Only good luck has kept the ACT from going into the red right at the wrong time in the economic cycle.
Keeping the Budget in surplus has become almost a compulsory mantra for major parties at federal and territory level. But, in fact, the surpluses are tiny and they spend or promise right to the limit.
Some discipline is at least applied in the federal sphere where some 200 journalists and as many political staff members check the cost of all proposals and have running tallies of the totals. They ring alarm bells when the surplus is threatened.
Not so in the ACT, especially this election where so much journalistic and political effort has been diverted to the concurrent federal game.
By the middle of this week in the ACT both parties had blown the surplus of $7.9 million, on any sensible reckoning.
On health, Labor was throwing beds around like a salesman in a Harvey Norman showroom. It was dishing out money for women to go back to work and has promised $70 million extra in child protection “over the next few years”.
The Liberals swallowed the surplus in one gulp with its education promise to increase funding to Government schools by $10 million and to increase funding for each non-government student to a third of the government level (about $18 million a year in time).
This is aside from banging out “I’m the good guy” media releases almost daily – each with an implied cost: $1 million for the courts, $100,000 for Neighbourhood Watch, $500,000 for the ACT Academy of Sport, an architecture scholarship here, some money for firefighters there, a “full-scale” refurbishment of Fraser Court, abolition of Core Residential areas (and the extra rates and land tax that come with them) and so on. Each was directed at the votes of some sectional interest. And no-one was doing the detailed counting.
The ACT would have to beg (from the Commonwealth), borrow (from the financial markets) or steal (from us) to make up the shortfall.
Then they got lucky.
The ACT, like the Commonwealth, has legislated that, a month before an election, the Treasury put out an independent statement of the budgetary position. That figure came out on Wednesday evening. The $7.9 million surplus was really a $20.9 million surplus. But all of it had been promised away before the figure was even announced. We would have been in a real mess if the figure had been $13 million the other way.
Perhaps it is worth putting some of these figures into a more understandable context – comparing them to the spending and income of an average wage earner, on one hand, and the Federal Government on the other.
To compare an ACT figure with a Federal one, just add two zeroes. ACT Labor’s child protection spending is like the Feds spending $7 billion over the next four years. The Liberals’ education promise is at least $1 billion next year rising to $3 billion a year by the fourth year of government.
If the Federal parties threw that sort of money around, you would hear the cry “Where’s the money coming from” from Cape York to Cape Leeuwin.
On the other hand, the $13 million improved position announced on Wednesday is the equivalent of just $4 a week for an average worker. It is not very much. It certainly does not mean the political parties can go out of a splurge.
The improved position, by the way, is not down to any good management on the ACT’s part. It is made up almost entirely of extra revenue from the GST – all of which goes to the states and territories. Sixty per cent of ACT revenues come from the Commonwealth.
In all, the ACT is not in a rosy position. Here we are at the top of a boom. The housing boom has resulted in large slabs of extra stamp duty and land tax. Much of the alarming increase in household debt (based largely on increased housing values) has gone into consumption, thereby increasing GST revenues. The Federal Government has increased the size of its public service and public spending (much of it defence). This has given Canberra boost.
Yet the best the major parties in the ACT can do in these most favourable conditions is a tiny surplus or maybe a slight deficit if the promises continue in the lead up to the October 16 election.
What is going to happen when property and debt-fuelled GST revenues level out or fall, and federal spending in Canberra contracts? Further, it is likely that just as the extent of the increase in revenue from property taxes was under-estimated, so will be the extent of their drop.
We should be saving during this boom so government spending can boost the economy in the coming slump. But, no, our politicians are out there buying votes. The electoral and economic cycles are horribly out of sync.
And speaking of Federal and ACT elections, will the blackout on political advertisements imposed between midnight on the Wednesday before the Federal poll to the end of polling on the Saturday October 9 affect political advertisements for the ACT election?
Independent Ken Helm who is standing for Molonglo thought he might use that period to advertise for the ACT election, and probably get a discount. He is awaiting an answer for the TV stations and the bureaucrats.
For what it is worth, my reading of the Broadcasting Services Act says the ban applies only to political advertisements “in relation to” that election – not all elections and not all political material. So an advertisement for an ACT candidate directed at the ACT election can be broadcast during the federal blackout.
We will not be spared.