Page 1106 - Week 04 - Thursday, 29 March 1990
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continue to provide capital grants and advances at the 1989-90 levels. Expenditure on the capital budget is forecast at a lower level because of a decline in receipts available from the sale of land in the current economic circumstances. The Forward Estimates show construction expenditure is projected to be $19m lower in 1990-91 than it is in 1989-90.
Various States have been caught up by policies which have allowed for high borrowing regimes which are now coming back to haunt them. A significant proportion of some States' recurrent budgets is tied up in just paying interest on the debts that have accumulated. We will not allow this to happen in the ACT.
The scenario that I have just described requires firm action. The Forward Estimates show that we have a major task to restructure our finances. We cannot just retreat into a corner and hope that the problems will fix themselves. We have to approach each expenditure area systematically and not just seek savings at the edges. We will and we have to face up to the hard decisions.
The Alliance Government has been addressing this problem. I shall now outline our actions directed towards setting the ACT on the right track.
Approaches to the Commonwealth
It is clear that the Commonwealth must establish a realistic framework in which a transition to parity with Commonwealth-State finances for the ACT is achievable.
The Commonwealth had previously undertaken to provide for a three-year guarantee period. The guarantee commenced in 1988-89, a year prior to self-government. Funds generated by the guarantee in that year were not used by the Commonwealth for restructuring. They merely propped up an inflated budget. The operation of the guarantee in that year therefore acted to exacerbate, rather than reduce, our overfunding. This left the ACT Government with only two years to implement major changes. The budget year that we are now considering, Mr Speaker, is the second and last of those years.
It is also crucial to the ACT that we resolve the many other outstanding financial issues which remain between us and the Commonwealth. These include the establishment assistance foreshadowed by the Commonwealth, assistance to cover liabilities passed to the ACT upon self-government and the unique position of Canberra as the national capital.
I have written to the Prime Minister seeking his agreement to an extension of the guarantee period to include the year 1991-92 - that is, an extension of a further year - and asking for an early resolution of the unresolved financial issues that I talked about before. As yet I have had no
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