It is unfortunate that the very desirable fixed parliamentary terms in the ACT and NSW end with elections in February and March, rather than in December. It has meant that with the change of governments in both places a financial hiatus that would have been better dealt in the quieter summer months than in April, just before the Federal Budget. The result has been the postponing of both places’ Budgets. Ideally, it would have been better for Budgets to have been brought down just before the end of the financial year.
The dates of the fixed terms are unlikely to be changed, however. Besides, the ACT has a greater problem of a steadily mounting fiscal imbalance. The Chief Minister, Kate Carnell, says that a full range of reform measures cannot be ready by the earlier Budget date of June 20, so the full Budget is to be put off until September rather than locking in a lesser range of measures for a year from June 20. There is some merit in that approach. It is almost routine for incoming governments to declare the fiscal cupboard bare and that the poor management of the previous government calls for drastic financial measures. Usually there is some truth in it because governments that have been in power a while have a natural tendency towards financial optimism. In the case of the ACT, the former government has been accused of indulging in a $10 million off-Budget spending spree and the ACT Treasury has estimated that without spending cuts the ACT will have a debt of $275 million by the end of the decade.
The Leader of the Opposition, Rosemary Follett, says her Government had a triple A credit rating and ran an overall surplus over three years. This is true. However, the Follett Government did not address the fundamental financial problems of the ACT _ a good capital base, a poor income stream and some bad spending habits. The territory inherited an excellent debt-free capital base upon self-government in 1989 and this was bound to give the territory a good credit rating for many years, even with profligate governance. However, its income stream from 1989 on was not bright.
The Commonwealth was determined to cut its funding and the ACT has no substantial industry to generate more tax income. The ACT also was spending, and continues to spend, well over the Australian average in health, education and others services without showing it has a commensurably better service delivery. These matters were only partly addressed by the former government. Despite what may be some exaggeration and histrionics, it is good to see the new government determined do something about it.
The new Government will have to reverse the folly of giving people across-the-board pay rises for “”productivity” without ensuring the productivity is achieved. This has been true in education and health. Eventually the extra cost has to be picked up by the ACT taxpayer. The Government has shown welcome signs of not taking the easy path of raising taxes to meet Budget shortcomings. Such as path would be especially detrimental to the ACT in the medium and long term. At present the ACT has virtually no industrial base. If it is to build one _ presumably in information technology _ it must make the ACT as attractive as possible, which means taxes and charges that are no worse and perhaps better than other states.
The Carnell Government faces a difficult task, partly because it is minority government and partly because of Canberra’s notoriously effective pressure groups. However, it must aim to meet the broader interests of the Canberra community which is to have leaner (though not meaner) government and one that encourages the industry that will give Australia’s most educated and trained young people real jobs in which to apply that education and training.