Treasurer and Chief Minister, Rosemary Follett brings down the ACT Budget at 3pm today, (Tuesday) facing further cuts from the Federal Government and threats from teachers to take industrial action if they are not satisfied.
About $70 million has been pruned off Federal grants to the ACT. The ACT now receives almost exactly the Australian per-head average of state and territory grants. None the less that is $70 million less than last year when the ACT continued to get substantial self-government transition funds.
This means today’s Budget will mean service cuts, extra revenue, efficiency measures, extra borrowing, capital run-downs or a combination from among the five. Alternatively, there could be some plain over-estimations of revenue and under-estimations of expenditure.
Last year, the Government announced efficiency measures and did not achieve them. It also announced it would not borrow its way out of trouble and commendably kept the promise. The actual result (which was almost an exact balance) was better than the budget because of extra revenue from property (land tax and stamp duty) and a slight capital run-down.
Last year it aimed at a 2 per cent across-the-board spending cut among agencies. This year the Government has been advised strongly against this sort of salami-slicing because it is guaranteed to cut the most effective programs too much and the least effective too little. Some sort of targeting is more likely.
Last year the Government failed to achieve the efficiencies with budget overruns in major agencies. It had to contend with public-sector union agitation whenever efficiencies were mooted and will have to do so again.
On the revenue side, high petrol franchises have been tipped by the opposition. The inquiry on savings by Dr Vince Fitzgerald has suggested state and territory death duties. But there can be any amount of idle speculation and guesswork about Budgets.
Compared with other states and the Northern Territory, the ACT is in very good shape financially. This is largely because it inherited no debt at self-government. It is not carrying the interest-repayment burden of the rust-belt States. Moreover, the ACT has lower unemployment than elsewhere which makes for better revenue.