The ACT has the advantage of being a new polity. It can learn from the mistakes of other states and territories.
It can learn from Victoria and South Australia: do not get into debt. It can learn from Western Australia: do not sell your government to “”mates”. It can learn from the Northern Territory: the Federal tit can dry up. It can learn from the Fraser Federal Government: do not indulge in the political cop out of across-the-board cuts.
Then again, it can fall into the same mistakes.
In the next two months, ACT politicians and bureaucrats will be framing the budget. It is in severe danger of following Victoria and South Australia: let the next generation pay for the intemperance of this one. It is in danger of following Western Australia: quick, allow a lot of government-subsidised development to enrich a few and impoverish the many. It is in danger of following the Northern Territory in hoping the cargo cult of the Federal Government (York Park, the National Museum etc) will provide for all.
Or it can sit down and use its brains.
One day in May, 10 top ACT bureaucrats met at Commonwealth Club yesterday to hear a private-sector financial guru tell them how to get better results with public money.
Bart Vogel, from Deloitte, Touche and Tohmatsu accountants and management consultants told the ACT bureaucrats that “”salami slicing” was a silly way to control costs.
“”Salami slicing” is where a percentage cut is made across the board.
“”That way you are guaranteed to cut 2 or 5 per cent, or whatever, off your most important activities,” he said.
Let’s hope the across-the-board cut is consigned to the biographers of Phillip Lynch.
On the revenue side, the ACT has been fairly smart recently. Land tax, for example, has dragged money from the federal to territory sphere. Landlords slugged with ACT land tax have claimed it as a deduction against their Federal income tax.
But the ACT could get smarter. There was a competition among the states in the 1980s to provide the cheapest conditions for dying. Come to sunny Queensland and die without death duties, the message ran. The economic dries loved it. Alas, poor Queensland. It is now hit with providing health care for a lot of oldies. The ACT could now reverse the process and levy a death duty. It will either raise revenue or drive the government-dependent oldies out of town. Death duties are a fairly painless form of revenue raising anyway, provided spouses are not hit.
The expenditure side is of more importance. Some fairly intelligent work has been done by various community groups on planning policy, for example. The upshot of it is that developers are getting an easy ride. The Government is not getting a proper return on the increase in land values caused by changes in lease purpose clause. Geoff Handley, of the Belconnen Community Council, for example, very cogently argues that the developer of the Belconnen Golf Course project will get up to $29 million unearned income from the change of lease-purpose clause from public recreation to housing.
Handley has no difficulty with plonking some houses on the golf course, provided the public gets value for the land. The developer, Ron Bell, has a solid record of providing some very high quality housing. He deserves to make a profit on his talent for marshalling building resources and putting up imaginative housing, but to the extent that their is an increase in value in the raw land because of changes in lease purpose, the difference should go to ACT revenue, not to the developer.
Betterment tax should be 100 per cent, or sites should be resumed and re-auctioned.
The magistrates court is another example of planning wastage and inefficiency. The ACT spent a lot of money on a proposal that never had federal approval.
Speaking of Federal money, I understand the ANU has some plans for redevelopment of some of its inner-city residential sites. It would be hypocritical for the ACT to whinge about Federal funding on one hand and not charge the ANU 100 per cent betterment on its redevelopment.
The ACT Government should start tapping into some of the ideas of community groups rather than dismissing them as NIMBY is cranks.
Once again, on planning it is short-sighted to make a quick rake-off with only 50 per cent betterment tax to provide some quick medium density. The ACT ends up picking up the tab for the social cost.
Then there are the buses. It is insane that the bus service drains more than two thirds of the rates revenue. Why not deregulate taxi services instead of get a quick fix $80,000 per plate sold? Why not contract out individual bus routes (for profit or loss)?
In other words, the ACT should avoid the cop-out debt trap and use a bit of lateral thinking to overcome the squeeze of federal money without necessarily compromising services or imposing unacceptably high taxation. It is not what you do, but how you do it that counts.