Page 1435 - Week 05 - Thursday, 13 May 1993
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The terms of reference requested the commission to assess per capita relativity factors which the commission would regard as appropriate to apply after 1992-93. The reference also requested the commission to make alternative assessments, with the ACT both included in, and excluded from, the combined pool of general revenue and hospital funding grants distributed among the States and the Northern Territory. Decision on this issue to be taken at the 1993 Premiers Conference will represent another important step in the full incorporation of the ACT in Commonwealth-State financial arrangements.
The report represents a major review of the methodology and scope of the Commonwealth Grants Commission's assessments. It represents the first major review of methodology since 1988, with intervening reports providing annual updates of those previous findings. The implications of the commission's report for funding to the States and Territories will be a matter for discussion at the 1993 Premiers Conference. The ACT, like the States, is heavily dependent on Commonwealth funding. However, the relatively recent transition of the ACT to self-government makes the findings of the report and the Premiers Conference response especially significant for the ACT. I would like to take this opportunity, therefore, to advise the Assembly of the report's major findings and its implications.
Since self-government, the Labor Government has adopted a policy of meeting, and exceeding, the progressive phasing out of transitional allowances embodied in the commission's fourth report 1991 on financing the ACT and reflected in the update of that report in 1992. The most recent report needs to be placed in the context of what has actually been achieved in ACT finances by the three budgets of my Government since self-government. Comparison of government finance estimates by the ABS and credit rating agency reports have all confirmed that outlays in the ACT have been contained to a greater extent than in the States and that substantial progress has been made in bringing the ACT's financial position into line with the States.
In 1992, the ACT achieved a credit rating of AA+ in difficult financial circumstances. This rating was reaffirmed in the agency's annual update released in March this year. This result is second only to that achieved by New South Wales and Queensland, neither of which faces future reductions in Commonwealth funding of the magnitude faced by the ACT. ABS statistics show that ACT final consumption expenditure, the most broadly based economic measure of public sector recurrent expenditure, was reduced in 1991-92 by 1.85 per cent in real terms compared to an increase of 6.2 per cent for all States and Territories. The 1992-93 estimates examined by the ABS show a similar picture, with ACT recurrent outlays being forecast to increase by 1.3 per cent in real terms compared to 3.7 per cent for all States and Territories.
The 1993 Grants Commission's report includes comparative information with the States which also demonstrates the underlying effectiveness of the budget strategies that have been adopted by the ACT Labor Government. Between 1988-89, the year prior to self-government, and 1991-92, the last year of review in the commission's most recent report, ACT above standard expenditure has been reduced by half, from 12 per cent above standard in 1988-89 to 4.5 per cent above standard in 1991-92. The worth and value of these budget strategies place the ACT in a stronger position than would otherwise have been the case to manage the massive pressures likely to be placed on the ACT in future years.
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