Page 3045 - Week 11 - Tuesday, 11 September 1990
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the adverse economic and social consequences of continuing high interest rates, high inflation and high overseas debt. At the same time, the Commonwealth has imposed reductions in its support to the States which exceed the constraint it has exercised over its own expenditures.
I am committed to ensuring that the ACT avoids the problem of excessive reliance on debt financing which now plagues so many of the States. The severity of the consequences of this, coupled with the cutbacks in Commonwealth funding, are now only too evident for the Premier of Tasmania, who is being forced to impose severe service cutbacks in his State because of his debt servicing load.
Mr Speaker, in 1989-90 the ACT economy performed better than those of most of the States, despite the adverse effects on business confidence of high interest rates and the direct effects on Canberra's economy of the Commonwealth's tight fiscal policies. Employment increased by 2.9 per cent and inflation in Canberra was the lowest of all the capital cities. Retail sales, although down overall, recovered towards the end of the financial year. In other respects, Canberra shared in the somewhat mixed performance at the national level.
In 1990-91 the ACT will again be affected by tight national fiscal and monetary policies. It is expected, however, that conditions will improve from early 1991 as interest rates ease and planned tax cuts allow some increase in consumer spending. This should result in a moderate increase in employment, a stable level of building and construction activity, and some improvement in retailing and tourism.
Mr Speaker, I should deal briefly with the outcome of last year's budget. The Labor Government, in framing the 1989-90 budget, forecast a balanced budget outcome. We reviewed the budget situation within three weeks of our taking government in December 1989. Major decisions were taken to contain a $7m blowout in hospital expenditure, a situation in regard to which the Labor Government had been inexplicably indecisive. New spending proposals of the previous government were also re-examined - - -
Mr Berry: You closed down hospital beds.
MR KAINE: That is what you should have done, mate. New spending proposals of the previous Government were also re-examined for priority and several were cancelled, to overcome the budget gap left by the previous Government's failure to implement its own expenditure reductions and its own revenue measures.
During the year, in addition to the positive management decisions which we took, unexpected circumstances arose that contributed to a budget surplus. The national wage decision in 1989 was delayed. Interest rates remained higher for a longer period than anticipated, leading to
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