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ACT Budget delivers record deficit; record borrowing

By Peter Clack - 4 June 2014 15

peter-clack-budget

Canberra’s economy is about to plunge to new, record breaking depths with the ACT Government forecasting an operating deficit of $332.8 million in 2014-15.

However, the Government will be borrowing more cash, taking out a record program of loans for a $2.5 billion program of infrastructure investment over four years.

In delivering the ACT budget (on 3 June) ACT Treasurer Andrew Barr blamed the Commonwealth and its budgetary programs for hurting the city and damaging Canberra’s economy through direct budget and staffing cuts to Commonwealth government departments and the consolidation of federal agencies.

He said the increased deficit for the net operating balance was due almost entirely to factors outside his Government’s direct control. The direct impact of Commonwealth decisions had forced a write-down of $375 million in revenue over four years and the loss of 6,500 jobs. This combined to dampen growth and would flow to other parts of the ACT economy, hurting the city, the vulnerable, business, households and the economy.

Lower Commonwealth health grants and the reduction in revenue from the land release program due to falling Commonwealth employment would add more than $80 million to the deficit in 2014–15, he said.  Resultant concerns about job security would limit consumption and consumer confidence and delay businesses hiring and investing.

Mr Barr said the estimated recovery for Canberra’s economy with a modest surplus was still some years away in 2017-18 (the ACT elections will be held on 15 October 2016).  And gross state product would grow by 1¾ per cent in 2014–15, reflecting slower growth in the public sector and household consumption.

He outlined a mixed program of investing in health, education and community services and providing transforming infrastructure to create jobs and economic activity.

The Government intended to borrow for a $2.5 billion Infrastructure Investment Program, including $735 million in 2014–15. This four-year capital program was the largest by any ACT government. He described it as “an investment in the future” and in the productive capacity of the ACT economy.

The money would provide spending for transformational projects such as Capital Metro (light rail), Australia Forum, City to the Lake and new court facilities. These projects would generate employment and services and “create a legacy for Canberra as we begin our second century”.

The program provided for spending on a broad range of projects across the ACT, such as a new government office building in Gungahlin, a new school in Coombs and infrastructure to support land release.

Taxation reform

The Government would introduce taxation reforms designed to make taxes fairer, simpler and more efficient.

  • Insurance tax – cut by one-third this year and abolished by 1 July 2016
  • Stamp duty – cut on every property in Canberra, making home buying cheaper. The top rate of stamp duty will cut to a flat 5.25 per cent for all properties – residential and commercial – valued above $1.455 million
  • The new Over 60s Home Bonus – cuts stamp duty; eligible buyers will pay only $20 in stamp duty, a saving of up to $20,500
  • Payroll tax reform – local businesses will benefit. The threshold rises from $1.75 million to $1.85 million in 2014-15. Businesses with a payroll of $2 million will save $6,850 per year, and about 40 businesses will no longer pay this tax

Health

The budget provides $1.4 billion for health in 2014-15, including around $40 million to cover the shortfall left by the Commonwealth. It includes $173 million over four years for growth and new initiatives in the health system.

  • More services and more staff at local health centres, more outpatient services and more beds at hospitals
  • Funding for a new sub-acute public hospital at the University of Canberra, a secure mental health unit, extra hospital beds and a car park at Calvary Hospital

Education

Will invest more than $961 million in education – a 6 per cent rise – to improve learning outcomes for all students in all schools regardless of ability or background

  • Childcare centres upgraded and improved training for pre-school teachers
  • Capital funding of almost $82 million will improve education infrastructure and enhance information and communication technology in schools
  • Construction of the new Coombs Primary School, a state-of-the-art facility for more than 700 students

Community services

More than $465 million for community services and housing, including disability and out of home care services, community housing and homelessness services.

  • Children with disabilities will get extra support with funding for more school-based therapy intervention services
  • Funding for a range of justice system reforms and improvements, notably to focus on preventive programs, a new Supreme Court facility, and upgrades to the Alexander Maconochie Centre
  • $21 million for a joint fire and ambulance station in Aranda

Transport and parks

  • More than $45 million to expand and maintain roads – particularly in newer suburbs in Gungahlin and Molonglo
  • Significant investment in public transport, including more services to new suburbs, the start of work on the redevelopment of the Woden bus interchange, a new bus station for Erindale, and the establishment of a Community Transport Coordination Centre
  • Light rail – $21.3 million for the start of the Capital Metro project.  The Government will seek expressions of interest to build and run to network in the coming year. Building starts in 2016
  • More than $15 million is allocated to urban parks and trees, shopping centres, and other community open spaces continue to be managed and maintained to a high standard

Fees and charges

  • Most government fees will rise; for driver’s licences and car registration
  • Eight more parking inspectors (around $3 million a year in revenue)
  • $2 million levy on commercial properties for emergency services
  • $34 lifetime care and support levy for catastrophic road injuries

Sports

  • Provide $2.4 million for three Cricket World Cup matches at Manuka Oval in 2015
  • Upgrade Lyneham tennis courts for hosting professional tournaments
  • Funds for a water-play park in Tuggeranong

Digital services

$75.5 million for a range of digital initiatives to make it easier and cheaper to do business with government

Ex-public servants

Financial support for former government employees to start their own businesses; young entrepreneurs will receive expert support

Red tape

Regulatory reforms to improve efficiency, cut red tape and make it easier to do business with government

What’s Your opinion?


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15 Responses to
ACT Budget delivers record deficit; record borrowing
neanderthalsis 9:14 am 05 Jun 14

bigfeet said :

So I googled Peter Clack to see who this guy is as I have no idea.

The only reference I could find was an ex-drummer for AC/DC.

I assume its not the same person?

Former Canberra Times journo from before it went to c@#p and author of a fairly comprehensive account of the Canberra fires.

dungfungus 7:04 am 05 Jun 14

XO_VSOP said :

dungfungus said :

justin heywood said :

Yep, I’m sure that ‘sometime in the future’, when treasurers and ratepayers have to repay the $2.5 BILLION dollars, they’ll be singing the praises of Andrew Barr’s visionary 2014 budget. Meanwhile Andrew Barr himself will have safely moved on to some other comfortable sinecure.

In the real world, when your income drops, so should your spending. But apparently in the world of ACT politics, you just say it’s all someone else’s fault and go ask the bank to prop up your lifestyle. Awesome work..

Yeah, they are slow learners.
The writing was on the wall when Rhodium Asset Solutions incurred massive (still undisclosed) losses, Actew lost over $50 million on TransACT, the Cotter Dam construction cost blowout, the GDE sage etc. etc. Maybe all this was all to inure us and to build receptivity for us mug ratepayers to wear the cost of the mother of all follies namely the City to Gungahlin light rail.
And for an encore they will build a totally useless convention centre in a city that has no direct international airline flights at a time when the convention industry is becoming a sunset one.
Yep, they can sure pick the winners.

And Canberra stadium blow out? of that was the libs painting the grass green!

Well, at least they got the colour right.
All the Libs were doing was trying to make it a Better Place.

XO_VSOP 10:50 pm 04 Jun 14

dungfungus said :

justin heywood said :

Yep, I’m sure that ‘sometime in the future’, when treasurers and ratepayers have to repay the $2.5 BILLION dollars, they’ll be singing the praises of Andrew Barr’s visionary 2014 budget. Meanwhile Andrew Barr himself will have safely moved on to some other comfortable sinecure.

In the real world, when your income drops, so should your spending. But apparently in the world of ACT politics, you just say it’s all someone else’s fault and go ask the bank to prop up your lifestyle. Awesome work..

Yeah, they are slow learners.
The writing was on the wall when Rhodium Asset Solutions incurred massive (still undisclosed) losses, Actew lost over $50 million on TransACT, the Cotter Dam construction cost blowout, the GDE sage etc. etc. Maybe all this was all to inure us and to build receptivity for us mug ratepayers to wear the cost of the mother of all follies namely the City to Gungahlin light rail.
And for an encore they will build a totally useless convention centre in a city that has no direct international airline flights at a time when the convention industry is becoming a sunset one.
Yep, they can sure pick the winners.

And Canberra stadium blow out? of that was the libs painting the grass green!

dungfungus 9:32 pm 04 Jun 14

justin heywood said :

Yep, I’m sure that ‘sometime in the future’, when treasurers and ratepayers have to repay the $2.5 BILLION dollars, they’ll be singing the praises of Andrew Barr’s visionary 2014 budget. Meanwhile Andrew Barr himself will have safely moved on to some other comfortable sinecure.

In the real world, when your income drops, so should your spending. But apparently in the world of ACT politics, you just say it’s all someone else’s fault and go ask the bank to prop up your lifestyle. Awesome work..

Yeah, they are slow learners.
The writing was on the wall when Rhodium Asset Solutions incurred massive (still undisclosed) losses, Actew lost over $50 million on TransACT, the Cotter Dam construction cost blowout, the GDE sage etc. etc. Maybe all this was all to inure us and to build receptivity for us mug ratepayers to wear the cost of the mother of all follies namely the City to Gungahlin light rail.
And for an encore they will build a totally useless convention centre in a city that has no direct international airline flights at a time when the convention industry is becoming a sunset one.
Yep, they can sure pick the winners.

rommeldog56 8:33 pm 04 Jun 14

I thought the toy train set was supposed to commence construction in 2016 ???? If so, or sometime there after, is the m$617+ for the actual infrastructure costs shown anywhere in the budget foward years papers ?
Hmmmmm….perhaps Gallagher, Barr and Rattenbury can also publish what my Annual Rates will be in $ terms (based on a min. 10% avg. increase pa) when the toy train starts running ? I hope people are doing the math……..

justin heywood 6:00 pm 04 Jun 14

Yep, I’m sure that ‘sometime in the future’, when treasurers and ratepayers have to repay the $2.5 BILLION dollars, they’ll be singing the praises of Andrew Barr’s visionary 2014 budget. Meanwhile Andrew Barr himself will have safely moved on to some other comfortable sinecure.

In the real world, when your income drops, so should your spending. But apparently in the world of ACT politics, you just say it’s all someone else’s fault and go ask the bank to prop up your lifestyle. Awesome work..

Masquara 5:14 pm 04 Jun 14

“Infrastructure Chief Minister” …… what is that reminding me of? Can anyone jog my memory?

Diggety 12:16 pm 04 Jun 14

Peter Clack said :

John Hargreaves Ex MLA said :

Ah…Clacky! Like the good old days, you old crooner, you! Nice to see you haven’t lost it.

We must always of course remember that the ACT weathered the GFC by a similar approach to insulating against outside influences. To have followed the feds would have doubled the pain for those who can least afford it!

Once upon a time, you’ll remember, we only faced hikes in beer, smokes and petrol. Ah..the good old days!

Thanks John, yes the good old days have just slipped quietly away (for old fogies like us anyway). I guess my view is that we will be better off if governments stop trying to spend money they haven’t got and then just borrow more to make some politician mileage (or to hide their blunders and mismanagement). One thing we all know, there is no accountability for incompetent politicians. They all (federally anyway) get their generous superannuation and benefits at the end of the day and can retire comfortably, regardless of any disasters they leave behind. Cheers Peter

Whoever you are, please run for parliament.

Peter Clack 12:01 pm 04 Jun 14

John Hargreaves Ex MLA said :

Ah…Clacky! Like the good old days, you old crooner, you! Nice to see you haven’t lost it.

We must always of course remember that the ACT weathered the GFC by a similar approach to insulating against outside influences. To have followed the feds would have doubled the pain for those who can least afford it!

Once upon a time, you’ll remember, we only faced hikes in beer, smokes and petrol. Ah..the good old days!

Thanks John, yes the good old days have just slipped quietly away (for old fogies like us anyway). I guess my view is that we will be better off if governments stop trying to spend money they haven’t got and then just borrow more to make some politician mileage (or to hide their blunders and mismanagement). One thing we all know, there is no accountability for incompetent politicians. They all (federally anyway) get their generous superannuation and benefits at the end of the day and can retire comfortably, regardless of any disasters they leave behind. Cheers Peter

mr_pink 11:51 am 04 Jun 14

Mr Hargreaves, a Labor man, using “GFC” and “insulating” in the same sentence? I sense an uncomfortable foreboding.

Peter Clack 11:50 am 04 Jun 14

mr_pink said :

I understand the reasoning for borrowing to boost the economy but there doesn’t seem to be too much in this budget in the way of cutting back on excess and redundancy. A few sell-offs here and there but little in cutting back on the ongoing expenses.

Yes I think this is very sound logic. The answer is not always to borrow more money but to actually manage revenue and outlays to suit available resources. Peter

John Hargreaves Ex M 11:28 am 04 Jun 14

Ah…Clacky! Like the good old days, you old crooner, you! Nice to see you haven’t lost it.

We must always of course remember that the ACT weathered the GFC by a similar approach to insulating against outside influences. To have followed the feds would have doubled the pain for those who can least afford it!

Once upon a time, you’ll remember, we only faced hikes in beer, smokes and petrol. Ah..the good old days!

mr_pink 10:51 am 04 Jun 14

I understand the reasoning for borrowing to boost the economy but there doesn’t seem to be too much in this budget in the way of cutting back on excess and redundancy. A few sell-offs here and there but little in cutting back on the ongoing expenses. These drive the rates, parking and the rest up. Really there should have been a few shut downs, wrap up some duds and mothball a few of those schools like Kaleen where enrollments are under 40%. Not just sell-offs of lights, flats and water. We should be a little suspicious when a government splashes out and that it is not an election year. The sting in the tail this time I suspect is a slow acting poison.

PantsMan 10:50 am 04 Jun 14

I would also point out that they appear to have fudged the bottom line by counting dividends and interest received from passive superannuation investments as revenues to the General Government Sector – about $100 million per annum!

According to the Government Finance Statistics (GFS) accounts at Chapter 9 (http://apps.treasury.act.gov.au/__data/assets/pdf_file/0015/601161/General-Government-Sector-Financial-Statements.pdf) they are $446.5 million in deficit in 2014-15.

That’s spending 10 per cent more than you’ve got.

Ouch!

bigfeet 8:33 am 04 Jun 14

So I googled Peter Clack to see who this guy is as I have no idea.

The only reference I could find was an ex-drummer for AC/DC.

I assume its not the same person?

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