Page 3420 - Week 08 - Tuesday, 17 August 2010

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“Yes, I remember that.” We all lived through it. There was the impact on housing prices, the impact on employment or unemployment levels, and the fact that it took a number of years to recover from that. Whilst the rest of the country boomed, the ACT was in a recession against the tide.

This is something that the Labor government here is very concerned about. When the Chief Minister, I and other ministers walk the corridors of federal parliament, we never let a meeting with a federal minister go without mentioning the important role they play in the economy here and that, when they are making these decisions around the table, they need to be conscious of the fact that our community requires them to maintain their significant role here in our economy and that any cut that might seem painless to a federal government is not necessarily painless to a small community like the ACT.

When you look at the impact of these cuts, what do you see? I note that already there is a sort of hesitation in decisions. There is always a little hesitation in decisions being made by business in the lead-up to a federal election in a town like Canberra, but I certainly have picked up on that in the last couple of months, with people watching and waiting before they make business decisions. Because of the commentary and the magnitude of the cuts being proposed by the coalition, we are already seeing businesses hold off on decisions and take a step back. To some extent, we probably will see that consumer confidence will decline as well. That is relevant to people who lived through the cuts of 1996.

Consumers, business and homeowners did respond very well to the commonwealth stimulus measures to support our local economy during the economic slowdown. The prospect of those constraints on commonwealth spending does not bode well for consumers or for business to make those employment decisions or even commit to any further investment plans.

The potential devastating flow-on effects from cuts in commonwealth government spending and public service jobs in the ACT will not only be an impediment to the local economy’s current growth momentum, but also lead to lower tax revenues, impacting on service delivery in our own public service. That is of very significant concern to the ACT.

Again, it is not only our taxation lines themselves but the fact that 45 per cent of revenue coming to the government is generated through grants and assistance from the commonwealth government. If we see any declines in those, that will impact on our bottom line, and indeed on all of our own revenue lines. The top four revenue lines—payroll tax, conveyancing, rates and land tax—will all be impacted upon if these cuts go through. It is going to have an impact not only on the individual sectors, but on our own budget. We have identified this as a challenge as we move ahead in identifying and delivering on our budget plan.

We do not believe that we can afford a severe recession like the one that occurred in 1996, when the public service was reduced by 32,000 jobs nationally. The ACT experienced a 2.3 per cent decline in the employment level, and a fairly significant fall, which we have not seen for many years, in average house prices. The ACT

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