Page 1416 - Week 08 - Tuesday, 26 September 1989
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Mr Speaker, the Government has carefully examined the possibility of increasing revenues. Of course, the ACT has little control over a large proportion of its revenue: that from Commonwealth grants. While the Government can try to negotiate a better position for the Territory, we cannot rely on expectations of extra Commonwealth funds in planning current expenditures. Therefore, it is ACT rates, taxes and charges which the Government must alter to raise revenue in the short term. However, all these taxes and charges are costs to Canberra families and businesses. Any alterations must fit in with prevailing economic and social conditions. The Government believes it has acted fairly and responsibly in its proposed revenue charges and is clear in its commitment not to increase the real cost burden for individuals and households. We have achieved this by concentrating on improved collection and anti-avoidance measures rather than tax rate increases.
In the initial statement I foreshadowed a number of restructuring proposals where modest capital expenditure would provide substantial recurrent savings. The Government is keen to introduce a number of these restructuring proposals. The early release of funds by the Commonwealth from the ACT transitional funding trust account would have a significant impact in this area.
In deciding on its borrowing program, the Government has to make a finely balanced decision: how much to spend now on important works, with consequent increased economic activity, compared to the future cost of the borrowings and any impacts, positive or negative, on future budgets. At this stage the Government has decided not to borrow almost $11m of its Loan Council semigovernment borrowing limit of $39.5m. This reduces problems for the future. Using the uncommitted funds available from 1988-89 and the unallocated capital funds identified in the initial budget statement makes this borrowing reduction possible. The Government may need to review this decision should the Commonwealth not meet its undertakings with respect to restructuring funds. Thus the key elements of our budget strategy remain unchanged: a balanced recurrent budget and a $10m first step towards reducing the overfunding identified by the Grants Commission.
Mr Speaker, in preparing any budget it is essential to take account of the economic conditions, and this budget has been developed to take account of existing and anticipated economic and social conditions in the ACT.
Economic indicators are sending the ACT Government some mixed signals. Following years of strong growth, the ACT economy is now not performing as well as the rest of Australia in areas such as employment growth, retail sales and levels of activity in the construction industry. On the other hand, measures such as work force participation rates, household incomes and growth in private sector activity indicate an underlying strength in the local economy. This provides the potential for future growth.
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