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Legislative Assembly for the ACT: 2002 Week 4 Hansard (11 April) . . Page.. 1017 ..

Capital works program

MR STEFANIAK: My question is to Mr Quinlan. In providing an answer to a question from Mrs Cross in relation to the ALP position on budget cuts, you said the following:

A year or so ago, when the government brought down its budget, it brought down a capital budget which was twice the size of the normal annual budget. It does not take much to work out that the territory's finances cannot digest that sort of level of increase in expenditure. That, of course, was reflected if you looked at the cash line in the budget. The unencumbered cash of the territory was running down at an alarming rate. We are still facing, in large part, that situation.

Can you confirm that it is the view of the government that the capital works program in the 2001-02 budget was too large? If so, can you further advise the Assembly what size capital works budget you consider the territory could have afforded this year?

MR QUINLAN: Taking into account last year's capital budget itself and other capital expenditures, off the top of my head, we are up in the area of $200 million. Looking at the numbers, we could probably digest about half of that in a normal year. That is what we would do if we wanted to be consistent and get an even flow of work-an even flow not just to manage our own budget but also to let businesses out there align themselves.

Unfortunately, if you have too many works for the wrong reasons or a rush of works, you will attract outside contractors who will come and knock off the work and then move away again, if that is possible. Local industry will of course miss out because, sooner or later, if you spend that sort of money, there has got to be an equal and opposite decrease.

If the capacity of the territory can sustain $100-odd million consistently and, unless there are some minor miracles in windfall gains, sooner or later you will have to take that back out of the capital flow. If you create an inconsistency by overspend, it will create a difficulty later. In answer to your question, the capital works budget would be about half what was implied in the last budget.

MR SPEAKER: Do you have a supplementary, Mr Stefaniak?

MR STEFANIAK: Thank you, Mr Speaker. Treasurer, will the government be aiming, in the budget for the 2002-2003 fiscal year, to reduce the capital works budget to the size that you indicated in your answer? What will be the impact on employment in the building industry? Has the government started work yet on determining what capital works projects in the pipeline will be cancelled or postponed?

MR QUINLAN: To answer the last question first: yes, we have started work on reviewing items in the capital works budget that have not commenced, as you would anyway. That is only common-sense budgeting, isn't it?

One of the difficulties I find in looking at my first budget is the time and the capacity to actually do any zero-based stuff. You guys on the other side of the house are complaining about the arbitrariness of a possible 2 per cent cut. When successive governments have needed to, they have had razor gangs or across-the-board cuts or whatever you like to call it, mainly because the complexity of state budgets at times just

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