Page 1408 - Week 04 - Wednesday, 24 March 2010
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accounting advisers to find the necessary savings. And let there be no mistake: we must find savings. This imperative is even more pressing now following the decision by the Grants Commission to recommend reducing GST funding for the ACT by $80 million a year.
We need to position our budget in the best possible way to return to a balanced budget as soon as possible while also being able to withstand the consequences of any spending cuts that may be made by the federal government. Some others have referred to this as the perfect storm. This has been said by others who have considered the ACT’s financial position. Are we facing the financial perfect storm? If we have harsh reductions in spending in the ACT budget plus reductions in the federal budget this year, what will be the consequence? The Canberra Business Council, in their presentation to the estimates committee, said this last year, and I remind members:
When those two occur at the same time—
that is, federal cuts and cuts in the ACT—
the pain for the ACT is going to be significantly compounded. The worst case scenario is a perfect storm where you have budgets at both levels taking drastic measures to return the budgets to balance or surplus and that is likely to have a substantially and disproportionately negative impact on business and employment in the ACT.
Do nothing and people will suffer. The government have done nothing and the potential for great suffering is there. The situation we now face is that, following the failure of the Treasurer to provide substantive spending cuts in 2009, we now have to consider even more harsh spending cuts to protect the ACT into the future.
Let us talk about that future. We need to talk about the recent panic from the Treasurer. We saw the recommendation from the Grants Commission to cut the ACT’s revenue from GST by more than $80 million a year, and what happened? Ms Gallagher, who should have been well aware that this may have happened—all the signs were there; we saw the draft report—did not seem to bother to argue the ACT’s case with the commission, and we are now paying the price. We had panic and it resulted in a freeze on the recruitment of non-essential public servants. We see now an attempt to renegotiate the Greens-Labor parliamentary agreement. We see a ceiling on wage claims for public servants. This is simply economic policy on the run.
Ms Gallagher: It is still more than you ever paid them.
MR SMYTH: The minister interjects that it is more than we ever did. But we were the government that had to make up for your last mess—the $344 million operating loss that was left to the people of the ACT and, indeed, compounded by the cuts that the Howard government put in place. We spent six budgets fixing up your last mess. I am sure that when we get to office we may well be doing the same.
At the same time, the minister needs to protect core services. The issue of course is to define core services. We have seen the advice to departments and agencies on 5 March 2010 about essential services. But what it does is leave whole areas of
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