Page 1504 - Week 05 - Wednesday, 7 May 2008
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MR SMYTH: Thank you, Mr Speaker. Treasurer, what risk factors have you built into your budget to take account of this moderation and the likely impact of next week’s federal budget on the ACT economy?
MR STANHOPE: The government, on the back of detailed modelling and assessment that the Treasury has done in relation to the likely impacts or implications of the federal budget, and a range of other risks that present not just to the ACT economy but to all economies around Australia and, indeed, increasingly the world, has factored in risks that we are able to assess and that we are aware of. There has been detailed assessment and analysis of performance and of information available to us in relation to economic activity. There is the fact that we have historically low levels of unemployment and very high participation rates. The economy is still strong. The economy is still operating at a very high level.
The number one indicator of the strength or performance of an economy is, of course, the labour force—the labour market. We have unemployment at under three per cent in the ACT. We have participation rates of over 70 per cent. We have, as reflected by the level of employment participation in the territory, an economy that is performing very strongly. There are certainly risks presented by a contractionary commonwealth budget which will be delivered next week, but those have been factored into the budget. On the basis of our expectations in relation to residential construction, commercial construction and activity, work that we know is in the pipeline, the significant budget which we have delivered and the capital projects of ActewAGL, we have made a range of assumptions.
There are risks in this budget; we are aware of that. But in the context, for instance, of this coming financial year—2008-09—it needs to be understood that the capital budget is fully funded, not just for this year but into the future. This budget specifically allocates funding to the tune of $752 million. That is almost precisely the amount of accumulated cash. Expenditure announced and committed to in this budget is covered by existing cash reserves. It gives us a degree of comfort as well, of course, to have a budgeted $85 million surplus, and surpluses at an average of $61 million over the budget estimates. We have budgeted for an $85 million surplus this year. We have budgeted for an average of $61 million in surpluses over the budget estimates. The committed capital budget is covered by cash reserves.
We have been responsible—at one level, conservative. There are no borrowings. We have the second-lowest negative net debt in Australia. Our balance sheet is very strong. Our cash position is strong, and remains strong. But there are risks; we are aware of that. There are always risks. There are risks in every budget. But we have done the detailed analysis. We have done the work. The budget is sustainable. We have significant cash reserves, and we are budgeting for the future. We are, through this particular budget, creating an environment where the ACT government can play its part in ensuring the continuing strength of the ACT economy. All of the initiatives within our $1 billion infrastructure fund, Ready for the Future, are designed to assist, encourage and facilitate economic activity and growth. At one level, you might argue that it tends to be countercyclical, in that we are investing heavily in an economy where the major firm in town—namely, the commonwealth government—is, on all
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