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Legislative Assembly for the ACT: 1999 Week 2 Hansard (9 March) . . Page.. 392 ..

MS CARNELL

payroll tax to the New South Wales Government. They then pay their taxes, their stamp duties, all of those sorts of things, to the New South Wales Government. We lose the lot for every business that relocates because of a lower tax approach over the border. Mr Speaker, I do not think anybody would recommend cutting off our nose to spite our face in this situation.

Mr Speaker, we have also maintained a policy whereby rates are not increased by more than the rate of CPI. Any departure from this policy attracts criticism from this Assembly. Some of the members will not know because they were not here in the last Assembly, but the enormous amount of work and effort that this Government put in to come up with a new rates approach that was accepted by the Assembly was quite stunning. Members made it patently clear that they were not willing to accept a situation where rates went up significantly more than CPI. Mr Speaker, nobody likes paying more in taxes, but the record of successive governments shows that cutting back spending is even more difficult politically than raising taxes.

The major areas of expenditure, of course, are health and education, which together account for just over 50 per cent of general government expenses. Reductions in services in these areas traditionally attract criticism from members of the Assembly and, of course, absolute opposition from the community itself. Mr Speaker, not so long ago, we saw this Assembly vote against the closure of Downer Preschool, a preschool that at that stage had 12 children. It was a really good example of how this Assembly uses the reality that this is a minority government to block changes in expenditure in areas such as health and education.

The major driver of the cost of services, of course, is employee expenses, making up nearly 50 per cent of general government expenses. Any major reduction in costs will mean a reduction in jobs. The average annual salary in the general government sector is roughly $39,000. Eliminating an operating loss of $90m equates to reducing the number of jobs by roughly 2,300. But, again, any suggestion of job cuts immediately attracts all hell to break loose in this place. And, Mr Speaker, we understand. We are a minority government.

Some facts about the services provided in the Territory I think are important to be on the table at this stage. In the ACT, on average, it costs 16 per cent more than the national average to educate a student; it costs 48 per cent more to treat a patient; and it costs 50 per cent more than the Australian average to process a development application. Why is this so? A lot of it has to do with the fact that we do have more people working in these areas - and remember that wages make up at least 50 per cent of the bill.

Mr Speaker, health expenditure in the ACT is 16 per cent higher than the standardised expenditure according to the latest Grants Commission assessment, even after taking into account disadvantages that may add to our costs, such as the relatively small size of our health system. The most recent report on government service provision by the Productivity Commission found that recurrent expenditure per person in the ACT public, acute and psychiatric hospitals was the highest at $826, compared with the national average of $660 per person.

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