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My take on the ACT Budget

By 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 ?

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52 Responses to My take on the ACT Budget
#1
HiddenDragon6:33 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.

#2
wildturkeycanoe7:24 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?

#3
JessP7:43 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.

#4
dungfungus7:50 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?

#5
Pandy9:07 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.

#6
rommeldog569:51 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 !!!!

#7
dungfungus10:29 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.

#8
dungfungus10:33 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?

#9
gooterz11:58 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.

#10
Sebastian Fernandez5:28 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 ?

#11
Sebastian Fernandez5:30 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.

#12
Mysteryman7:39 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.

#13
pajs9:37 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.

#14
dungfungus10:37 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.

#15
dungfungus10:38 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?

#16
bikhet12:19 pm, 04 Jun 14

dungfungus said :

Why is it that everyone except the elderly think this is a good idea?

Spot on. The following ABC programme is relevant:

http://www.abc.net.au/radionational/programs/lifematters/downsizing/5487436

#17
rommeldog5612:57 pm, 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.

Possibly – but its a slight of hand isnt it.

Those over 60s sellers/downsizers will STILL be notionally paying for stamp duty because its being phased out and rolled into annual Rates increases. This decision is about window dressing, nothing else.

#18
dungfungus1:58 pm, 04 Jun 14

bikhet said :

dungfungus said :

Why is it that everyone except the elderly think this is a good idea?

Spot on. The following ABC programme is relevant:

http://www.abc.net.au/radionational/programs/lifematters/downsizing/5487436

I hope Andrew Barr listens to this because the presenter has gone to the trouble of gathering facts through surveys and forums that totally contradict the notions that yuppies like Barr have about what is good for the elderly.
Time to upgrade the home security.

#19
rosscoact2:33 pm, 04 Jun 14

dungfungus said :

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.

Good to see you’ve been taken on the role of speaking for all the elderly people in the ACT. Was there a vote or is it an honourary position?

#20
dungfungus3:26 pm, 04 Jun 14

rosscoact said :

dungfungus said :

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.

Good to see you’ve been taken on the role of speaking for all the elderly people in the ACT. Was there a vote or is it an honourary position?

Self-appointed actually.

#21
HiddenDragon4:39 pm, 04 Jun 14

rommeldog56 said :

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.

Possibly – but its a slight of hand isnt it.

Those over 60s sellers/downsizers will STILL be notionally paying for stamp duty because its being phased out and rolled into annual Rates increases. This decision is about window dressing, nothing else.

The over 60s deal will be a nice windfall for people who were planning on moving anyway – provided, of course, the move they are planning is within the ACT. It will also help to appease some of the anger from people whose rates are likely to be going up more than the “only 10%” average, and it’s a classic example of the “we know what’s best for you” nudge politics which is a hallmark of this government, but beyond all of that, yes, it’s another part of the rather artful window dressing which has been deployed to disguise a desperate strategy of converting unsustainable, boom-time property transaction revenues into a permanent and ever-growing income stream for a government which can always find new reasons to spend other people’s money.

If we do ever see an ACT Budget truly in surplus, that will essentially be a clerical error, which won’t be allowed to stand for too long.

On the broader theme of “reform”, which, in practice, basically means picking one pocket, and putting some of the proceeds in another, I enjoyed this – most particularly the final sentence (from Budget Paper No. 3, page 253):

“Motor Vehicle Registration

The Government will reduce the administration fee for motor vehicle registration, from $25 to $15 per transaction, for those motorists who choose to pay their motor vehicle registration quarterly or half yearly.

Under this new structure, on average, motorists who choose to pay their motor vehicle registration quarterly will be better off in real terms by around 5.5 per cent, and those who pay half yearly will be better by around 1 per cent.

Motorists who pay their motor vehicle registration annually will be rewarded through a 2 per cent annual discount.

To offset these reforms, motor vehicle registration will increase by 6 per cent in 2014-15.”

#22
rosscoact5:36 pm, 04 Jun 14

dungfungus said :

Self-appointed actually.

:-D And a super job you are doing too.

#23
Walker7:07 pm, 04 Jun 14

“What do you think?”

I think simcity is a hilarious analogy.

Sometimes it feels a bit like that, like someone is all giddy playing with a real scale game without a more mature overview on enough of the relevant factors. You don’t need to be impaled by a civic sculpture to realise that.

(I’m all for artwork but there comes a point where the density and flow is ridiculously jammed up, you can’t just call something culturally enhancing by turning it up to ten, or eleven… that’s one more than ten, innit?… there’s a little more to it than that).

#24
rommeldog568:23 pm, 04 Jun 14

” The Government will reduce the administration fee for motor vehicle registration, from $25 to $15 per transaction, for those motorists who choose to pay their motor vehicle registration quarterly or half yearly.

Under this new structure, on average, motorists who choose to pay their motor vehicle registration quarterly will be better off in real terms by around 5.5 per cent, and those who pay half yearly will be better by around 1 per cent.

Motorists who pay their motor vehicle registration annually will be rewarded through a 2 per cent annual discount.

To offset these reforms, motor vehicle registration will increase by 6 per cent in 2014-15.”

Well done HiddenDragon for spotting this one !! If this is a direct quote, it would have to be the most stupid, arrogant, incompetent bits of spin ever to come out of the ACT Government – and that’s saying something. Who in the blazes in the ACT Government reads the words to be printed – its unbelievable !! OMG – we are just so well served by the current crop of ACT politicians arn’t we ! Now, if the same idiots are making decisions about infrastructure investments, increasing debt Gov’t debt levels, Light Rail, tripling Annual Rates, etc, is there any hope for ACT Ratepayers and residents – really ??? Groan…….

#25
rommeldog568:36 pm, 04 Jun 14

rosscoact said :

dungfungus said :

Self-appointed actually.

:-D And a super job you are doing too.

Go for it dunfungus – you are usually spot on with your analysis. While u are at it – give yourself a pay rise !

#26
dungfungus9:17 pm, 04 Jun 14

Walker said :

“What do you think?”

I think simcity is a hilarious analogy.

Sometimes it feels a bit like that, like someone is all giddy playing with a real scale game without a more mature overview on enough of the relevant factors. You don’t need to be impaled by a civic sculpture to realise that.

(I’m all for artwork but there comes a point where the density and flow is ridiculously jammed up, you can’t just call something culturally enhancing by turning it up to ten, or eleven… that’s one more than ten, innit?… there’s a little more to it than that).

Canberra is the place where SimCity meets Thomas the Tank Engine.

#27
dungfungus9:21 pm, 04 Jun 14

rommeldog56 said :

” The Government will reduce the administration fee for motor vehicle registration, from $25 to $15 per transaction, for those motorists who choose to pay their motor vehicle registration quarterly or half yearly.

Under this new structure, on average, motorists who choose to pay their motor vehicle registration quarterly will be better off in real terms by around 5.5 per cent, and those who pay half yearly will be better by around 1 per cent.

Motorists who pay their motor vehicle registration annually will be rewarded through a 2 per cent annual discount.

To offset these reforms, motor vehicle registration will increase by 6 per cent in 2014-15.”

Well done HiddenDragon for spotting this one !! If this is a direct quote, it would have to be the most stupid, arrogant, incompetent bits of spin ever to come out of the ACT Government – and that’s saying something. Who in the blazes in the ACT Government reads the words to be printed – its unbelievable !!

OMG – we are just so well served by the current crop of ACT politicians arn’t we !

Now, if the same idiots are making decisions about infrastructure investments, increasing debt Gov’t debt levels, Light Rail, tripling Annual Rates, etc, is there any hope for ACT Ratepayers and residents – really ??? Groan…….

That quote’s nearly as good as Geoge W Bush stating that “the French don’t even have a word for entrepreneur”.

#28
VYBerlinaV8_is_back10:29 am, 05 Jun 14

rommeldog56 said :

Now, if the same idiots are making decisions about infrastructure investments, increasing debt Gov’t debt levels, Light Rail, tripling Annual Rates, etc, is there any hope for ACT Ratepayers and residents – really ??? Groan…….

You misspelt the last word, it’s actually ‘Green’…

#29
Grail3:09 pm, 05 Jun 14

The Canberra Metro (which is actually a tramway, nothing like the Metro of Paris) is entirely reliant on rezoning the residential blocks either side of Northbourne Avenue to high-density housing and having the population in that corridor triple in the next ten year or so. This was in one of the earlier documents about the tramline, and the work on getting that population increase has started with the construction of many multi-storey/high-rise apartment blocks.

Although increasing the population is great for the Metro, it’s bad for Canberra in the long run since our water supply and sewage works aren’t able to cope. The sewage works (“Lower Molongolo Water Quality Control Centre” LOL) was originally intended to be 1/3 of a much larger plant, each section catering to another 200k people. In the interim, various Governments Federal and Local have decided that duplication of the plant is too costly, so we resort to storing peak sewage in a pond and waiting for the plant to catch up.

There’s nothing in the budget about expanding the sewage plant. This is the most troubling omission, to my mind. The Canberra Metro project should be put on hold until the infrastructure is able to cope with the expected increase in population.

Other than the obvious omission of taking the piss from increased population, borrowing money to build the tram line is a great idea. It’s a fund raising project and will pay its own way: the money for repaying the loan won’t have to come from taxes.

#30
miz11:57 pm, 05 Jun 14

It’s completely wrong to assume older people want to downsize – see http://www.abc.net.au/radionational/programs/lifematters/downsizing/5487436
Older people like space for their hobbies, the same as anyone else.

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