Page 2613 - Week 08 - Thursday, 24 August 2006
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The point about the successful tobacco excise challenge to the New South Wales government in 1997 is that it highlighted the need for fundamental reform of the tax system, notably to the states and territories’ indirect tax base. Before the introduction of the GST there was an argument that the state and territory spending responsibilities were not matched by their revenue-raising powers. Having received $3.8 billion in GST receipts since it was introduced in mid-2000, which was $80 million above expectations, a new tax on water amounts, we would say, to another attempt by the ACT government to double-dip here. Therein lies the problem.
The water fee, added to another water charge, could well amount to a tax on a tax. It is not linked to any regulatory process and amounts to a very big increase—an increase of 107 per cent. The relatively ad hoc nature of the water abstraction licence fees in the territory, unrelated to the costs of processing and enforcing licences, was noted by the National Competition Council in its 2004 assessment. Accordingly, there could be big problems there for the government. I just bring that to their attention.
Proposed expenditure agreed to.
Proposed expenditure—Part 1.5—Department of Treasury, $49,686,000 (net cost of outputs) and $37,182,000 (payments on behalf of the territory), totalling $86,868,000.
MR MULCAHY (Molonglo) (11.34): In relation to the Department of Treasury, as you have pointed out, Mr Deputy Speaker, the net cost of outputs is $49.6 million, payments on behalf of the territory are $37.1 million, and the total is $87.8 million. Somebody once said to me, “Never be too hard on Treasury because you just never know your luck. You might get into government and have to rely on those people to support you.” I suppose I am therefore somewhat tempered with my views on Treasury. But I really believe that, at the end of the day, whilst cabinet make the political decisions as to what they will include or not include within the budget, it is the advice of Treasury, which we do not necessarily know about, that has to be considered in the context of the position in which the territory has found itself over the years.
I know specialists can put spin on numbers and try and paint a rosy picture along the way, but the fact of the matter is that the people of Canberra are now paying a horrific price for years of spending in excess of the capacity of the territory’s income or earning ability. The rationale for that has been that people have high expectations. People may well have high expectations and may want everything known to mankind, but it is the task of the territory government to manage those resources within the revenues available to them and within a tax regime that is competitive and comparable to other states and the other territory.
I do not believe we have discharged our affairs in this territory particularly well. We have hung onto a form of account presentation until the point where it became really a scream from all parties to do something about it, including the credit rating agency people, so we eventually changed the system. I have heard the Chief Minister and Treasurer say, “Oh well, it was good enough for the Liberals.” A lot of things have changed from the way in which public expenditure was tackled in decades gone by. Of course things move on.
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