Page 3585 - Week 10 - Wednesday, 13 September 2017
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Gratefully, we did not take that approach. Thanks to Andrew Barr’s strong economic management, years later the ACT economy has grown substantially, the population is booming and we have continued our steady climb back to a balanced budget. Standard & Poor’s announced earlier this month that we have continued to retain a AAA credit rating, despite ongoing threats from the commonwealth through their continued efficiency dividends, relocation agenda and extended uncertainty about their own credit rating.
You might ask, Madam Speaker, how credit ratings are actually determined. Beyond the components outside the ACT government’s control, such as national economic factors or per capita income, economists look at a variety of hard numbers like the level of government borrowing, the level of net government debt, economic growth forecasts and business confidence surveys. Then ratings agencies look at more qualitative factors like political risks, the government’s economic and spending agenda, for what purposes the debt is being accrued, and the rating agency’s confidence in the government’s ability to follow through on its financial promises and agenda.
Using these criteria, Standard & Poor’s have determined that the ACT is just one of three Australian states or territories, and only one of 28 sub-national jurisdictions around the world, outside of the United States, deserving of holding a AAA credit rating. In comparison to our rating, Queensland, Western Australia, South Australia and Tasmania have only been able to attain AA+ credit ratings. In the cases of both Queensland and Western Australia, it is notable that the then governments of both of those states undertook major expenditure-cutting exercises in the name of so-called “fiscal consolidation” and ensuring creditworthiness. In contrast, we have still been able to pursue large-scale city-building projects.
Furthermore, the report states that “longer-term tax reforms, such as the changes to land tax, will also support the ACT’s budget in the future” by making revenue sources more stable and less subject to market fluctuations, while also reducing the detrimental economic impacts of taxation or, in other words, any deadweight losses. But where I think we stand out from the pack is that the ACT government’s tax reform package has actually made the journey back to surplus an equitable one, whereas governments in other jurisdictions have undeniably increased inequality due to their one-sided approaches to reducing deficits. To quote Standard & Poor’s:
We expect the reform package to be revenue-neutral, and more progressive and stable than the former tax regime.
Where Campbell Newman, Barry O’Farrell and Joe Hockey all decimated government-funded support services with an austerity approach that disproportionately affected women and disproportionately affected people with disabilities, immigrants and those on the lower end of the socio-economic scale, our changes in the tax mix have meant that our service provision has been better than ever, while a greater proportion of revenue is collected from those with higher incomes and higher net wealth than ever before. We have actually managed to pull off the trick of becoming a more equitable government during a downturn.
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