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Legislative Assembly for the ACT: 2001 Week 5 Hansard (1 May) . . Page.. 1303 ..

MR HUMPHRIES (continuing):

means addressing the major source of crime: the drug problem. This budget will see more resources for treatment and rehabilitation.

This budget also recognises the economic uncertainty that exists nationally and internationally. We understand the need to keep the ACT economy moving forward in order to provide both job growth and greater job security. That is why we today announced the territory's largest new capital works program since self-government began. This program will translate directly into jobs and increased economic activity. The value of new works committed in this budget is more than $214 million. Total capital works expenditure in 2001-02 will be in excess of $140 million.

Economic outlook

During 1999-2000 the ACT experienced unprecedented growth. This growth spurt was the strongest of any state or territory. Like any period of exceptional growth, it was not sustainable in the longer term. Not surprisingly, the ACT economy in 2000-01 has experienced a slower, more sustainable rate of growth. This lower growth rate reflects movements in the national economy over the past year. In particular, last year's employment growth of almost 5 per cent was clearly unsustainable.

This year's forecast is a more modest 2.4 per cent. As a consequence of this slower growth, we predict that the ACT will experience a decrease in gross state product from 4.9 per cent in 1999-2000 to 4.25 per cent in 2000-01. Growth at this level is expected to continue into 2001-02 and beyond, with 4.6 per cent forecast for 2001-02 and an average of 4.4 per cent for the subsequent three years. But we fully expect ACT growth rates to be higher than the national average.

Changes in state final demand are somewhat starker, declining from an exceptionally high 12 per cent in 1999-2000 to minus 1 per cent in this financial year. Reduced Commonwealth spending in the ACT has made a significant contribution to lower demand levels. Growth of 3 per cent is forecast for 2001-02 and an average of 2.7 per cent a year for the subsequent three years.

The government remains confident that the ACT will continue to perform above the national average as we still enjoy the lowest level of unemployment and have the highest work participation rate of any state or territory in Australia. It is also important to recognise that, while the territory is still affected by movements in Commonwealth government expenditure, this government will continue to strive for a diversified economy and growth in the private sector.

There are sound reasons to support reasonable growth forecasts in the ACT: Canberra is not a large player in the international market, so a downturn in the international trading environment will not have the same effect on the territory as on the rest of the nation. Business confidence remains positive, and the expected growth in jobs will translate into solid income growth and increased spending power for wage and salary earners in this community. Although business profitability has decreased slightly, it has come down from a very high base and is currently stable. Business surveys indicate a return to stronger growth levels as the national economy rebounds from the slowdown it is currently experiencing. It is, however, unrealistic to expect the growth to be as high as experienced in 1999-2000.

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