11 February 2024

Libs play debt and deficit as Labor rides the infrastructure train

| Ian Bushnell
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Elizabeth Lee, MLA.

Opposition Leader Elizabeth Lee isn’t about to miss any opportunity to put the boot in, and plenty was on offer last week. Photo: Michelle Kroll.

Is Andrew Barr sending the ACT broke? Not really.

Is there an election this year? Absolutely.

Does Elizabeth Lee want to be Chief Minister? You bet.

And she wasn’t about to miss out on the free kick handed out with the mid-year Budget Review that posted a blown-out deficit of $783 million and increasingly eye-watering debt for our little city-state over the next four years.

The situation resulted from woeful economic management. Mr Barr had squandered hundreds of millions of dollars on dodgy procurements and vanity projects, and the interest bill was now $2 million a day.

This should ring alarm bells, she said.

Ouch.

Watch out for higher taxes and more pain for those already, yes, “doing it tough”.

The government’s signature big-picture infrastructure program was a mirage. But apart from light rail 2B, what would get the chop?

The only legacy Mr Barr would be leaving is the Territory in the worst financial position in its history, Ms Lee said.

Just don’t expect to hear how the Libs would knock the budget into shape, yet.

You will hear plenty of that from Mr Barr, who has already said they will gut services as all Liberal governments do.

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That’s where we are eight months out from election day: the government in can-do, business-as-usual mode rolling out infrastructure announcements and Ms Lee attacking Mr Barr’s economic credibility and playing cat and mouse with journalists until she is ready, at a time of her choosing, to release actual policies and proposals, apart from a couple of early tasters.

But don’t worry, she’ll be upfront with us, unlike the other lot.

Mr Barr had to serve up a turd sandwich, saying the deficit blowout is only temporary due to falls in GST and payroll tax, and the budget will recover as consumer spending increases, people get a tax cut (thank you Albo), and interest rates fall.

What could go wrong?

Render of light rail at the corner of State Circle and Kings Avenue. Grand vision or a colossal waste of money? Your call. Image: ACT Government.

The debt may look scary, but look at what we’re getting – new hospitals (and one’s almost built), a theatre, a stadium, a convention centre, an entertainment pavilion and more light rail, of course. Eventually.

Still, Rome wasn’t built in a day. And we can sell some land, and the Feds are going to pitch in.

Speaking of coliseums, that stadium – we’ve been talking about it so long it’s virtually already built in our imaginations – does look like it will rise in Bruce now the AIS’s future is settled.

But the Libs say they’re still looking at the city. Where, I wonder? Doesn’t matter; there are plenty hanging on to the dream.

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Then there’s the other gift to the Opposition last week – the latest light rail update for Stage 2B to Woden.

The government would have hoped that it signalled a re-commitment and progress in this marathon project, but all this milestone did was leave us uncertain about what was happening and wondering if it had the wobbles.

Just staying flexible, the government said, about putting the Barton dog leg back on the table. The public servants of Sydney Avenue and surrounds – now and the thousands more in the future – are probably very excited, and don’t the renders look great.

But Transport Minister Chris Steel sounded pretty uncomfortable dodging questions about travel times and trying to introduce a little nuance into the debate.

It’s election time. He’s going to have to show a little more trainspotters’ passion than that to keep the public on board and hold their challenged attention.

It just doesn’t stack up, said a suitably feisty Ms Lee, who’s not holding anything back. A refrain that we will hear up to election day.

The alternative? Something to do with buses.

It’s going to be a wild ride to October.

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Incidental Tourist1:32 pm 15 Feb 24

Did I get it right “interest bill was now $2 million a day”?? This is $730 millions a year and if you add some principal payment it will be close to a billion dollars just to service debt. This would be enough to build extra 2000 public houses each year, or hire extra 6000-8000 nurses, teachers, doctors, police officers, build new schools or even new hospital each year. And we are all missing on all these today. If it continues like that we and our kids will be missing more every year with the cost of living going up.
The ballooning state debt is too serious to ignore. I just want to remind people of the South Australia state bank collapse in 1991 and that it caused a massive state wide implosion of all services, infrastructure and recession for decades.
I don’t oppose infrastructure investment as such, but it should be prudent investment not a waste of money. I don’t oppose tram in principal either, but if people can’t tell how much it costs half way through the project – do they really fit to job? Definitely we need change.

Gregg Heldon9:35 am 15 Feb 24

Well, we know that Labor have two votes. Ian Bushnell and Jack D.
The Libs have to start announcing policy though. They should know by now that denouncing the Government without sharing your vision doesn’t wash with the electorate.
We need to know where they stand on infrastructure and other things. We know where they stand on light rail 2B and that they will increase buses.
Fine.
They have initiatives on cost of living help and measures.
Good
But what about health? Rates? Land release? Education? Lake and water management? Revitalise local shops and neighbourhood ovals and parks.
There is the potential to be a lit of swinging voters in October and the Libs needs to capture them.
Just forget about Ian and Jack. Even if their homes were taken, before the lease expired, A la Calvery, they’d still spruik Labor until the death.

Thanks Gregg you’ve given me a laugh!

Being seen on the same wave length as Ian Bushnell is better than that of David Murtagh!

Hoot! Hoot!

Gregg Heldon10:52 am 15 Feb 24

Well Jack, you are a cartoon. An unfunny one, but still a cartoon.

Well Gregg Heldon I am just getting started and have 8 months to remind people just how backward and bad a Liberal government would be on the ACT. An inept party whose lack of foresight you highlighted so well in your comment!

Gregg Heldon9:20 am 15 Feb 24

Whereas Barr would only let the CMFEU or GeoCon run the chook raffle.

nikita martin10:32 pm 14 Feb 24

The political landscape is evolving as the focus shifts to infrastructure for the Labor party, overshadowing the Coalition’s emphasis on fiscal responsibility. While Labor champions investment in essential projects, the opposing narrative of debt and deficit remains potent. The intricacies of managing fiscal policy amidst pressing needs reflect a nuanced debate. It’s a delicate dance, where both sides grapple with contrasting priorities. Striking the right balance between development and financial prudence will likely shape public perception. In this dynamic play between ideology and practicality, the political stage unfolds with infrastructure as a pivotal theme, defining the parties’ economic narratives.

Intergenerational theft of the highest order!

Tom McLuckie8:41 am 13 Feb 24

The 2022-23 budget by Pegasus Economics states ACT’s net debt and net financial liabilities continuing to grow through the forecast period / net worth falling. Proportionally to GSP, all key balance sheet measures are to deteriorate over budget and forward estimates period.
Khalid Ahmed, former executive director ACT Treasury, and Stephen Anthony, chief economist at Macroeconomics, argued the ACT and Victoria stand out as the nation’s worst economic and fiscal managers in recent times.
Over the past 10 years, it experienced the fastest growth in taxation revenue of 105% in the country from $1.18bn in 2011-12 to $2.4bn in 2021-22. This Fiscal deterioration overlapped with the first Labor/Greens government in 2012. Per capital tax is growing at an alarming rate. In 2021-22, per-capita tax was $5347. Its closest rival was NSW ($4880) followed by Victoria ($4727).
The ACT’s net operating balance between 2014-15 and 2021-22 averaged a deficit of 6.6 per cent. The next worst performer has been Victoria at 4.1 per cent.
The fiscal balance as a percentage of GSP for 2023-24 and 2024-25 places the ACT last for both years in an analysis conducted by the Federal Treasury in mid-2022.
S&P found the debt burden had “grown significantly” from 93 per cent of operating revenues in 2018-19, to peak at 163 per cent in 2023-24 before falling to 154 per cent in 2025-26.
ACT taxpayers would pay $310m in servicing the debt in 2022-23, or 4.2 per cent of the territory’s total operating revenues, and this would climb to more than $500m, or 5.6 per cent of operating revenues, by 2026.
It seems the Barr/Green government take pride in being the “best at being the worst” in so many categories including financial management, health services, corrections, recidivism, court costs and prison costs (highest), and the lowest per capita funding and sworn police officer for per person in the country.

HiddenDragon8:10 pm 12 Feb 24

“Is Andrew Barr sending the ACT broke? Not really.”

For several years now a former Labor Chief Minister and a former senior official of the ACT Treasury have been contributing detailed articles to another local media outlet which take a contrary view to the above.

I have occasionally seen those articles dismissed as sour grapes, or words to that effect, but I have yet to see anything remotely approaching a comprehensive, fact-based rebuttal of their central contention that the ACT government is on a fiscally unsustainable trajectory.

On the assumption that the ACT Liberals are not overflowing with clever ideas for repairing that trajectory, maybe they should commit a future Liberal government to conducting a Commission of Audit of ACT finances and invite the two gentlemen in question to head it up – how could the Barr government possibly argue against that…..

Not really sending us broke hey? Where did you come up with that gem? Clearly you know next to nothing about financial management much the same as Barr and his crew. Our rates and land taxes have sky-rocketed over the last few years but our credit rating has slumped. Great financial management hey.

So far as the libs cutting services are concerned have a look at the state of lawns being mowed. Yesterday they finally had a mower around our area in tuggeranong but they missed a whole section, left the place a complete mess and the grass was so high they hit an electric green box. There are weeds growing in the gutter. It’s an absolute mess so please don’t dictate about Barrs service delivery. Likewise with their road maintenance near Southpoint and broken branches and upturned tree roots from the storm over a month ago.

He’ll end up like Andrews leaving on a huge pension for life with no accountability.

Yes MichaelM the ACT’s credit rating was downgraded as with NSW, QLD, Tas, and SA as one would expect coming out of Covid. Victoria has a AA rating. The agency commented that the ACT economy remained strong despite the downgrade and had solid prospects of growth with prudent public spending management. The agency also warned growing expenses and infrastructure spending were delaying budget repair after the pandemic.

Current statistics reflect the ACT’s strong growth five months on.

You won’t hear Elizabeth Lee or her party mention that!!

So Jack D you’re of the opinion Barr is doing a good job are you? What’s the internal rate of return for the infrastructure spend currently underway? Why are our rates sky-rocketing with worsening services? What ramifications occurred after blowing $77 million up the wall?

Judging by your recent comments Michael M I don’t think anything I say would have an effect on your opinions.

As to the internal rate of return on the government’s investment in infrastructure, I think the latest ABS and Commsec statistics speak for themselves. Infrastructure spending contributes to economic growth as we emerge from the pandemic. The ACT leads VIC, SA, TAS and NSW on relative economic growth. High employment rates, public investment and spending has all contributed to this recovery. We lead the nation in annual spending growth. We also lead the nation on retail trade spending for the second quarter running. There is the expansion of the Canberra Hospital and the ED with plans for a new North Canberra Hospital. We have seen the expansion of the Light rail and a new CIT campus in Woden. I could go on….

While not every government can get everything right Michael M, I think the ACT economy is cruising pretty well. The Canberra Liberals have no plans for our city’s future. They blew up one of our public hospitals last time they were in government, refuse to provide a transport plan and promise to dump light rail if elected.

As to tax reforms, these changes provide a fairer and less complex system of taxation. The reforms have been bold and praised by both sides of government. They reduce stamp duty costs for younger first home buyers wanting to enter the housing market, so I won’t get into an argument with you there.

I am sure you would find something to complain about with our city’s services. I could find many well-funded and effectively run services that we lead the nation.

As to the “$75m up the wall” there is an election in October where you can vote and make your feelings known which I am sure you will do!

“Judging by your recent comments Michael M I don’t think anything I say would have an effect on your opinions.”

A more ironic statement on this website I have not seen.

Jack an IRR analysis is based on individual projects not high level data by external agencies.

So far as building a hospital is concerned yeah great, but you need staff to Mann it and provide the necessary services. Has Stephen Smith addressed that anywhere? We don’t need more massive wait times do we.

I’d really like to know what services you believe are working well. Clearly you think there are some.

One of the biggest issues is where do governments actually try to find savings. No doubt they have many meetings to.discuss these strategic issues in order to ascertain sustainable outcomes.

Debt! Debt! The sky is falling! listen all the chicken littles out there, Government debt is not household debt! Increased population and a lift in commercial activity along with Commonwealth input allows the ‘debt’ to be spread over decades with the future citizens paying some of that debt on infrastructure financed now. Every state and territory has an excellent credit rating and screaming ‘debt’ all day with a Liberal lashing of ‘We’ll all be rooned!’ is cheap clickbait. Elizabeth Lee will be ACT Chief Minister the day after Barnaby becomes President of the Australian Temperance League.

That’s only true if the debt is funding long term benefits such as infrastructure that has detailed and robust business cases……oh wait.

And using debt to fund recurrent spending with no commensurate increase in economic activity just means getting future generations to pay for the wasteful service delivery of today which is not remotely equitable.

Debt can be good, but only when invested in the right areas. Unfortunately the ACT Government’s priorities are not those areas.

No organisation that takes governance seriously has the same person as treasurer & CEO, as then there are none of the usual checks and balances on spending.

Generally the spending of the CEO has to get past the treasurer who monitors spending and challenges expenses that are not smart. Not in Canberra. Here, Barr is the local dictator, who spends on what he wishes and who has no-one managing him.

We all pay the price in high rates and low level services as we fund his ridiculous whims, whilst he ignores the essentials like maintenance of footpaths, roads, running of schools, hospitals and all those other boring but necessary things..

GrumpyGrandpa1:51 pm 12 Feb 24

Yes, this will be another LR election and possibly, the biggest one yet.

As soon as Minister Steele raised the dogleg and suggested that buses would continue to run, for those that preferred a faster trip, LR became a bigger election issue.

Will the Government commit to a definite plan before the election?

Is the Minister’s talk about the “dogleg” and a continuation of buses, simply to buy votes?

How much mileage and the Opposition make about LR ?

You would have to think, it’d be absolutely financially irresponsible to run both LR and buses Woden to the City along the same route (Adelaide Ave) and while I’d prefer to ride on LR, for me, living in Tuggeranong, I just want fast public transport, so that means bus.

Now let’s look closely at the ALP’s rwcord/history of management of public money. It really doesn’t matter which level of government you look at either when it comes to massive overspending. Victoria owes the biggest debt (long term ALP Government). Next Qld the same, big debt long term ALP Government. NSW recent ALP Government but sliding quickly into much higher debt. NT, ALP Government and no one is safe there and Public infrastructure is a disgrace. Lastly the ACT very long term ALP/Communist Green coalition government and just under $800 million in debt. Work that out per- capita of the ACT population which means every single person in the ACT owes about $3,500 As they are the local council and the state government get set for a massive rates rise to cover their quite unsustainable and reckless spending follies.

Pretty clear where you stand. Once you wrote “communist green” it becomes as clear as a pimple on the nose. There will be no governments, whatever their persuasion might be, will ever be able to avoid debts. The World as we experience it now I’m affraid.

If you’re going to invest in Infrastructure, make sure you invest it in what delivers the best value for money to the city and its people.

ACT Labor and the Greens are investing in a project that their own very questionable business case has a cost benefit of just 38 cents in the dollar. Just to be clear, that’s essentially investing in infrastructure that will be worth less than what it costs.

It’s like buying a fancy apartment for a million dollars that you expect will be worth $380k down the track.

The regime needs to explain to the people why they broke a core economic commitment.

When Labor and Greens first hopped into bed, their prenuptial agreement included this clause, “The parties confirm their commitment to fiscal responsibility and the maintenance of a balanced budget through the economic cycle.”

The last time the budget was in surplus was 2012, so which of the 2 parties is responsible for breaking this commitment, was it Labor or was it Greens?

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