If the ACT had any steel, it would join the rust-belt states fairly quickly.
As it is most of its economy is based on sheltering and feeding federal public servants, so its public finances are not like that.
None the less, yesterday’s Budget took those finances from excellent to merely good. And the projection, without policy changes, is for them to head to the debt trap.
After making much of the harsh circumstances imposed by the Federal Government, Rosemary Follett ignored them. The $78 million cut by the Commonwealth is met by Ms Follett dipping into reserves and borrowing to meet a deficit of $77 million.
And in each of the next three years borrowings will average $57 million. It is precisely the debt trap warned about by Commonwealth Grants Commission chairman Dick Rye earlier this year.
It means that in three or four years time the ACT will have to meet higher interest payments. This year’s “”social-justice” spending will be next year’s interest payment.
The few savings made have been squandered in the same breath. Moreover, the method of the savings _ another 2 per cent across-the-board-cut _ is not very smart. It means the most effective and efficient program is to be cut 2 per cent as is the worst (buses and tourism excepted).
It was a steady-as-she-goes Budget _ steadily off course.
The Budget has squeezed the middle. “”Social justice” is there for welfare recipients _ homeless men get a home, there’s a half-way house for women, electricity concessions for health-card recipients, more loans for low-income rents to buy houses. The very wealthy are left alone. Other than petrol, revenue changes are slight.
The middle residential rate-payers got hit in June with an average 20 per cent rise. The oft cited 5 per cent average rise is for all rates, including commercial rates which fell 1 per cent.
The revenue base remains unimaginatively narrow _ six taxes making up 95 per cent of it, with a pending High Court decision threatening franchise taxes. On the expenditure side there has been little change from earlier pre-self-government structures and only lip-service to building a more diversified economy beyond the federal public service and construction.
It is as if the Government cannot say no to some people and must say yes to others and too bad for the long-term prospects and vast ruck in the middle.