Page 3541 - Week 12 - Thursday, 19 September 1991
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Ms Follett stated: "We must ensure that a sharp adjustment is not forced on the ACT". This translated, as far as action was concerned, into: "No expenditure cuts, just revenue increases to balance the budget".
She then proceeded to say that she had decided to contribute $10m - a whole $10m - towards the elimination of the overfunding which was identified by the commission. Even then, I had estimated that overfunding to be in the order of $120m, a figure that the Treasurer ridiculed and refused to accept at the time. As it happened, my estimate was close to the mark of $135m, as was later determined by the Grants Commission.
So, what was the Treasurer's overall budget strategy in 1989? It was a typically Socialist Left approach - overly simplistic, failing to address the fundamental problem, and failing to provide a long-term program. It entailed only two basic points - a balanced recurrent budget and $10m towards reducing the overfunding. There was nothing further about stimulating the economy, or creating employment, or rationalising the public service. There was no plan for effective expenditure reduction, but there was a conflicting commitment to increase by 10 per cent overall public sector construction. That, incidentally, is quite a contrast to today, when massive reduction of public sector construction is the go.
In short, it was a strategy of buying our way out of trouble in the short term. So, let me return to my earlier question: How did Ms Follett balance the books? She did it by increasing revenues and using up every dollar of the Territory's reserves that she could identify; in short, by new taxes and soaking up our savings. After last Tuesday, this sounds rather familiar, does it not, because we have a repeat in 1991 of that appalling approach of 1989.
In March last year, when I outlined my Government's economic strategy, I stated that the ACT's financial difficulties would compound if we did not embark on an effective strategy for the next five years - something that was essential if we were to weather the transition period and give the ACT a good financial base for the future. We embarked on such a strategy. Labor has failed to do so.
It was my Government's commitment to responsible management of the community's resources, demonstrated through fiscal restraint and commitment to micro-economic reform, that enabled me to secure the release this year of the entire $53m of the Territory funds which had previously been withheld by the Commonwealth. In hindsight, I am confident that this money was withheld previously by the Federal Treasurer because he could see neither an obvious commitment by the Follett Labor Government to any reforms, nor any attempt to implement responsible financial management policies. Having obtained it, Labor now fritters it all away on short-term objectives.
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