Page 1717 - Week 06 - Tuesday, 3 May 2005

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Employment and the economic outlook

Mr Speaker, I turn now to the economy. This budget has been framed in the expectation of some increase in the rate of economic growth this year, and moderating growth in 2005-06 and 2006-07.

Growth in production in the ACT cannot match that at the national level, and this simply is a reflection of the fact that the national economy benefits far more from increasing global demand for Australian exports than does the territory. From small beginnings, exports from the territory are nevertheless growing.

Underlying demand in the ACT economy remains strong. Looking ahead, growth in demand in the ACT will continue to accelerate, while at the national level it is forecast to slow. While a slowdown in the national economy is less than ideal, it may make it easier for the ACT to attract the workers needed to meet the strong and increasing economic demand within the territory. Indeed, ACT employment has shown strong growth in recent months, up by almost four per cent between September 2004 and March 2005, an additional 6,800 employed since the government was re-elected.

Despite the strong growth, a shortage of labour remains an issue within the ACT economy. Unemployment, at 3.4 per cent, is the lowest on record and our rate of participation in the labour market, 73.5 per cent, is close to the highest on record. In the meantime, job vacancies are at a record high. The government is already addressing the issue of skills shortage, but clearly the ACT is not alone in experiencing this challenge and we look forward to participating in any national efforts to address the problem.

Consistent with the measures of strong demand and employment growth, the private business sector of the ACT is brimming with confidence. The key business surveys indicate that businesses are very confident about their prospects.

While the private sector of the ACT is performing well, the reality is that our economy remains heavily dependent on Australian government activity. Federal activity has been a strong contributor to the ACT economy in recent years and, while the Australian government has upwardly revised its forecast for growth in outlays in 2004-05, it is currently forecasting only modest growth in the outyears.

This budget has taken a balanced view of economic growth. The risks are essentially external to the territory and relate mainly to Australian government outlays and interest rate interests.

Commonwealth—state financial arrangements

Mr Speaker, it has been said in the past that the introduction of the GST would instil a degree of predictability in Australian government transfers, at least, in aggregate terms. The GST was anticipated as a growth tax that would afford the states and territories the capacity to absorb growing pressures on the delivery of basic community services. That was the basis upon which the state and territory governments signed the agreement to introduce the taxation regime in the first place.

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