Page 2247 - Week 07 - Thursday, 27 August 2020
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Complementing this is expansionary fiscal policy that will accelerate the recovery of the territory and national economies. This is a change to how fiscal policy has operated in Australia over recent decades. This requirement to exercise expansionary fiscal policy represents a new phase of economic management in our country. In this context, we are acting on the principles that by investing today to support the economy, we are avoiding an even bigger loss of economic output and jobs that would damage our economy and community for years to come, which would put a larger ongoing strain on the territory’s budget.
The territory’s public finances are in strong shape and public debt here is much lower than in most other states and territories and considerably lower than at the commonwealth level. Overall, the territory balance sheet is also in a strong position after decades of good economic performance. The ACT government’s financing costs have never been lower, with interest rates being the lowest since the Australian colonies federated to form this nation.
The message from the Reserve Bank is clear and the right thing to do now is to use our borrowing capacity to help people during this once-in-a-century crisis, to keep them in jobs and boost public investment at a time when private investment is very weak. Interest rates are the lowest since federation, which will allow all states and territories to use our balance sheets to build sustainable, productivity-improving and growth-enabling infrastructure to prepare our communities for the future.
Through this plan we are sending a very clear message. Our decision to invest in Canberra will give businesses the confidence to invest and keep employees working. The role of every government in Australia at every level of government will be to drive aggregate demand through increased expenditure. It requires us to be bold and it requires us to take on more risk. Locally, we will continue to create and shape markets to encourage job creation in emerging industries.
In June I presented to the Assembly the ACT economic response to COVID-19, noting that at this time I would have generally presented the budget and the appropriation bills for this fiscal year. So 2020 has not been the year that any of us expected—we have endured extreme bushfires, a catastrophic hailstorm and we are still facing the very real threat from the COVID-19 global pandemic.
Through the government’s rapid steps and the community’s actions to keep each other safe, we have so far managed to avoid the overwhelmed health and aged-care systems that we have seen in many other parts the world. This has meant that at this early stage of the pandemic our community has handled things well and our economic recovery has been stronger than in other jurisdictions.
In Australia and across the globe there continues to be a deterioration in economic circumstances and associated impacts on consumer confidence and on the public finances of all governments around the world; but what is clear is the absolute correlation between the quality of the health response and the impact on the jurisdiction’s economy.
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