and Territories towards reducing the record deficit that was the legacy of the former Keating Labor Government. For the first time since self-government, the Commonwealth decided not to grant the ACT any additional special revenue assistance. It is worth noting, however, that although transitional funding is due to end in 1997-98 the new Federal Government has agreed to have the Commonwealth Grants Commission consider extending this beyond its original eight-year timetable.

Reduced Federal funding, large scale redundancies in the Australian Public Service, and reductions in revenue in the ACT due to lower levels of economic activity have all caused this Government to reassess fundamentally its financial relationship with the Commonwealth. In this context, I have already approached the Prime Minister and sought his support for the formation of a joint task force to examine the payment of ACT taxes and charges by Commonwealth agencies. Put simply, the Commonwealth is not paying its way in Canberra and we can no longer afford to give it a free ride.

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