In bringing down the Budget yesterday, Treasurer Gary Humphries was careful to ensure that the ACT Government was not seen as a bunch of market-driven ideologues. He painted his Budget as a liberal Budget, with a small l, not a conservative Budget. This might be a change in heart or an act of political expediency. Either way, it is at least a recognition that the role of Government is quite different from the role of a business. There is more to what government should do than attend to the bottom line.
Mr Humphries turned his attention to social capital. He said the Government should help sustain social capital – the connections between people, institutions and organisations. And he pushed some money that way. In doing so, however, he stressed an important point: governments should only spend money on social capital when they have it to spend. He could have made the further point that spending borrowed money on social capital is counter-productive. Ultimately it, and the interest, has to be paid back at a huge economic and social cost.
In his Budget, Mr Humphries was justly proud of the Carnell Government’s achievement of getting the Budget into balance with modest projected surpluses to restore the overall government finances of the territory. It will pose a challenge to Opposition Leader Jon Stanhope in the lead up to next year’s election. To be a credible alternative Government he will have to fit his policies and promises in that context and subject them to the rigours of accrual accounting. The imposition of that discipline will be a good thing for the territory.
In turning its attention to social capital, the Government has not proposed to set up large-scale government programs. Rather it will mostly fund community groups to do the work. This approach to dealing with service to the less advantaged in the community has the merit of being cheaper to delivery. However, whether it produces a better result in the long term is an open question. It may be that either the cost of supervision of non-government organisations or the risk of government money going to groups with weak supervision is not worth it. Alternatively, the service delivered may not, in the long term, be as good. Alternatively, the Government could be on to a good thing: better services at a cheaper price.
The Government, while copping the political flak for higher revenues in the form of taxes, fines and charges, has conversely directed its spending in a politically astute way. It has offered a palliative to all the sores that have caused public disquiet in the past couple of years: police presence, Gungahlin and Tuggeranong traffic, dilapidated government flats, poor upkeep of the city, and cycleways. These things need doing in any event. The question for the Government will be whether the squeaky door is a true indication of community priorities.
The Government can claim some success in its program to fund properly the ACT’s public-sector superannuation liability. Left unchecked it would have placed a huge debt burden on the ACT in future decades. Not many governments tackle long-term issues will little electoral return. The program is a sensible one which will see the accumulation of a significant investment fund to meet the liability. It is essential, however, that prudential requirements proposed in Bernie Fraser’s report be adhered to and that the fund is not used for investment plans for local glory.
The Budget now faces a test in the Assembly. Independents have already muttered dissent at certain line items. Mr Humphries has said he stands by his Budget. This he must do. The ACT is likely to have permanent minority government. In that environment, the temptation to allow the unpicking of line items of the Budget must be resisted if the territory is to have fiscal integrity. Budgets must be all or nothing and a vote against the Budget must be seen as a no-confidence motion