Page 62 - Week 01 - Tuesday, 10 February 2015
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Budget 2014-2015—Investing in Canberra—Budget review.
I ask leave to make a statement in relation to the paper.
Leave granted.
MR BARR: I present to the Assembly the 2014-15 budget review, prepared in accordance with section 20A of the Financial Management Act 1996. The 2014-15 budget review reflects that, despite the ongoing impacts on our economy arising from the commonwealth government’s fiscal consolidation efforts, the government is continuing to implement its priorities as outlined in the 2014-15 territory budget.
A new priority has been included in the 2014-15 budget review—namely, the ACT government’s buyback scheme for ACT houses affected by loose-fill asbestos, the Mr Fluffy insulation. The government has acted on a recommendation of the ACT asbestos response task force, and all affected houses will be demolished.
As the Assembly is aware, the cost to the territory’s budget will be significant. However, the government believes that the asbestos eradication scheme will offer a fair and flexible solution to Mr Fluffy home owners that will remove the risk of loose-fill asbestos not only to home owners and tenants but, importantly, to the broader community.
As the Assembly would be aware, the commonwealth has agreed to provide the ACT with a $1 billion loan over 10 years. The ACT government will, however, incur the full net cost of the asbestos eradication scheme as well as the interest costs on the commonwealth loan.
Given the magnitude of the impacts associated with the asbestos eradication scheme and with a view to providing additional clarity, the 2014-15 budget review presents the movements in the headline net operating balance both with and without the impacts of that scheme.
When the effects of the asbestos eradication scheme are excluded, the headline net operating balance estimate for the 2014-15 fiscal year has declined by $53 million. In other words, in the absence of the scheme, the forecast deficit would have been $385.9 million. The forecast for each subsequent year is a marginal improvement over the 2014-15 budget estimates, resulting in a total net reduction of only $32.7 million in the headline net operating balance across the full four years of the forward estimates.
However, when the cost of the asbestos eradication scheme is taken into account, there is, of course, a far more significant decline in the headline net operating balance for 2014-15. This, as has been explained on numerous occasions in this place, is associated with the acquisition cost of the properties from home owners and the expenses associated with housing demolition, soil remediation, financial assistance packages and the administrative costs of the asbestos response task force.
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