Page 1366 - Week 05 - Tuesday, 5 April 2005

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In many ways it is perceived outside this Assembly as the Treasurer engaging in some sort of poker game with the commonwealth. It is a predictable cycle. We have seen it for years in this country. The state and territory governments scream that they have been dudded. I have worked in another state government, a very prosperous state, and we were part of the same theatre. It is always worth having a go at the commonwealth because they are the richest player on the block. But the truth of the matter is that there comes a time when each state government has to manage its own affairs and be accountable to its own people. The message to the ACT government ought to be that they now have to look very critically at the decisions they are making.

We were told in the Canberra Times on 24 March that getting rid of these taxes or reviewing them would cripple the territory’s economy, but one has to wonder whether it is not a case of crying wolf. I certainly hold the view that the ACT does not have the flexibility it had in the past, but it is of its own doing. They are now coming, cap in hand, saying, “Well, we have been on a three-year spending spree. We have thrown the cash around. Now times are going to be tough. Bad luck, people of Canberra and business houses of Canberra. You’ll just have to wear the tax levels you’ve got.”

On the figures that have been made public and that have been provided to the Treasurer and to me, last year the ACT received $658 million in GST revenue. That was $39 million more than the guaranteed minimum. In 2004-05 the ACT will be better off by $53.5 million, in 2005-06 by $54 million, in 2006-07 by $66.7 million and in 2007-08 by $84.9 million. If the ACT government were true to the spirit of the 1999 agreement, it would certainly be cutting territory taxes to the value of something approximating the windfall gains, rather than simply pocketing those taxes. There are many more benefits in removing taxes than the dollar value. Eliminating pernicious and unnecessary nuisance taxes makes the tax system more efficient and contributes markedly to economic growth. The cost to business of these taxes is considerably more than the revenue the government may receive because of the administration involved in those organisations.

It is interesting that Access Economics has estimated that the removal of the various taxes that have been listed could add more than $3 billion to Australia’s gross domestic product, from which we all benefit. But eliminating these taxes is unlikely to happen in the ACT because the government has not been able to control its spending. The scope for cutting taxes has been blown, and I am referring particularly to the wage increases that the government has so generously handed to its public sector. Of concern, as it emerged in the hearings on this bill, was how it was done. I said this morning, and it is worth stating again, that it was quite amazing to hear Minister Gallagher admit that no productivity gains were sought by the government in granting wage increases to the ACT Public Service amounting to some $47.2 million.

The pay increases were therefore an additional cost for which no gain has been achieved in terms of more or better services to the community. What was evident in those hearings was that the minister really fails to understand that productivity gains are the means by which we are all made better off. It is about working smarter, not necessarily harder. It is about innovation. There is nothing new about this. This is what we have been arguing for years. I suspect the Treasurer knows that because he is saddled with the problem of trying to balance the books after these generous decisions are made. You would think

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