Page 1298 - Week 05 - Thursday, 18 June 2020
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The government understands that the loss of each of these jobs is devastating, which is why we are devoted to getting every person back into work as quickly as possible. We anticipate that unemployment will continue to rise in the short term, noting that there will be a shorter lag between reductions in activity and employment due to the nature of the economic crisis we face.
We know that the effects of this crisis are not evenly distributed. Some industries have been far more affected than others, and certain demographics have been disproportionately impacted relative to others. People would have seen this. Supermarkets were booming whilst hotels sat empty. Tourism and education are likely to see the largest impacts in the medium term, given the likelihood that national borders will need to remain closed for an extended period.
The burden of unemployment related to COVID-19 has fallen disproportionately on women and younger people. Thirty-six per cent of the 8,700 job losses caused in April in the territory were young people aged between 15 and 24. Therefore, increased investment in skills and education will be more important than ever in the coming few years.
Through both our own policies and reduced economic activity, the territory has seen our main own-source taxation revenue collections declining by around six per cent to the end of May, relative to our 2019-20 budget review. Members would be aware that payroll tax and conveyance duty make up around 40 per cent of own-source tax revenue in the ACT. Property prices for attached dwellings declined by 2.4 per cent in the March quarter, and property transactions have slowed, declining by 3.8 per cent in April. In May, conveyance duty for the fiscal year was cumulatively down by around 20 per cent, relative to the 2019-20 budget review.
The impact on the ACT’s fiscal position from the COVID-19 health emergency will obviously be significant. Of course, like every other state and territory government, and the commonwealth government—indeed, every government in the world—headline net operating balance positions are deteriorating, and net debt is rising. This will reflect major reductions in national GST revenue, further reductions in our own-source taxation revenue, and the increased expenditure required to support the COVID-19 response.
We will get further details from the commonwealth in their update towards the end of July, but advice is that national GST collections—our share of GST represents about 25 per cent of the ACT’s revenue base—have declined sharply as household consumption has contracted. National household consumption expenditure declined by 0.7 per cent in March, which led to a 2.4 per cent reduction in GST collections reported in the national accounts over the same period. This is before the much more significant anticipated reductions that will come when the April and May figures are provided.
This fall in GST collections is in addition to the Commonwealth Grants Commission five-year methodology review, which reduced the ACT’s GST relativity to the tune of around $100 million in the 2020-21 fiscal year, and $433 million across the budget
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