Page 1437 - Week 05 - Thursday, 13 May 1993
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The ACT will be pursuing this matter with the Commonwealth to ensure recognition of the cost impact of high retention rates and the undesirability of attempting to impose policies to reduce retention rates in our schools even if such policies were possible. As I have previously noted, experience in the States indicates that retention rates respond to national economic conditions more than to individual State education policies. All States have in fact adopted policies to encourage students to enhance their educational skills and employment prospects by fully participating in education and training beyond year 10. This changed treatment of retention rates is a significant departure from the commission's previous interpretation of the fiscal equalisation principle, which in the past has attempted to take into account factors outside the direct policy influence of individual State and Territory governments.
Mr Deputy Speaker, several other aspects of the commission's changed assessment methods have resulted in the ACT being assessed as having needs for its population significantly less than those for any other State or Territory. I am concerned that these issues - which affect the way the commission has assessed revenue raising capacity, needs for superannuation and some business undertakings - have resulted in an unrealistic and unacceptable assessment of the ACT's long-term share of Commonwealth funding.
This outcome is masked to some extent by the inclusion of cross-border factors in the relativity assessed for the ACT. If these factors, which do not relate to the range of quality of services provided to the ACT's population, are excluded, the commission has assessed the ACT as being entitled to a per capita share of Commonwealth general revenue funding 26 per cent below the national average. This is significantly less than the share assessed as appropriate for New South Wales and Victoria and presents an unrealistic and unsustainable outcome. The Government will be negotiating with the Commonwealth on each of these aspects.
Mr Deputy Speaker, the record of achievement of the Government in adopting sound financial management strategies will be of great significance in these negotiations. The Government has adopted and will continue budget strategies framed around principles of sustaining real reductions in outlays over the forward estimates period, limiting borrowings to income producing or savings generating purposes, containing the growth of unfunded liabilities compared with outlays and improving revenue performance.
Unlike the States, the ACT faces an adjustment task that is not attributable to past policies made at the State level. The magnitude of the adjustment continues to reflect the legacy of levels and patterns of expenditure transferred to the ACT at the time of self-government. Since self-government the ACT has made much greater efforts to contain outlays than has been the case for the other States. The Government has adopted budget policies which are sustainable over the longer term and will be seeking continued recognition of the need for a sustainable and achievable adjustment process. The level of reduction implied by immediate implementation of the commission's findings - about a 21 per cent real per capita reduction in 1993-94 - would be unreasonable, given the significant steps the ACT has made since self-government towards containing its expenditures and improving revenue performance.
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