We must pay for the privilege or have the privilege taken away.
This is the view of Chief Minister Kate Carnell who points to the latest round of comparisons between the ACT and other jurisdictions over the delivery of government services.
Ultimately she is right as any credit-card junkie knows. A prudent household manger, though, would prefer not to get any consumer credit charges even though you are willing to cop some mortgage repayments in the knowledge that ultimately home ownership is better than perpetual rent.
The question for residents of the ACT is not whether we want a high level of service but whether we are willing to pay for it. Most, I suspect, would be willing to pay for extra health and education services, provided the money was not disappearing down some administrative deep hole.
But the question is not as simple as Carnell would have it. There is a nasty Catch-22 here. Carnell cites the Australian Bureau of Statistics figures as proof of the fact we live privileged lives in the ACT. And she is right in that. In particular, we have higher incomes than in other parts of Australia. There’s the catch. Because we have incomes above the national average incomes it means we must pay the people providing the services incomes above the national average – both public sector employees and the employees of private contractors.
Only a small part of this work can be sourced to low-wage places, like the image diagnostics in India.
In effect, we have to pay more to get the same services as other low-wage states.
Some of the costs might be due to outright inefficiency, in which case it should be attacked.
But it may be we have better services: smaller classes, better roads, and total patient care. If so we should identify and ask whether we want to pay for it. We probably are willing to.
How does the government pay for it. Borrowing is not a good idea. We end up paying for the better service and interest payments. Borrowing is for capital items, not recurrent spending.
No; we must raise more taxes. The tax base of states and territories has been contracting for decades. It is likely to be expanded if the GST gets up because under the Howard plan GST income goes to the states.
But there are other avenues, particularly in the ACT.
When the Commonwealth took over income tax, virtually, by force, in 1942, the territories were not self-governing. So none of the impediments that blocked state income tax in 1942 apply to the territories. He Self-Government Act gives the ACT Legislative Assembly wide law-making power which would include incomes tax. It would require an Andrews-type law of the Australian parliament to reverse it.
And there could be death duties. Death duties were given away by Queensland in the early 1970s. Other states felt obliged to follow as Queensland attracted a lot of people and business to its benefit. With the aging society, however, the reverse applies. Death duties would cause many people to leave to the benefit of state or territory’s treasury because old people are a greater drain. I don’t offer this as a method of expelling oldies, but as an indication that death duties could be reimposed without fear of a detrimental backlash from other states. To the contrary they would follow suit. And then we would all have more money for health and education.