Page 3350 - Week 12 - Tuesday, 17 September 1991
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Commonwealth handed over a Territory overfunded by almost $136m relative to the States. And now the Commonwealth has decided to pull the rug from underneath us. It is clear that, even with severe cutbacks this year, the ACT faces further reductions as transitional allowances included by the Grants Commission decline. Clearly, the task of framing this budget has been mammoth.
Economic Conditions
I turn now to the ACT's economic conditions. Against this harsh reduction in Commonwealth funding, it is heartening that the direct impact of the recession has not been as severe in the ACT as elsewhere. The ACT continues to experience the lowest unemployment rate in Australia. Commonwealth public sector employment, high labour force participation rates and higher growth in earnings have cushioned the decline in private sector activity that has occurred across the national economy.
Whilst major indicators confirm that private sector investment has fallen in the ACT, just as elsewhere, there are early signs, particularly in relation to housing, that ACT private sector activity is rebounding with considerable pent-up demand.
The recession has weakened growth in our own revenues. Anticipated collections from payroll tax and business franchise fees, especially the petrol franchise fee, have dropped. The recession has increased pressure on a number of high-cost government services; in particular, public hospital use and demand for public housing have increased sharply.
The Commonwealth expects its own employment to increase this year by 2.8 per cent Australia-wide. This should have a positive impact on the local economy and provide employment stability at a time when the ACT Government must necessarily reduce its work force. Employment is likely to increase by 1.5 per cent. The growth in the ACT's population is expected to slow from about 2.8 per cent to 2 per cent in 1991-92, but will still remain above the growth rate for most States.
There is room for optimism about the ACT economy. Private sector activity has shown resilience. The long-term potential of our economy is sound, with growth rates and economic performance comparing favourably with those of most other regions.
The 1990-91 Budget Outcome
The outcome of the 1990-91 budget, framed and presided over by the previous Government, has added to the difficulties we now face. The Alliance Government was unable to contain recurrent expenditure within the estimated levels. The blow-out in health expenditures contributed significantly to this outcome. The outcome of the 1990-91 recurrent
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