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Legislative Assembly for the ACT: 2003 Week 1 Hansard (18 February) . . Page.. 100 ..

MR SMYTH (continuing):

If you look at the documents that are provided, you will find that taxes, fees and fines have gone up by $24 million. That includes an increase in stamp duties of $12 million and in payroll tax of $7 million. Interest received rose $23 million, and lease sales were up $15 million. Non-ACT government user charges rose $7 million, and the Commonwealth grants rose $7 million as well. So, in part, the outcome is a result of the government being a high taxing government.

Some expense items were also increased. Grants and purchased services were $3 million. There was a loss on superannuation related equity investments of $25 million, and there were some offsetting reductions in spending on legal and administrative matters.

In summary, it would appear that, despite continuing difficulties in global equity markets, there has been quite strong growth in revenues, balanced by some increases in expenses over the first six months of the financial year, leaving the general government sector at the end of December 2002 with a surplus of $75 million.

What is the outlook for the second half of the year in the revised figures? We need to understand what has happened to this point and to question some of the government's assumptions about outcomes over the next six months. We need to look at the key items of revenue for the general government sector.

Taxes, fees and fines in the first half of the year increased by nearly $24 million. Why is the government then assuming that there will only be a further $8 million growth in revenue? Interest increased by $23 million in the first half of the year. Why is the government assuming that there will actually be a reduction in the interest earned of $19 million over the next six months? Other revenues increased by $10 million. Why is the government assuming a reduction of $45 million over the full year?

As for expense items, the only expense item that is assumed to change is "other expenses", which are projected to increase by more than $40 million. What are these expenses that will total $40 million over the course of the rest of this year? Are these reasonable assumptions to make?

At the same time, I find it surprising that over the next six months:

the government assumes a slowing in the rate of increase of tax revenue collected, despite the experience of the first six months;

the government assumes a reduction in interest received, after an increase of over 80 per cent in the first six months; and

the government assumes a reduction in other revenue of $45 million, after an increase of $10 million to 31 December 2002.

It would be very nice to get a brief on the assumptions underlying these estimates, and I will ask the Treasurer's office if they can explain how they have come to these conclusions.

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