There has been much talk of this yearâ€™s budget being a â€œtoughâ€ one, despite a lack of leaks to back this up. Not even the Opposition was given access to the budget papers before today, which has apparently happened in the past (I was told with some surprise by a mainstream journalist that I was lucky to have gotten into the lockup under the auspices of the RiotACT given the treatment weâ€™ve handed out to the government [and everyone else] over the years). Well tough the budget may be, with a range of rises in revenue-raising taxes and levies, but it seems to me that it is a big change in direction (disclaimer here: I am in no way an economist and am basing my assessments on a probably haphazard reading of the mass of material that was dumped in my arms earlier today).
This yearâ€™s budget represents a change for the government because it is based on Government Finance Statistics (GFS) rather than Australian Accounting Standards. The main difference this makes to the bottom line is that operating revenues no longer include money made from land sales and unexpected stock market gains on superannuation investments. In the past, these one off income amounts have been included in operating revenue and thus decisions about recurrent spending have been made taking these amounts as granted. Under the GFS system the ACT has a forecast deficit of $80.3 million in 2006-07, another deficit of $40.7 million in 07-08 and then surpluses of $18.3 million in 08-09 rising to a surplus of $67.7 million the following year.
Mr Stanhopeâ€™s main point of the day was that the ACT has services which cost 20 per cent more than the national average and a tax rate which is 11 per cent below the national average, and that these two numbers just plain do not work together. To fix this there are a number of measures to cut back on expenditure, including combining departments, cutting jobs (it was strongly emphasised that this will happen through natural attrition and voluntary redundancies), closing schools, decreasing superannuation payments to new public servants, new MLAs, senior executive service, MLA staff and the judiciary. There are also a range of increased rates and levies.
The revenue raisers in the budget are:
* a 6 per cent increase in rates as well as future rate rises being indexed to the Wage Price Index. Mr Stanhope said this would amount to an average increase of $1 a day per household;
* a new fire levy of $84 per year which will be included in each householdâ€™s general rates notices. It is expected this will raise $20 million a year. People on low incomes will only pay half of this;
* changing the eligibility criteria for the Home Buyer Concession Scheme (presumably meaning less people will be eligible);
* a new call-out fee for false alarms for the fire brigade of $200 per residential and $500 per commercial building;
* an increase in the ambulance levy currently charged to health funds for individuals and families who have ambulance cover. This levy will now be $85 per individual and $170 per family. People on pensions will not be charged this levy;
* full cost recovery for ACT Workcoverâ€™s services and successful prosecutions;
* a Utility Land Use Permit will be introduced for sewerage, water, electricity, gas and phone lines;
*development application fees will be raised; and
* a water fee will be introduced â€œthrough an increase of 30 cents per kilolitre in the water abstraction chargeâ€ (I couldnâ€™t work out what this meant).
The Emergency Services Authority is to become part of the Department of Justice and Community Safety, although Minister Simon Corbell said this will not affect the autonomy of the fire brigade, ambulance services, rural fire services or state emergency services. A new department called the Central Regulatory Office will be created, combining the Office of Fair Trading, the Registrar-Generalâ€™s office, ACT Workcover, licensing and regulations currently done by the Independent Competition and Regulatory Commission and approvals and administration for business activities using public land (I imagine this is mainly licensing cafÃ©s for outdoor tables).
Other minor reductions in spending will come from things like changing the governmentâ€™s vehicle fleet from six-cylinder cars to four-cylinder ones and reducing the number of advisory boards and committees (one wonders if this means there will be less â€œcommunity consultationâ€). Mr Stanhopeâ€™s pet project, the arboretum, has had $4.7 million of its fund reallocated into consolidated revenue and will be left with only $6 million over two years to start basic work. Apparently six different species of trees will be planted on the site this winter and spring.