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My take on the ACT Budget

By Sebastian Fernandez - 3 June 2014 52

act-budget

Andrew Barr is a gamer.

It’s well known that at the end of the world Sim City championships, which are held every 4 years, that the title holder’s main prize is to run a pretend city. If you win the World Sim City Championship you get to take on the role of Treasurer for the ACT.

Lets face it, Canberra is like Sim City.

It must be so much fun to sit there plotting where your next residential or commercial zone will be. Do I build a highway to the neighbouring city or should I construct a monument ?  What will the Sims think if I cut back police presence ?

Do I put on an earthquake, or, and here’s an idea, how about I build a train line.

Capital Metro doesn’t crack much of a mention in todays ACT budget.

So much of it is about insulating this town against the cuts from those hardliners in the federal coalition.

So there’s a lot of money being spent on infrastructure. We spent $2 billion on capital works in this city in the last four years. Over the forward estimates four year period, this little Government of ours is going to spend $2.5 billion on an infrastructure program, which includes Capital Metro.

How will we pay for it ?

We’re going to borrow hundreds of million and we’re  going sell stuff…lots of stuff.

ACTTAB, some surplus land, Govt offices like Callum Offices and Macarthur House and streetlights. Really ? Streetlights ?

Not sure how you go about selling street lights.  I think you do it on ebay.

This city is going be squeezed by the feds. Revenue from a number of direct and indirect sources are going to face a downturn.  Barr and Gallagher argue that it’s up to us to create stimulus and there’s nothing more stimulating than constructing a train set.

So the bottom line then. $332 million in the red for 2014/15. $117 million in the red for 2015/16 and a balanced budget in 2016/17.

Andrew Barr conceded in the press conference today that he’s gambling on a much more Canberra friendly federal budget next time around.

I understand the need to stimulate but I don’t know that I’d be borrowing so much at this time, but I can see why he’s so good at Sim City.

What do you think ?

What’s Your opinion?


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52 Responses to
My take on the ACT Budget
1
HiddenDragon 6:33 pm
03 Jun 14
#

“Andrew Barr conceded in the press conference today that he’s gambling on a much more Canberra friendly federal budget next time around.”

If that’s what he said, he gets points for honesty, but it makes the borrowing of large sums for infrastructure (some of it of debateable value) all the more worrying, particularly noting:

“The ACT has a number of revenue raising disadvantages in comparison with other jurisdictions, as a significant proportion of the Territory’s economic activity is generated by Commonwealth Government expenditure within the Territory. Commonwealth employment, which drives much of the Territory’s expenditure, is exempt from payroll tax.

The Territory has a moderate private employment base in the education and small scale manufacturing sectors, and wholesale trade. Employment in agricultural and mining industries, important contributors to the diversity and growth in other jurisdictions’ payroll tax bases, is small in the ACT.

While the ACT is compensated for these limitations through the Commonwealth Grants Commission’s assessment, it nevertheless has comparatively less capacity and flexibility to raise own source revenue than other jurisdictions.” [ACT 2014-15 Budget Paper No. 3 – page 224]

The “comparatively less capacity and flexibility to raise own source revenue than other jurisdictions” is going to become a very serious problem if, rather than more Canberra-friendly federal budgets we see, for instance, more jobs disappearing from Canberra due to the federalism review. It would not be difficult to imagine State Governments responding to the “$80bn cuts to federal health and education funding” by demanding much less accountability to Canberra for their activities in those (and quite possibly, other) areas – which would mean somewhat fewer officials in the relevant federal departments.

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2
wildturkeycanoe 7:24 pm
03 Jun 14
#

If spending twice as much on a prison as on hospitals seems like good value for money, I just don’t know how to respond to this. Who is more entitled?
Even more ridiculous, spending $55.8 million on public housing and then selling off public housing…WTF [Wild Turkey Frowns]? Have the government totally lost the plot?

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3
JessP 7:43 pm
03 Jun 14
#

Capital Metro = big mistake.

We face a down turn, we know that.
We know it may/will go on for a number of years.
So we decide to build a infrastructure project that 90% of canberra can’t use (hello Tuggeranong, hows Capital Metro working for you?) for a lazy $300+ million.

Idiots.

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4
dungfungus 7:50 pm
03 Jun 14
#

Barr sounds just like Wayne Swan and his empty promises about a “modest” budget surplus somewhere in the future.
Does anyone know who is exempt from rates in the ACT? Does the Federal Govt pay rates on any properties they own (that they haven’t already sold off) and what about the embassies and high commissions?
Clubs? Churches? Military?

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5
Pandy 9:07 pm
03 Jun 14
#

The Canberra Times says that $21 million will be spent on the Gungahlin tram line (heh heh). That is a lot of money just to spruik the benefits of monorails.

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6
rommeldog56 9:51 pm
03 Jun 14
#

JessP said :

Capital Metro = big mistake.

We face a down turn, we know that.
We know it may/will go on for a number of years.
So we decide to build a infrastructure project that 90% of canberra can’t use (hello Tuggeranong, hows Capital Metro working for you?) for a lazy $300+ million.

Idiots.

The train set will cost at least M$627 I believe – not M$300+. But, your point is 100% correct. With expected cost blowouts and ACT Governments history of those in their infrastructure projects, real cost will probably be at least M$800, I reckon. Also, it will never get across the Lake to Tuggers. Anyone who believes that spin is delusional.

“Idiots” ? Well said JessP !!!!

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7
dungfungus 10:29 pm
03 Jun 14
#

The government is gambling a lot with the path it has chosen.
If everything falls in a heap it would be the Federal government that would have to bail us out.
While those who would agree with the Chief Minister’s mantra that it is Tony Abbott’s cutbacks that are creating the debt decision for us could see that as deliciously poetic, what would be the consequences if the Feds. actually had to bail us out?
There have been plenty of cases where states have sacked local governments and then sent in an administrator to clean up the mess and I am wondering what would be the situation between the Feds. and the Territories if the same thing happened.
The administrator I am referring to is not the same type of administrator that occupies that position on Christmas Island in case you are thinking ahead.

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8
dungfungus 10:33 pm
03 Jun 14
#

Pandy said :

The Canberra Times says that $21 million will be spent on the Gungahlin tram line (heh heh). That is a lot of money just to spruik the benefits of monorails.

That money will only get it to “investment stage”. The implementation costs will then determined by the tender system and the tram industry is notorious for price fixing as I have referred to previously.
I wonder what the parameters are for the probity checking of the tenderers?

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9
gooterz 11:58 pm
03 Jun 14
#

The moneys better spent digging for gold around Canberra. Its bound to make more profit than a trolley car.

These jokers know they almost lost the last election they know for sure they’re gone next time.
two budget losses then a even budget = Many losses in a row and a bad budget position for an incoming liberal government. Mirror of what happened federally the last few years.

If they had any sense they wouldn’t have sold so much of the free land at the north end of Canberra instead this would be useable farmland. (All of Canberra used to be a sheep station) Using the limited green land for housing is just a joke and is going to make Canberra a much hotter place.

There are many houses and many many units coming onto the market, but bugger all in between. The artificial housing prices make Canberra an expensive unproductive liability. If we build the capital metro Canberra will be a ghost town in 20 years.

If we ditched the light rail and spent the $600 million on a casino we’d literally be rolling in extra tourist money.

One of the biggest issues with Canberra is that if all the government agencies leave the ACT budget shrinks and has to increase rent. Increase rent then decreases the number of staff that agencies can employ which makes Canberra shrink again.

The governments way of addressing this issue: build more top of the market properties. They literally want to run the lower end of town out of town.

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10
Sebastian Fernandez 5:28 am
04 Jun 14
#

dungfungus said :

Barr sounds just like Wayne Swan and his empty promises about a “modest” budget surplus somewhere in the future.
Does anyone know who is exempt from rates in the ACT? Does the Federal Govt pay rates on any properties they own (that they haven’t already sold off) and what about the embassies and high commissions?
Clubs? Churches? Military?

When do you believe we’ll be back in surplus ? Is there any real chance we can balance the budget within a few years ?

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11
Sebastian Fernandez 5:30 am
04 Jun 14
#

JessP said :

Capital Metro = big mistake.

We face a down turn, we know that.
We know it may/will go on for a number of years.
So we decide to build a infrastructure project that 90% of canberra can’t use (hello Tuggeranong, hows Capital Metro working for you?) for a lazy $300+ million.

Idiots.

When you put it like that, it makes no sense at all.

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12
Mysteryman 7:39 am
04 Jun 14
#

Let’s all enjoy our increased car rego and stamp duty. And be mindful of the extra parking inspectors that will be out and about to help make up for the budget shortfall. As well as the increased parking and traffic fine costs. Too bad these things won’t make a dent in the insanely large budget deficit.

Barr has put together a string of lousy budgets. This is just the latest. We shouldn’t be surprised.

I love how he points out that over 60s will be exempt from stamp duty. Over 60s can’t get loans to buy houses unless they’re already cashed up in the first place. Why should they be exempt? It’s a token gesture with no actual benefit to anyone.

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13
pajs 9:37 am
04 Jun 14
#

Mysteryman said :

I love how he points out that over 60s will be exempt from stamp duty. Over 60s can’t get loans to buy houses unless they’re already cashed up in the first place. Why should they be exempt? It’s a token gesture with no actual benefit to anyone.

The idea here is to encourage the elderly to downsize by selling their existing home (not taking out home loans) and using that money to buy a smaller or different home. The stamp duty exemption saves them money on the purchase of the downsized property, encouraging them to sell their original place. Seems like a sensible idea to me, which should encourage some more turnover in the market.

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14
dungfungus 10:37 am
04 Jun 14
#

pajs said :

Mysteryman said :

I love how he points out that over 60s will be exempt from stamp duty. Over 60s can’t get loans to buy houses unless they’re already cashed up in the first place. Why should they be exempt? It’s a token gesture with no actual benefit to anyone.

The idea here is to encourage the elderly to downsize by selling their existing home (not taking out home loans) and using that money to buy a smaller or different home. The stamp duty exemption saves them money on the purchase of the downsized property, encouraging them to sell their original place. Seems like a sensible idea to me, which should encourage some more turnover in the market.

Why is it that everyone except the elderly think this is a good idea?
I am happy spending my retirement in the family home with garden and space, accessing aged homecare services when I need it. I don’t want to move to an apartment or a retirement home situation. When my friends and relatives come to Canberra I want them to stay with me. None of us can afford to stay in hotels. Moving to a smaller home means moving to a shoebox in an outer suburb where babyboomers are despised. Next time ask the people involved what they want Mr Barr.

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15
dungfungus 10:38 am
04 Jun 14
#

Sebastian Fernandez said :

dungfungus said :

Barr sounds just like Wayne Swan and his empty promises about a “modest” budget surplus somewhere in the future.
Does anyone know who is exempt from rates in the ACT? Does the Federal Govt pay rates on any properties they own (that they haven’t already sold off) and what about the embassies and high commissions?
Clubs? Churches? Military?

When do you believe we’ll be back in surplus ? Is there any real chance we can balance the budget within a few years ?

Answer to you questions in sequence:
Never
No
Now, how about answering the questions I asked?

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