Page 1364 - Week 05 - Tuesday, 5 April 2005

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Somewhat ominously, the Auditor-General also warns that the territory’s long-term financial position is expected to decline rapidly over the next few years, with the expected shortfall increasing by $658 million, from $931 million in 2004 to $1.589 million. The source of that information is the Auditor-General’s 2003 financial audits, report No. 10, page 20. In 2003-04 there was 60 cents in financial assets to cover each dollar of liabilities. But the situation will deteriorate to the point where, by 2007, it is expected that there will be only 34 cents in financial assets to cover each dollar of liability.

It is very evident that the territory is starting to head downhill. Other economic indicators are becoming matters of concern and the performance of the territory government is going to be a significant factor in the outlook for the ACT economy in the next couple of years. The revenue bonanza is likely to start to subside. The amount that could, and should, have been returned to business and individuals as tax cuts or modifications in land tax or rates has already been spent or committed.

A lot of revenue has been wasted on political self-indulgence such as human rights implementation, the community inclusion board, the social plan evaluation and union liaison officers on OH&S. Now, of course, we have a Small Business Commissioner to try to smooth over the damage that the ACT government is doing to business in the territory. So when the Treasurer suggests that he cannot consider tax cuts because all the money is needed for schools and hospitals, how do the rest of us know that it will not continue to be put into areas like human rights implementation, union liaison roles and a host of these other bright ideas that are foisted on the ACT taxpayer?

In spending other people’s money the government has also squandered the opportunity to use the windfall from the GST to cut taxes. There is a raft of taxes imposed by the territory government that were supposed to be either abolished or reviewed when the GST arrangements were settled. I suggest that the idea of a review saying, “We are not going to look at them or take any notice of them” is really unacceptable. I have agreed publicly that, in the letter of the law, we may have removed those taxes that we had a timetable to get rid of. But we certainly have not abided by the spirit of that agreement, and that is what is troubling in the recent debate that we have had in these past few weeks.

Many of the taxes in the stamp duty area are quite inefficient. They raise little revenue and they impose large compliance and collection costs. That is why they were listed for review. They were seen as impediments to the efficient running of business as this federal government, as did its predecessor in relation to competition matters, tried to make Australia a more competitive environment to encourage entrepreneurialism and business, which ultimately results in a healthy economy and strong employment.

It is for that reason—and it is not, as is constantly characterised by the Treasurer, some slavish right wing agreement or some such nonsense—that the federal Treasurer has been quite correct in asking the state and territory treasurers to meet their side of the bargain by reviewing and reducing state taxes in light of their windfall gains from GST. The Treasurer’s approach, although I do not think he prevails too often, is generally sound on a number of issues, but he is really off the money when he advances this

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