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Legislative Assembly for the ACT: 2003 Week 6 Hansard (17 June) . . Page.. 1875 ..

MR SMYTH

This report, I believe, is the most comprehensive yet issued by an Estimates Committee in the ACT. It is the product of more than 80 hours of public hearings, it has generated over 300 questions on notice and it contains more than 50 recommendations. Beyond those mere statistics, what is remarkable about this report is the way in which it goes right to the heart of the budget and budgets generally.

Its first chapter analyses in some detail the role of budgets in the ACT and the failure of this one against some very basic benchmarks. Typically, a budget serves a number of purposes. It provides the economic settings for a jurisdiction for the year ahead in terms of major economic parameters such as employment, inflation and rate of growth. Then, within this economic setting, it sets out the economic priorities and policies for a jurisdiction for the coming year.

It sets out spending priorities for a jurisdiction for the coming year and provides an explanation for any changes in priority. It provides the financial budgets for departments and agencies within a jurisdiction, generally to a highly aggregated level. It identifies non-financial resources to be applied by a jurisdiction to the activities of governing through the provision of goods and services. It may also provide commentary and analysis on the broader context in which a budget is framed, as did the 2002 federal budget.

The paramount purpose of any budget, however, is to show the financial outcome of the previous year and the estimated outcome for the next financial year. In particular, the amount and disposition of expenditure reveals much about the government's view of how it should best serve the community. The identification of actual and prospective surpluses and deficits has a significant impact on community expectations of future service delivery, taxation and financial markets.

The reliability and credibility of budget data are therefore very important. For this reason, the committee is highly critical of the Treasurer for not providing updated information on the principal budget aggregates when he was clearly in possession of such information. When the budget was presented on 6 May 2003, the expected outcome for the 2002-03 financial year was an operating result of $61 million.

In my budget reply, I pointed out that this estimated result seemed excessively pessimistic in the light of continuing strength in economic activity and hence greater than forecast revenue from rates, stamp duties, payroll tax and so on. This was combined with a cessation of the fall in equity markets, which resulted in the loss on superannuation investments being less than forecast. It followed, I argued, that the net effect would be a budget outcome slightly greater than the government's official estimate of $61 million.

Subsequent events have proven my assessment to be correct. Indeed, recent revenue from land sales alone has yielded the government an extra $16 million more than was forecast, and the loss of superannuation investments is now about $30 million less than forecast at the time of the budget. At a rough guess, the impact of those two items alone would raise the surplus in 2002-03 to something in the order of $107 million.

While all this is very interesting, the key issue is: when was the Treasurer made aware of the change in outcome? I would argue that, during the Estimates Committee hearings, the

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