Legislative Assembly for the ACT: 1998 Week 3 Hansard (27 May) . . Page.. 626 ..
MR OSBORNE (11.59): I move:
That this Assembly:
(1) acknowledges the need for the Government to take urgent action to address the operating loss of the Territory which is still at unacceptably high levels; and
(2) urges the Government, in its forthcoming budget, to lay out a clear strategy to address the operating loss.
You will be pleased to know that today I will not be speaking about India, and neither will Mr Rugendyke. Mr Speaker, it may not be immediately apparent, but there are similarities between the birth of ACT finances and the Immaculate Conception. The Immaculate Conception is the Catholic Church doctrine which says that Mary, the mother of Jesus, was conceived without original sin. In 1989 the ACT Government was conceived without debt. Mr Speaker, when the ACT was given self-government the Commonwealth did not do us a lot of favours, but the debt-free birth was a big one. Debt is the great sin of many of the States to our south. In 1995, for example, servicing debt chewed up 32c in every locally generated dollar in Victoria. After years of enormous pain, Victoria is only slowly clawing its way back from a debt burden that all but crippled that State, but debt is still running at about 18 per cent of Victoria's gross state product.
The debt-free birth of the ACT, more than the virtue of local governments since 1989, is the key reason that the Territory enjoys its AAA credit rating. I should say, Mr Speaker, that, despite what governments would have us believe, the credit rating is not a measure of government performance beyond saying that successive ACT governments have not been reckless borrowers. The rating simply tells private investors what chance they have of recouping cash invested in a particular State or Territory. Their chances in the ACT are considered good because the Territory has a comparatively low level of debt and the credit assessors still believe the Territory has the implied backing of the Commonwealth, whether or not that is actually true. A better measure of government performance since 1989 is that successive governments have been able to hold the financial line in the face of rapidly reducing Commonwealth assistance. Since self-government the drop in Commonwealth financial assistance has been almost evenly matched by the rise in locally generated taxes and cuts in the cost of government. But, Mr Speaker, that is about it for the good news.
Commonwealth revenue is now about half what it was at self-government and our ability to continue to jack up charges is limited, lest we begin to drive residents and businesses across the border. No matter what the Government says about our economy, it is still almost entirely reliant on the Commonwealth, and what growth there is in the private sector is minor and is attached at the hip to government work. To put it in perspective, the Commonwealth makes up 40 per cent of the ACT's economy and is its engine room. By comparison, the ACT Government makes up about 10 per cent of the local economy. Unfortunately, if the Commonwealth decides to sneeze again in the near future the ACT will certainly catch a cold.