Page 1623 - Week 05 - Thursday, 8 May 2008
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .
The current budget makes several optimistic assumptions about the ACT’s economic future, as did last year’s. Measures like state final demand, gross state product and employment and population growth were all overestimated in 2007-08. This year, the ACT government budget has assumed that the federal government will deliver a surplus of 1.5 per cent of GDP, but the surplus is likely to be higher.
Assuming the optimistic figures are achieved, we still see a diminishing budget surplus in outward years. If the optimistic figures are not achieved, we will see budget deficits. Will future governments be able to sustain, for example, the estimated $30 million cut in payroll taxes, especially if there is downturn in business activity and employment? Things are not as safe as they seem. In recent years the government has sailed through on an unexpected land sales bonanza. If the economy does not meet the government’s optimistic projections, will we see another functional review in 2009?
We all recognise the difficulty the ACT government has with revenue streams. There are not many. The ACT government attempted to develop new streams in 2006-07 via actions like the utilities tax and the fire and emergency services levy. These taxes are not environmentally or socially progressive. They are short-term solutions to long-term financial problems—actually, they are medium term now. What I am yet to see from the government is a serious attempt to diversify or alter its revenue streams in a socially and environmentally progressive manner that meets long-term financial needs. If we are aiming for a surplus by 2011-12, the government must tackle this in the near future.
The government has chosen to cut stamp duties on the establishment and alteration of trusts. The Chief Minister dismissed it as a nuisance tax. Why should this tax qualify as a nuisance tax which can be repealed without question while other taxes which affect many more people and are not the slightest bit progressive are classified as essential taxes? I think the editorial in yesterday’s Canberra Times was closer to the truth when it said that the removal of this tax was designed to “burnish Labor’s electoral appeal among demographic groups where Labor support has traditionally been low”. There is enough pork in the barrel for everyone, it seems.
While trusts can serve many very laudable and socially useful purposes, they are also a favourite vehicle for avoiding tax. They keep wealth within the family and they can amount to tax savings of over $100,000 by the time a dependent child turns 18. Few low or even middle-income earners have trust arrangements to minimise their income tax, so this tax strikes me as a reasonable and progressive tax, and I am unconvinced as to the reasons why the Treasurer decided to cut it.
If government took climate change seriously, we would see expenditure on climate change initiatives sooner rather than later. Instead, we see a government maximising its spending in this area in 2012-13. Apparently, this government does not understand that action must be taken now to militate against greenhouse gas emissions and that if we do not do enough now there will be more to deal with later.
The government is giving the impression that it is doing all it can on climate change by investing in all 43 initiatives in its climate change strategy. This may be the case,
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .