Page 1415 - Week 08 - Tuesday, 26 September 1989
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develop an appropriate strategy for economic development and budget management. The initial budget statement outlined a clear strategy.
A balanced recurrent budget is essential to provide a sound base for responsible economic management. As well, a start has to be made in addressing the overfunding identified by the Grants Commission in its 1988 report. We must ensure that a sharp adjustment is not forced upon the ACT as we move towards State-type funding.
In adopting this particular budget strategy, the Government has had to deal with an overall recurrent deficit on the forward estimates of $21m, a deficit primarily the result of the Commonwealth's decision to place $17m of the expected ACT recurrent grant into the ACT transitional funding trust account. At the same time, we decided that $10m of the Grants Commission assessed overfunding should be tackled this financial year.
While the reaction to the budget strategy has in general been positive, there have been some concerns expressed. Some sectors have suggested that the level of government expenditure should be significantly increased to offset the current downturn in the economy. While I recognise the current economic problems facing the ACT, a significant increase in expenditure would only be possible if we ran a deficit budget. The Government has no ability to finance a recurrent deficit. It is not a viable option. I note, however, that an increase in expenditure will be possible if the Commonwealth reacts positively to the financial issues currently being negotiated.
Other sectors, while agreeing with the Government strategy of a balanced recurrent budget, believe that not enough has been done to address the overfunding problem and that the Government has relied too heavily on increases in revenue rather than on expenditure reductions. This Government will not support simplistic, ideologically based slashing of public expenditure without regard to the quality of service provision. We will not react automatically to the findings of the Grants Commission in each spending or revenue area. Our approach includes a mixture of increasing revenue and reducing expenditures. We have spread the burden of financial adjustment equitably and acted in tune with the needs of the ACT economy.
There was also adverse reaction to the initial statement from particular groups affected by proposed reductions. In these cases, most groups have argued that areas other than theirs should be cut or that revenue should be increased. In a lot of cases, no offsetting measures were presented.
On the expenditure side, the Government detailed clearly in the initial statement its objective to rationalise government expenditure wherever possible without significantly affecting the quality of services offered. The budget achieves this objective.
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