Page 81 - Week 01 - Tuesday, 14 February 2012
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It is important to note that these are short-term issues. The target of returning the budget to balance in 2013-14 remains. The ACT continues to enjoy robust economic growth and, compared to other jurisdictions, we are indeed performing well. State final demand is growing at 3.3 per cent year-on-year to the September 2011 quarter. The ACT continues to enjoy low unemployment, well below the national average at 3.8 per cent, and continues to have a high participation rate at 72.1 per cent.
Further, our average weekly ordinary time earnings are more than 15 per cent higher than the national average. We have the second highest net worth to revenue ratio, only slightly lower than the resource-rich Western Australia. We also have the best net debt position in the country and our economy is forecast to grow, albeit at a slower rate than in recent years. We also have a stable and solid base of public sector employment, which provides a strong element of stability to economic activity in the territory.
I reiterate again that the fundamentals of the ACT economy are sound. However, there remains a significant threat to the economy over the horizon, which has the potential to cause real pain to Canberra households. I refer here to the stated objective of the federal Liberal leader, Tony Abbott, to slash at least 12,000 jobs from the federal public service. This, it would appear, Mr Assistant Speaker, is just the starting point. Many Canberrans will remember the significant job losses and economic downturn that was caused when the Howard government slashed thousands of jobs in our city in 1996 and 1997. If Mr Abbott is elected, Canberra will be returned to these dark days. Now of course, Mr Abbott may not be elected, but the prospect of his taking office does affect sentiment in the territory.
In August last year I updated the Assembly about the outlook for the territory economy. I warned that there were significant risks facing our economy and, in turn, the territory budgetary position. Those global economic conditions have not changed. Global financial uncertainty and instability continue. We still see weakness in consumer spending and confidence, both in Australia and globally, and the risk of slower GST pool growth remains.
The influence that national and global economic trends have on the ACT cannot be underestimated. The much publicised turmoil in Europe and in the US, notably through its recent credit rating downgrade, has fed into domestic markets, mostly through sentiment questions, and we have continued to see lower consumer and business sentiment. This has somewhat depressed consumer spending and caused households in particular to focus on their balance sheets through saving or paying down debt. The international turmoil has also increased our superannuation expenses and lowered our investment returns.
In my economic statement to the Assembly last August, I observed that the territory economy would continue to perform strongly, but possibly without a commensurate positive impact on the ACT’s fiscal position, and households would focus on their balance sheets through saving or paying down debt. This has indeed come to pass. Furthermore, there is the additional issue posed by retractions in spending by the
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