Page 3001 - Week 10 - Tuesday, 14 September 1993
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The Government's responsible approach to financial management, borrowings and debt played a significant role in securing a AA-plus long-term credit rating for the second year in a row and has assisted the Government in framing the 1993-94 budget.
Madam Speaker, 1992-93 brought dramatic changes in the financial relationship with the Commonwealth and the other States. The Grants Commission's five-yearly review of relativities resulted in a reassessment of the ACT's standard expenditure and revenue capacity. The commission's recommendations were adopted by the Commonwealth in the July Premiers Conference and resulted in a reduction in our general revenue grants from $387m in 1992-93 to $309m, including special revenue assistance of $40m. The new relativities have meant that the eventual level of funding we can expect from the Commonwealth is even lower than was anticipated at this time last year. As a result, an accelerated pace of budget adjustment has been imposed upon this Territory.
The 1993-94 budget has successfully balanced the social, economic and environmental needs of the ACT within the shrinking funding position we face. Despite the massive cut in Commonwealth general revenue grants this year, the Government has produced a recurrent budget with an estimated surplus of $12.8m. This recurrent surplus, combined with previous years' provisions, means that some $56m of the Territory's capital deficit of $90m will be funded internally, with only $34.4m, or less than 40 per cent, expected to be met through borrowing. In contrast, the Liberal Alliance Government borrowed $67.4m in 1990-91 to pay for their budget.
Madam Speaker, our borrowing program is responsible, it is sustainable, and it is underwritten by essential and productive public investment and budget restructuring measures. The relatively low level of borrowing in this budget is an important achievement in the face of the unprecedented adjustment task. It will help us to retain the strong credit rating we have earned and save us money in the future. Within the responsible financing position established for 1993-94, the budget pays its way by providing $31.6m for future superannuation costs. This decision, and the low level of borrowing, will help to avoid handing future taxpayers a large bill to pay for today's services.
Notwithstanding the continuing fall in Commonwealth payments included in the forward estimates, the projected deficits decline slowly from the level of this year, but the borrowing requirement becomes significantly greater. Reflecting our strategic approach, the work force restructuring and program reviews announced in this budget will help future budgets to take a measured approach to this issue.
An essential part of the overall budget strategy is to maintain our revenue effort. The reduction in Commonwealth grants places the ACT into the harsh world of paying its way, according to the Grants Commission's assessment of ACT finances. In meeting these reductions in our grants, this Government intends to avoid the social dislocation caused by widespread cuts in essential programs or massive staff lay-offs which have befallen some States. The alternative, which our strategy adopts, is to keep up our own revenue effort and to pare back on expenditures.
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