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Legislative Assembly for the ACT: 2002 Week 7 Hansard (4 June) . . Page.. 1809 ..

MR HUMPHRIES (continuing):

The discrepancy in this arrangement is already evident for the coming financial year. The inflation rate between the December quarters of 2000 and 2001 was, apparently, 2.9 per cent and that is the basis on which there is going to be a rates increase of 2.9 per cent for the coming financial year-not, as the Canberra Times reported this morning, 29 per cent. Unless the government is going to move an amendment, it will be 2.9 per cent. But the federal treasury estimates that the inflation rate for 2002-03, the period in which these rates are to be collected, will be only 2.75 per cent. The difference in real dollars is about $166,000.

I would suggest that, with a budget of $2 billion, $166,000 is nothing and should be of little concern, but that is in a year for which we are expecting or projecting a relatively small variation in inflation between two given periods. In other years, the variation between inflation rates in one year and the next could be very substantial. Indeed, last financial year there was a notional inflation rate of about 6 per cent, as I recall, compared to a previous year of about 2 per cent. That was, of course, attributable to the advent of the GST. We are assuming that we are going to have a very stable period with low rates of inflation. I think that that is a mistake, particularly given that things like interest rates are projected to be rising in the very near future.

Mr Speaker, I think that it is a serious mistake to break the nexus between the amount of money you have to raise from the community and the amount of money you have to spend on behalf of the community. The government should be matching one with the other. There is an element of showmanship, of window dressing, in this exercise, of the government saying, "We are doing something to deal with the problem of rates rises in the ACT community." The fact is that they are not. The order of increase is likely, in most years, to be about what it might have been previously calculated. There is not likely to be a major difference, on average, in many years. But those years when the inflation rate does fluctuate fairly wildly will be the years when the government will know about it. That will be when the government will be having to cut back other services elsewhere because it has not raised enough in the rates to cover the things that rates money is presently used to fund, and that would be a mistake.

As I said, there is an element of showmanship in this regard. I think the Treasurer said in introducing this proposal that some ratepayers would get a reduction of $100 a year in their rates. He denies having said that, so I will not say to him that he did say it. I seem to recall that that is what was being touted somewhere in the media in reports about how this system would result in a reduction in rates for some people. It follows, if he wants to make that assertion, that there has to be an increase for somebody else of $102.90 to reflect the fact that there is going to be an overall increase in the tax rate of 2.9 per cent.

I also note that when the Labor opposition produced its costings of its election promises on 15 October last year it claimed that its rates policy would be revenue neutral. Indeed, it projected that there would be a reduction of $750,000 a year for rates rebates. I am not sure how that marries with an increase this year projected in the rates. It seems to me to be inconsistent. Perhaps the Treasurer would care to explain how the promise to be revenue neutral is consistent with an increase of 2.9 per cent. I simply raise that point for the Treasurer to address when he rises to close this debate.

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