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Budget blues as the money dries up

By johnboy - 14 February 2012 9

For the last decades government all over the country have not had to cut funding to anything and as budgets waxed fat the question has been “What do we spend the extra money on?”.

Andrew Barr has today announced the outcomes of the mid-year budget review and it’s not looking good for those reliant on ever growing government funding:

The main fiscal changes since the Budget are:
— A $62 million loss in GST revenue grants to the Territory across the Budget and forward estimates, including $12 million this year.

— Superannuation expenses are up more than $22 million due to bond rate variations.

— Revenues associated with property market activity are forecast to decline, in particular:
— Land release revenues are down more than $39 million due to restricted land supply in a number of areas. Anticipated returns are expected to be maintained over the four-year budget cycle.
— Conveyancing revenue is down more than $20 million due to lower than average prices in the residential sector, and reduced activity in commercial sectors.

— A $33 million reduction in dividends and income tax equivalent returns from ACTEW has been forecast, mainly due to reduced water usage.

— Recent enterprise bargaining outcomes for Territory public servants.

— A decline in investments due largely to volatility in financial markets. However, there have been some gains from the high Australian dollar.

The bottom line is the projected $37 million dollar deficit is not out to $181 but Andrew still says he can balance the books by 2013-14 (putting the pain beyond the next election).

Politically the new environment gets more interesting because, absent tax rises, all new spending initiatives imperil someone else’s pet project.

What’s Your opinion?


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9 Responses to
Budget blues as the money dries up
Mysteryman 10:50 am 15 Feb 12

housebound said :

We’ve heard all this before, albeit with different details.

Either this government is incapable of managing the books, or it’s the start of another scare campaign being used to push through some pet reform/renewal.

Thumper said :

Well, if they hadn’t wasted squillions on the GDE, Cotter Dam, Rhodium, caravan park land swaps, etc.

Just putting it out there.

PantsMan said :

The bodgie accounting continues!

The only thing getting us back to surplus is ACTEW and LDA dividends jumping from $250 million this year to about $450 million in three years time. Miraculous revenue growth conveniently expected after the next election!

And I’m Santa Clause.

+1 to these.

The ACT Labor government can’t balance a budget. Is anyone surprised by this? Quite coincidental timing that they announce their budget deficit while everyone is focussed on the opposition’s timesheet screw-up, don’t you think?

dtc 9:29 am 15 Feb 12

dungfungus said :

– “Superannuation expenses are up more than $22 million due to bond rate variations”
I think what he meant to say was the super fund lost $22 million so the employer (ACT Government) is “topping up” to indemnify the contributors. I’ll bet there are a few academics out there with UniSuper who wish they were in a similar scheme. It is scandalous that any super fund can lose $22 million though; who is running the fund for ACT Government? Can’t they bring it “in house”? They have a lot of high paid and highly qualified people working for Treasury so surely they could run a SMSF (but then again I am thinking of the Rhodium debacle). Glad I am not an ACT Governmnet worker on the cusp of retirement.

Well, ‘bond rate variations’ suggests that the return on the invested super funds was lower than the increase in the liability (some of which is not linked to market returns eg defined benefits). The only ways to over come this is to increase your risk to increase earnings (which would have made it worse) or reduce payouts. So neither is an option.

I agree that the ACT is highly dependent on real estate, but what else is there in Canberra? Indeed, most state governments are real estate and gambling dependent.

PantsMan 9:28 am 15 Feb 12

The bodgie accounting continues!

The only thing getting us back to surplus is ACTEW and LDA dividends jumping from $250 million this year to about $450 million in three years time. Miraculous revenue growth conveniently expected after the next election!

And I’m Santa Clause.

dungfungus 8:44 am 15 Feb 12

– “Superannuation expenses are up more than $22 million due to bond rate variations”
I think what he meant to say was the super fund lost $22 million so the employer (ACT Government) is “topping up” to indemnify the contributors. I’ll bet there are a few academics out there with UniSuper who wish they were in a similar scheme. It is scandalous that any super fund can lose $22 million though; who is running the fund for ACT Government? Can’t they bring it “in house”? They have a lot of high paid and highly qualified people working for Treasury so surely they could run a SMSF (but then again I am thinking of the Rhodium debacle). Glad I am not an ACT Governmnet worker on the cusp of retirement.

Thumper 8:15 am 15 Feb 12

Well, if they hadn’t wasted squillions on the GDE, Cotter Dam, Rhodium, caravan park land swaps, etc.

Just putting it out there.

steveu 7:22 am 15 Feb 12

Apart from GST revenue shortfalls, seems to show alot of the lossess come from real estate. Just goes to show how dependant the local council is on carving up what we have left of the ACT. What happens when theres nothing left to carve up?

To me it almost reads like a blame game in some part of it (ie. ACT public servants wages and superannuation, along with us being more sensible with our water usage).

housebound 6:24 am 15 Feb 12

We’ve heard all this before, albeit with different details.

Either this government is incapable of managing the books, or it’s the start of another scare campaign being used to push through some pet reform/renewal.

I-filed 7:08 pm 14 Feb 12

Let’s start by canning the current “carbon neutrality” plan – are we really that keen to pay $220-odd for every man, woman and child in Canberra? What would be the actual outcome for global warming?

(And is the energy-guzzling Canberra Glassworks value for money for Canberra tax-and-rate-payers in the context of energy efficiency?)

http://www.timetotalk.act.gov.au/time-to-talk/climate-change/

http://www.chiefminister.act.gov.au/media.php?v=11183

2604 6:55 pm 14 Feb 12

Unfortunately, you’re right on the money with your “tax rises” comment JB.

I wouldn’t be surprised if Mr Barr took a cue from his federal counterpart and got back to surplus by stinging all the Gina Rineharts and Andrew Forrests in the ACT earning $75,000 and above.

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