Page 216 - Week 01 - Wednesday, 26 February 2014
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a positive. If interest rates rise at any point in the next three or four years and our commonwealth bond rate goes above six per cent, this figure turns around for us. That is totally beyond the control of the ACT government. Not even Mr Smyth, I think, would suggest that we have a role in setting interest rates.
The other change is the impact of the ICRC’s water and sewerage pricing determination. In his presentation, Mr Smyth suggested that the independent determination of the ICRC on pricing is somehow my decision or a decision of the Chief Minister and me. Simply put, the ICRC has put a pricing cap, set the price, on what ACTEW can charge for water and sewerage. That impacts upon its dividend and the income tax equivalent payments it makes. It reduces the payments to the government from ACTEW Corporation by $22.4 million in 2013-14, and by $120 million over the four years. Income tax equivalents are expected to fall by $10 million in the 2013-14 fiscal year and by $54 million over the four-year period. This is not a decision of the Chief Minister or me.
Clearly, the benefits of this decision flow to households and businesses. Whilst Mr Smyth was busy lecturing us in relation to increased commercial conveyance, he neglected to laud the decision that has resulted in about 100 bucks a year or thereabouts going back into the pockets of every household as a result of the pricing determination. But the money that goes back into every household and every business does not come into the territory budget by way of a dividend by the ACTEW Corporation.
These parameter changes are beyond the control of the territory government but are reflected in this moment in time in the budget update. But they are not policy decisions of government. None of the adjustments to the bottom line—the big ones—are a result of policy decisions. I think about 99.7 per cent of the change results from those parameter changes.
To summarise, the 2013 budget review reaffirms the strength of the territory’s financial position but also recognises there are a range of external pressures that are driving the softening economic outlook for the territory. We remain well placed to respond to future unforeseen fiscal shocks. But let us be clear: the government’s intention is to continue to invest in the territory economy, drive the infrastructure projects that will provide jobs and increase the productivity of the city. That is one point that I think Mr Smyth and I are in agreement on—that we do need to increase the productivity of the city—although, on behalf of the manufacturing sector within the ACT that does exist, I will take exception to his comment that it does not exist. They do exist; they are growing; and they continue to make a contribution, albeit small, to the territory’s net exports.
To the fullest extent possible we will continue to respond responsibly and prudently to these matters and these challenges that face us in our future policy directions. It is important that the government budgets for the times. We are going to be entering a difficult period. Through that period, it is important that the territory government continues to support the growth of our economy.
To turn to the specifics of Mr Smyth’s motion, it is easiest to deal with those now. That way, we can provide Mr Smyth with the information he needs.
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