Page 2151 - Week 07 - Thursday, 16 May 2013
opportunities in this region in what has been broadly accepted as the Asian century. Nevertheless, ongoing global economic uncertainty continues to present some risks to the ACT’s economic and fiscal outlook.
While we have fared reasonably well in recent times, significant forces are buffeting our economy and driving structural change. Global forces are certainly negatively influencing consumer and business decisions to spend, invest and hire workers. Meanwhile, the high Australian dollar, lower commodity prices and corresponding constraints on federal government spending are certainly weighing on economic growth and, therefore, on the territory budget.
The higher Australia dollar impacts negatively here in the ACT on our small trade-exposed industries and certainly sectors that are linked to trade, such as transport and warehousing. Canberra’s retail and education sectors also face significant challenges as a result of the strength of the Australian dollar, as a high dollar means imports are certainly more cost competitive and there is a significant fiscal deterrent for international students when the high Australian dollar makes the cost of studying at Australian universities higher than in other comparative parts of the world.
Household consumption and investment decisions have also been influenced by this global economic uncertainty. As you look at the trend over the last four or five years, four out of those five years since the GFC household consumption have been below trend. Households are becoming more cautious and have certainly responded to this economic volatility by rebalancing their own balance sheets.
MADAM SPEAKER: Supplementary question, Ms Porter.
MS PORTER: Treasurer, how are the global economic conditions impacting the ACT’s fiscal position?
MR BARR: These economic conditions do flow through directly to the ACT’s budgetary position. Ongoing financial market volatility is evidenced in fluctuations in our investment portfolio returns. Whilst—I think we were discussing this prior to lunch—our portfolio returns in 2011-12 yielded fairly flat outcomes on average, 2012-13 is in fact likely to see double-digit returns. In terms of our financial investment portfolio exposure, the debt investments have benefited from falling global interest rates. However, ongoing consumer caution at a national level has led to lower GST receipts, and as such the commonwealth wrote down the GST for 2013-14 from 48¼ billion in 2012-13 to 47.7 billion in the budget the night before last. This results in a reduction in GST payments for the territory of around $49 million across the forward estimates.
MADAM SPEAKER: Supplementary question, Dr Bourke.
DR BOURKE: Treasurer, how is the ACT government supporting our economy to deal with these global economic conditions?
MR BARR: One of the most important things that the government can do is to seek to create greater certainty both in terms of our policy settings and our own revenue