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Legislative Assembly for the ACT: 2004 Week 05 Hansard (Tuesday, 4 May 2004) . . Page.. 1737 ..

The value of building work in the pipeline still remains at historically high levels and the ACT construction industry will remain busy over the forecast period.

Mr Speaker, employment growth has been lower than expected this year, yet the number of job advertisements in the Canberra Times newspaper, as reported by the ANZ bank index, reached a record high in March 2004. Employers are having difficulty in filling vacancies and, with strong job growth at the national level, it continues to be difficult to attract strong rates of interstate migration.

Employment opportunities are forecast to remain strong in the territory and will continue to test the capacity of the local labour market.

Commonwealth-state financial relations

Mr Speaker, the territory will continue to receive a positive per capita share of the GST funding pool and its distribution will continue to be based on the prevailing horizontal fiscal equalisation principle.

The release of the Commonwealth Grants Commission’s 2004 review report on 3 March 2004 finalised a five-year review of the underlying assessment methods used to distribute GST funding.

The outcome again confirmed the strong grounds for the territory’s greater than equal per capita share, which is primarily due to our limited revenue sources relative to most other states, our diseconomies of scale, and the cost of cross-border services and national capital impacts.

The commission’s report recommended a decrease in the territory’s GST relativity from 14.9 per cent in 2003-04 to 12.9 per cent above an equal per capita share in 2004-05. While the reduction is disappointing, the result represents an element of good news as the territory will still receive $82.5 million more than it would if GST was distributed on a strict per capita basis.

What is particularly pleasing is that a number of arguments put forward by the territory to the commission were accepted and, had this not been the case, the territory would have incurred a much larger reduction, as proposed by larger jurisdictions like New South Wales and Victoria throughout the review. Those larger states have been pressing for a complete change in the methodology for the redistribution of GST revenues—a change that would hit smaller states and territories very hard.

The Commonwealth, in light of majority support from the states and territories, accepted and endorsed the commission’s relativity recommendations and agreed that the current principles for funding distribution will remain in place, even though there will be an examination of procedures. This bodes well for the territory’s future share of GST funding.

There is increasing concern among the states and territories at the increasing propensity for the Commonwealth to place conditions on grants and for federal ministers to push for

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