Page 1192 - Week 04 - Thursday, 17 March 2005
I think most members would be aware of the focus that has been given by the Canberra Times in recent weeks to matters of economic management in the ACT. I was particularly taken by a front-page story headed “Horror budget warning”. I am not subscribing to that descriptor in terms of the economy being in a state of chaos or dramas being immediate. My point in raising this matter today is that the time is right to ensure that we take precautions to protect the interests of our territory in a more prudent fashion than I suggest has been happening in recent years.
I was particularly prompted to express these observations when I noted the Auditor-General’s financial audits report. These are not the words of opposition members, but that document speaks of the fact that the territory’s long-term financial position is expected to rapidly decline over the next few years, with the expected shortfall rising by some $658 million, 70.6 per cent, which, according to my advice, would take the overall shortfalls projected to about $1.589 million.
I know the view will be that members of the opposition are gloom and doom merchants and that our concerns and cautions may be dismissed, but I have the feeling that in 2007 the concerns that I am expressing at the present time about the way we have been operating, the expenditure pattern over the last few years and the apparent lack of anticipation that anything will change significantly, may be borne out and will be the subject of further debate.
I guess that beneath the surface that view has also got some currency certainly with the Treasurer—and I suspect he has persuaded his Chief Minister to recognise that the ACT economy is headed for tough times. There has been a property slowdown. There are certain signs that the Australian economy is softening, despite our 13 years of buoyant economic growth. I think that they are starting to sense that the concerns that the opposition has made known for some four years, well before I was elected to the Assembly—the warnings that have been provided by the opposition about profligate spending—have, in fact, now started to become much confirmed with what is going on.
There is little evidence that the ACT government has elected to drought-proof the ACT economy during the good times. It is a critical issue for the ACT as to whether or not the elected government is capable of sensibly managing our economy. I do not stand here today and suggest that the Treasurer of this territory is not a person with a deal of competence; that is not my observation. My observation is, however, that, notwithstanding the best advice that he or his department may offer to the government overall, the government cannot restrain itself from a policy of spend, spend and spend, and there is an underlying assumption from those who advocate that position that the revenue from the property boom will just keep happening.
It is also without much credibility for the government to argue that we now face tough times because of a small increase in interest rates and a fall in property-related revenue. Indeed, this government’s own budget analysis has incorporated an increase in interest rates and a reduction in property-related tax revenue into its estimates for 2005-06 and beyond. These issues have not just emerged and become a problem. They certainly were anticipated, at least by our treasury officials. The RBA cash rate was expected to rise to 5.5 per cent in each year and hold at that level through till 2007-08. In the ACT midyear review the interest rate forecast for 2004-05 is 5.5 per cent, which is unchanged from the