Page 2611 - Week 07 - Tuesday, 5 June 2012
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The situation is now somewhat different.
Europe’s continuing and worsening sovereign debt woes are well known, and having flow-on effects around the world.
Financial markets have remained unstable.
The current surge in national economic activity, while welcome, is in sectors that do not contribute to the GST pool. And because of lower nationwide consumption, that pool is shrinking.
The Commonwealth’s recent Budget was constructed against this backdrop, and the spending decisions in that budget have knock-on implications for every State and Territory.
All these external factors influence the Territory’s fiscal position, and local business and consumer confidence.
In response to these deteriorating conditions, the target for the return to surplus has now been moved back to the original target of 2015-16.
It is the right decision for this city and this community because it will let us absorb some of the impact of these external factors without risking unnecessary damage to local confidence, local business and local jobs.
In brief, the new scenario looks like this:
As a result of the timing of Commonwealth Government payments, this year the operating deficit will reduce to $125.5 million.
However, this will increase the deficit in 2012-13, and make it larger than previously expected.
In 2012-13 the forecast is for a $318.3 million deficit.
In the out years the deficit is projected to be $130.2 million in 2013-14, and $51.3 million in 2014-15. We are forecasting a surplus of $25.2 million in 2015-16.
In the face of all this it is important to recognise that the ACT’s fundamentals are strong.
We have low net debt and a strong asset base, and we are investing in productive infrastructure to continue to support growth.
And that is why we are able to take the decisions we take today—decisions that protect rather than imperil our local economy and local jobs.
The decisions taken in this Budget allow us to maintain the Government’s spending and employment.
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