Page 853 - Week 03 - Thursday, 30 March 2006
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that has them in the position to date. But I am pleased to see that he certainly is not putting it down to good management.
The fact is that as a result of GST revenue the ACT will be better off, compared with the pre-GST system of payments, by $151 million in the financial year 2006-07. In other words, if the ACT government were true to the intention of the 1999 intergovernmental agreement, it would cut territory taxes to the value of $151 million. And wouldn’t that make life easier in this territory for many people? But of course it will not happen. It is not possible because of the government’s past spending patterns. The fact that it has now run down its unencumbered cash underscores the extent to which the government has drifted from the spirit and intention of the intergovernmental agreement.
I know the Chief Minister will leap to his feet and say: “Well, you know, we are doing literally what we were required. When we said we would look at the other taxes, it did not mean that we would do anything about them.” But I do not think that was the spirit. I do not think that is what the people of Australia understood to be the case. It is certainly not what I think the people of the ACT believe to be the case.
We do not see, in tax issues, the territory government championing the position of many in the ACT. We saw a backflip on income tax. There is a very high percentage—higher than in the rest of Australia—of salaried people in the Canberra community who pay a substantial amount in income tax; they are not working in business where there may be tax opportunities that escape wage earners. But we saw the former Treasurer dismiss the idea of income tax reductions. He said: “No, we don’t want that going to the people of Canberra. We just want it all for ourselves.” Well, I think the people of Canberra might have a different view about that. I noticed that a little while later he suddenly felt that maybe income tax reductions were not a bad idea. Obviously someone at Labor headquarters said, “Be careful here; we will lose our voter base.” So, sadly, the issue of the tax burden on the community does not seem to be the primary driving priority, but I am pleased to see that we have got this initiative here, which has been agreed to by the Labor states and is, at least, scheduled for implementation.
The removal of many nuisance taxes at the territory level would make the tax system more efficient and contribute markedly to growth. It is interesting that Access Economics, a respected economic consulting firm, have estimated that the removal of these state-based taxes could add more than $3 billion to Australia’s gross domestic product, from which we all stand to benefit, and they said that the removal of the property taxes I referred to earlier would have the most significant stimulatory effect in the ACT. I actually met with them and asked to be briefed on their views about the ACT economy quite some time ago and they said that was the standout item and that there would be amazing flow-throughs to our economy if that reform were embarked upon. I do not stand here today and say we can afford to do it anymore. I think that is one of the tragedies of our present financial system. It will take quite a period of recovery before that can seriously be considered. But I think it is tragic that we are in that position.
Applying the usual ratio in terms of the removal of the state-based taxes would add about $60 million per year in activity to the ACT economy, which would be seen in more investment, more jobs, the look of the city and, of course, better services. When the economy flourishes, obviously the city benefits from it.
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