Page 1244 - Week 04 - Thursday, 4 May 2006
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time to respond to the challenges of the future than at a time when the economy is robust and confident and when the government is refreshed and ready for such a challenge.
The ACT economy is presently very strong. We have the strongest balance sheet in Australia. Unemployment is at a record low and investment is booming. Just a quick look around Civic shows the scale of activity in our city, with major developments at the Canberra Centre and the western side of the city. In 2004-05 the economy grew by three per cent. At 3.2 per cent the unemployment rate is the lowest in Australia. The employment opportunities in the territory are such that we are actively seeking people from elsewhere to take up these jobs. The territory has, as I just said, the strongest balance sheet in Australia.
With the economy in excellent condition, now is the ideal opportunity to be taking a longer-term stocktake of the ACT’s situation and at the territory’s capacity to deliver to the people of the ACT the world-class services to which they are entitled and which they have come to expect. In recent days there has been some sadly misinformed, at best mischievous, commentary on the state of the budget. I have to say there will be significant egg on more than a few faces come budget day.
The ACT government has a strong balance sheet and has the capacity to manage short-term deficits because of the surpluses recorded in recent years. However, it is true that the ACT faces significant longer term budget challenges. Other state governments face many of these challenges, particularly in relation to health. It is also true that the ACT has higher cost structures compared to other states—a situation that has persisted ever since self-government. Combined state and local expenditure per person in the territory is at least 20 per cent higher than the national average.
In the really vital areas of health and education, which consume about half of budgets here in the ACT, expenditures have traditionally been well above average. Recurrent expenditure per school student is about 17.4 per cent higher than average. Out-of-school expenditure is as much as 50 per cent above the national average. The growth in health expenditure necessary to redress the long neglect of Liberals cannot be sustained at its present rate indefinitely.
These trends are replicated across every area of expenditure. The legacy is a long one. It did not start with this government any more than the ageing of the population started with this government or the decline in the school age population began with this government or the increased demand for hip and knee replacements and cataract surgery began with this government. While the ACT economy and the government’s balance sheet are strong, it is important that we look ahead to make sure that the budget is well placed to manage future pressures. This is exactly why the government commissioned the functional review. Good governments undertake such reviews from time to time.
We have to recognise that the ACT, like all other jurisdictions, faces emerging risks and pressures for services. Increasing health costs is one example. The drivers of this cost are partly ageing, which will worsen rapidly in the next 20 to 30 years in the second and third decades of this century, but, more particularly, the high costs associated with many new medical procedures and technologies, including the effect of these technologies on acute hospital bed days.
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