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Legislative Assembly for the ACT: 1998 Week 4 Hansard (23 June) . . Page.. 827 ..

MS CARNELL (continuing):

Mr Speaker, the Government will continue to monitor closely our economic outlook in the light of three factors which could impact upon our growth and recovery: First, the Commonwealth public sector is expected to be further downsized in Canberra, particularly in the area of defence personnel. Secondly, the pending Federal election is likely to cause the traditional slowdown that has, unfortunately, been a feature of the ACT economy for decades. Finally, while the Territory is not as exposed to the fallout from the Asian financial crisis as the States and the Northern Territory, its potential effect cannot be ignored.

The Government is forecasting a year-end general government sector operating loss in 1997-98 of $151m. This estimate represents a significant improvement of $60m, or 28 per cent, compared with the published budget estimate of a $211m loss. Remarkably, since first coming to office back in 1995, we have now more than halved the general government sector operating loss, which once stood at $344m. Both international ratings agencies - Standard and Poor's, and Moody's - have again reaffirmed the ACT's AAA credit rating. That is the highest possible domestic credit rating.

Mr Speaker, Commonwealth funding is forecast to increase by $20m, or 3 per cent, this year, in line with forward estimates. However, this budget marks the final year of transitional funding from the Commonwealth. Over the nine years since self-government, general purpose funding has been cut by 49 per cent, or almost half, in real terms. No other government has had to absorb such a reduction in the history of Federation. In just a decade, the ACT has been required to stand on its own two feet. I am proud to say that this Government and the governments before us have managed this task despite very difficult circumstances.

Relations with the Commonwealth have been strained by the requirement for the ACT to pay a final fiscal contribution of $10.2m back to the Federal Government. I have written and spoken to the Prime Minister about the inequity of requiring this payment, pointing out that the Territory has a significant operating loss while the Commonwealth continues to promote a $2.7 billion surplus. While I remain hopeful that the Federal Government will recognise the strong case that we have put forward, our budget is predicated upon a $10.2m reduction. The ACT was, however, the first State or Territory to reach an in-principle agreement with the Commonwealth over a new five-year health funding package. This agreement will see a funding increase of more than 5 per cent in the first year, while the Territory will receive one-off incentive payments totalling more than $16m following our decision to sign early.

Mr Speaker, the budget I am announcing today represents the first stage of our strategy towards creating the clever, caring capital that we want Canberra to become in the twenty-first century. To be clever, we need to be at the leading edge of change, and we need to harness our city's intellectual, social and financial resources. To be caring, we need to ensure that the services that are provided are not only accessible but also flexible and affordable for all Canberrans. Our approach recognises that these aims cannot be achieved overnight, that that will take time. But the initiatives to be detailed today are all important steps towards realising this vision. They are about bringing us closer to a balanced budget so that the next generation of Canberrans is not disadvantaged

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