Page 108 - Week 01 - Tuesday, 9 December 2008
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We worked hard and planned well to achieve this. Going forward, we will underpin our budget policy with a focus on the sustainability of high quality services and fiscal discipline. Our cash position remains very strong. The past discipline we demonstrated in achieving budget surpluses, and banking those gains, means our capital program is assured. Our $1.4 billion infrastructure program announced in this year’s budget will continue, largely financed by cash holdings. I know Mr Seselja will be very interested in that considering the comments made earlier.
We can continue to invest in projects to stimulate the economy. We will deliver on high quality infrastructure for the people of Canberra. We will continue to make this a great and liveable city that will attract families and business. Our investment in education and skills will continue to support our community and our economy. Our efforts on housing affordability are returning results.
In times such as these, it is natural for people to worry about their own security. The people of Canberra can be assured that their government is taking action where it can and that the fundamentals of our economy remain strong. We can and we will build on that strength to provide more certainty and confidence for the people and businesses of the ACT.
There are, of course, some things that we as the ACT cannot control. We will be affected by rapid changes in global share markets and problems with credit markets as they impact on the national economy and trickle down to the ACT. We will be affected by decreases in revenue and we will be affected by the growing demand for government services. Our budget was built to be able to absorb unknown fiscal shocks. However, the magnitude of the shock that we are witnessing, and that is still unfolding, is likely to be larger than the present capacity.
There will be changes to the budget estimates from the last update to the community that was published in September with the pre-election update. The extent of the impact of these external factors was not foreseen even as recently as September. The reality is that they will have a negative effect on our budget. A decline in economic activity, particularly in the housing market, will affect our conveyancing revenue. A decline in the financial markets will impact on our investment returns. We will also be impacted by reduced GST payments.
Further reductions in interest rates will impact on the earnings on our cash balances. The outlook is, therefore, a budget going into deficit in the short term. Further details of this will be outlined in the mid-year review, which I intend to release on 23 December. The government will respond to this situation and will develop appropriate policy responses. This work will be done through the budget process in consultation with the community and will look at innovative and flexible responses. This is the government that listens, that delivers on its commitments and that invests in our community. We are determined to do whatever we can to strengthen our local system to withstand any future shocks. We will work with businesses, industry and the wider community of the ACT to promote and enhance economic stability and capacity.
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