Budget Paper 1: Speech


ACT Budget presented on 4 May 1999 by Kate Carnell MLA

Chief Minister and Treasurer


Mr Speaker, next week the ACT marks the tenth anniversary of self-government.

There can be no better way to celebrate this milestone than to announce that we have successfully made the transition from financial dependence to financial sustainability.

The budget I present today does just that.

It more than halves the budget Operating Loss and lays the groundwork for the budget to move into surplus in 2000-2001, four years ahead of schedule.

It commits $300 million towards our greatest financial millstone, the unfunded superannuation liability.

And it provides additional resources for critical services including health, education and justice.

Mr Speaker it is a responsible budget, it is fair budget and it is a sustainable budget.

It is a budget that allows us to look forward with confidence to the next ten years because we have put the Territory’s finances in order.

As we enter the next century, Canberra will continue to be Australia’s best place to live, work and raise a family.

Last year we mapped out a four year budget strategy centred on the theme of creating a clever and caring community.

Our goals have not changed.

Indeed strong financial management makes those goals achievable.

This budget also marks a further step in the standards of transparency in the information that is provided to Canberrans.

The papers I present today spell out clearly where savings will need to be made.

Where taxes have been increased.

Where reductions in staffing will occur.

Mr Speaker, we have gone ‘the Full Monty.’

Addressing the Operating Loss

Mr Speaker, I am proud to announce today that this government’s budget strategy will result in the elimination of the ACT’s operating loss within two years.

The 1999-2000 budget provides for a further dramatic reduction in the general government sector operating loss to $63 million.

This represents an $86 million or 58 per cent improvement on the $149 million operating loss forecast for the current financial year.

Less than 12 months ago, we promised to eliminate the operating loss by 2005.

Today we are on course to deliver on that promise four years ahead of schedule.

Indeed, by 2003-04, our strategy will see the Territory recording a forecast general government sector surplus of $67 million.

Our aim is to achieve a sustainable operating surplus that is sufficient to fully fund public sector capital works without the need for borrowings.

Under this government, we are on track to do just that.

And we will do so while continuing to fund important areas like health and education at levels that are above the national average to ensure that these high quality services remain accessible to all Canberrans.

Mr Speaker, when we first came to office four years ago we confronted the legacy of a $344 million operating loss left by Labor.

Most observers felt it was an impossible task to even think of trying to turn that into a surplus, given the realities confronting minority government in the ACT.

We have done the impossible and better, turning a $344 million operating loss into a surplus within six years without slashing and burning.

Mr Speaker, this government does not view a surplus as an end in itself.

Rather, it is the means by which we can ensure that not only are adequate resources directed to where they are most needed, but that future generations of Canberrans are not disadvantaged because we could not live within our means.

Economic Outlook

Mr Speaker, a stronger ACT economy is one of the factors underpinning the improved budget position.

The ACT has now enjoyed nine consecutive quarters of economic growth, producing a steady fall in the unemployment rate to levels not seen since the start of the decade.

The focus on business and employment in the last three ACT budgets has paid off, helping to diversify and strengthen the local economy.

Business conditions are positive, with low inflation, low interest rates and increased opportunities flowing from Commonwealth government outsourcing all contributing to high levels of confidence.

The government expects 1999-2000 to be a period of consolidation with economic growth forecast to moderate before accelerating again in the following financial year.

Population growth is predicted to increase gradually but remain below the national rate for several years.

The government has continued to be conservative in its forecasts of both economic growth and revenue growth in line with our commitment to responsible financial management.

Financial Relations with the Commonwealth

Mr Speaker, a much fairer deal from the Commonwealth is the second factor behind our improved budget position.

In our financial relations with the Commonwealth, we have achieved what no other ACT government has been able to do since 1989.

Following 10 years of reductions in federal payments which had amounted to almost 50 per cent in real terms, this government has successfully reversed that trend.

In 1999-2000, total Commonwealth funding to the Territory, including Specific Purpose Payments, is forecast to increase by $85 million or a record 14 per cent.

General purpose funding increases by 18 per cent, or $57.5 million.

It is unquestionably the best outcome since self-government and vindicates this government’s decision to go all out in putting its case to the Grants Commission for a greater share of Commonwealth payments.

Mr Speaker, as these budget papers show, we have responsibly directed this additional funding to reducing the operating loss and providing additional resources in areas of critical need.

Finally, the ACT, like other states and the Northern Territory, is on the verge of entering a new financial arrangement with the Commonwealth that will give each jurisdiction access to a growing financial pool.

Subject to the passage of legislation currently before Federal Parliament, the ACT will have access to revenue from a goods and services tax to be introduced from the 1st of July next year.

In return, the Territory will progressively abolish nine of its own taxes.

Thanks to this historic reform of Commonwealth-State financial relations, the ACT’s future budgetary position has been dramatically strengthened.

Budget Overview

Mr Speaker, spending restraint is the third critical element shaping the improved budget outlook.

Total expenses are forecast to increase by just three per cent, or less than one per cent in real terms, during 1999-2000.

More importantly, this budget represents the next stage of realising our vision for Canberra as a clever, caring community.

It targets additional resources and support for Canberra’s school and college students, for Canberrans needing medical treatment, for Canberrans with disabilities, and for increased protection of Canberra children who may be at risk.

This budget also recognises the need for greater effort by the government to improve our corrective services, our public housing and our city’s general appearance.

It will enable us to modernise our information technology systems so that we can deliver services to Canberrans quickly, conveniently, accurately and more efficiently.

At the same time, we are laying the foundations for a genuine budget surplus, to do what no other ACT Government has done - put our finances into the black using the most transparent of all public sector accounting measures.

While it is true that the elimination of the ACT’s operating loss has been high on our agenda, the need for improved social and community outcomes has not been overlooked.

Good financial management has delivered the social capital that Canberrans want.

And the responsible approach we have taken is the only way that these outcomes have been and can continue to be achieved.

Let me turn now to the major initiatives contained in this budget.

Health and Community Care

Mr Speaker, over the last four years, this government has invested heavily in the provision of new, and expanded services and facilities for health and community care.

This budget reinforces this commitment by providing additional funds to help people needing elective surgery, people with disabilities and older Canberrans.

It will also enable essential reforms and improvements to both hospital and community services as the focus of health care in the ACT increasingly shifts from acute care to primary intervention and support.

To ensure that waiting times for Canberrans needing urgent elective surgery are improved, the government has decided to allocate an additional $3 million to purchase many more surgical procedures.

To be in place for the next two years, this initiative represents a doubling of funding to $6 million per annum for the waiting list reduction program that was first established by this government.

Day surgery facilities at The Canberra Hospital will also be expanded from eight to 12 beds to enable greater throughput for these procedures.

As part of the plan by the Hospital’s management to improve its efficiency and contain costs, this budget also provides funding for targeted voluntary redundancies.

In total, the Hospital is expected to realise savings of approximately $12 million in 1999-2000 through this and other efficiency measures.

Mr Speaker, funding for the Home and Community Care Program will be increased by a further $1 million which will allow many more services to be provided to older Canberrans, people with disabilities and carers.

In 1999-2000, a record $12 million will be spent under this joint Commonwealth-ACT program.

If there is one area of community care which receives less public attention than it deserves, it is surely disability services.

Despite this fact, in the last four years, this government has boosted funding for disability services by 30 per cent.

I am pleased to advise that in this budget, we will provide a further $1 million for disability support services in recognition of the level of unmet need.

The Government has also made good on its promise to establish the Hepatitis C Financial Assistance Scheme at a cost of $4.5 million.

As well, funding of $300,000 has been made available to establish a new, integrated diabetes management service in the ACT.

Finally, the government has decided to transfer Allied Health Services from the control of The Canberra Hospital to ACT Community Care, in line with our aim of strengthening the primary health care sector.

Illicit Drugs

Mr Speaker, the government will release a new, integrated ACT Drug Strategy later this year that will outline the direction we intend to take in combating the problems caused by illicit drug use in our community.

The strategy will be based upon three distinct but interrelated approaches - law enforcement, education and treatment.

In advance of this strategy, this budget includes new funding initiatives costing more than $500,000 which are aimed at boosting our response to these problems.

The Government will contribute $250,000 a year for each of the next four years to help establish the ACT’s first residential drug treatment program for teenagers.

Extra funds totalling $100,000 will be made available to provide up to 100 additional places on the methadone treatment program.

Another $115,000 will be directed towards strengthening drug education programs in government schools.

Education and Community Services

Mr Speaker, just as this government’s provision of increased community and health services underpins our notion of a caring community, then our efforts to maintain the best education system in Australia must be seen as integral to our goal of a clever community.

In this budget, like the four that have preceded it, funding for government schooling has been maintained in real terms at an additional cost of $5.2 million in 1999-2000.

A total of $1 million has been set aside over the next three years to establish the High Schools in the New Millennium Program.

A Teacher Renewal Program will also be introduced with the aim of creating increased employment opportunities for graduate teachers.

It will provide incentives for teachers who are approaching retirement to consider leaving early and help schools and colleges to better meet their changing skills needs in areas such as vocational education and information technology.

For non-government schooling, we have honoured every one of our election commitments, with an extra $2.7 million in total to be made available in 1999-2000.

Mr Speaker, protection of children at risk of abuse is to be enhanced as a result of this budget.

Funding of $370,000 has been allocated for the introduction of a child protection case management system while a further $200,000 has been set aside for the introduction of family group conference as an alternative dispute resolution mechanism.

As well, $100,000 will be made available to help provide more support and information for Canberra parents and families.

Justice and Community Safety

Mr Speaker, this government places a high priority on helping to make Canberra a safer community.

During the past four years we have significantly increased our police, ambulance and firefighting resources.

In 1999-2000, the Government will provide the Australian Federal Police with an additional $1.7 million.

This Government is also committed to providing police with alternatives to the use of lethal force.

Capsicum spray is one such measure and I am pleased to announce that the AFP has agreed to a request from the government for operational officers to be equipped with these devices later this year.

As part of the government’s commitment to road safety, speed cameras are to be introduced from the 1st of July this year while red light cameras will be operating in Canberra in July 2000.

Mr Speaker, the Government will commit additional funding of $310,000 to meet the increased workload of the Director of Public Prosecutions.

We have allocated $70,000 for the establishment of an Aboriginal Justice Advisory Committee and the development of a strategic plan in a measure aimed at addressing the over-representation of Aborigines and Torres Strait Islanders in the criminal justice system.

The Government has also set aside more than $1 million for the introduction of a new Victims’ Assistance Scheme which will provide counselling and rehabilitation services.

This Scheme is of course, dependent upon the passage of legislation that is currently before the Assembly.

This budget also makes provision for new and improved correctional services at a total cost of $3.7 million, the largest single increase since self-government.

Payments to the NSW Government for prisoners will rise by $2.1 million in 1999-2000, while more than $880,000 will be spent on increasing the capacity of the Belconnen Remand Centre.

Funding of $400,000 has been made available to improve the management and operations of Quamby Youth Detention Centre, including skills development and education courses for young offenders.

An extra $200,000 will be provided to improve nursing and other medical services at both the Remand Centre and Quamby.

Finally, the ACT’s highly successful Community Corrections Scheme which was established by this government, will be further expanded at a cost of $85,000.

Mr Speaker, this additional funding for justice and community services should be viewed against the overall decrease in the ACT’s operating loss.

It shows again how good financial management can produce real improvements in the social capital of our community.

Housing

This budget also marks major changes to the management and operation of public housing in Canberra.

The eligibility and tenure criteria have been completely overhauled to ensure that from the 1st of July this year Canberrans who are most in need will receive priority assistance.

We are determined to ensure that under this government, more low income earners will be able to access housing faster.

To this end, the government will also aim to transfer responsibility for another 800 dwellings to the community sector over the next five years, bringing to 1,000 the total number under community management.

These changes, which are detailed in the budget papers, are accompanied by an increase of almost $8 million in spending on refurbishment and construction of new dwellings.

The government is painfully aware that our current stock of housing does not adequately meet the changed profile and needs of today’s tenants.

An additional 74 units suitable for older persons will be built over the next 12 months as part of our promise to provide 200 new units over three years.

The ageing Lachlan Court complex at Barton will be sold and the proceeds will be used to upgrade Burnie Court at Lyons and to purchase more suitable replacement dwellings.

Environment and Urban Revitalisation

Mr Speaker, this government is conscious of the need to promote not only a sustainable budget surplus but also the sustainable development of the Territory.

To support the ACT’s greenhouse gas reduction strategy, funding of $340,000 will be invested in a range of measures designed to reduce energy usage.

These measures include a pilot subsidy program for water-efficient shower heads, extension of the Energy Advisory Service, the collection of emissions inventory data and a pilot public housing retrofit program to reduce energy consumption in up to 500 homes.

The ACT will also commit an additional $100,000 to enable the production of the Year 2000 State of the Environment report.

It is worth noting too, that funding for the construction of new bikepaths and repairs to existing routes has been increased to $660,000 in this budget - a record amount.

From December, a new Water Abstraction Charge will be introduced to reflect the full cost of water supply and to encourage Canberrans to conserve one of our most precious resources.

In line with the Independent Pricing and Regulatory Commissioner’s recommendation, the charge will be applied at the rate of 10 cents per kilolitre.

For an average Canberra household, this will result in an increase of approximately $30 a year or about 60 cents per week.

It will still mean that Canberrans will be paying much less than residents of other major Australian cities for their water.

Mr Speaker, while this government has already announced new monies totalling $1.3 million under the ‘Streetsmart’ program to improve the appearance of Canberra’s urban areas, we have decided to allocate an additional $1 million in 1999-2000 to help clean up our city.

On top of this, the next stage of our precinct management program will see $2.1 million spent on improving public areas in Charnwood, Dickson, Hall, Kingston, Kippax, Manuka and Weston Creek.

Employment, Business and Tourism

Mr Speaker, while the ACT currently has an extremely low unemployment rate, this government has not reduced its support for Canberrans who are seeking work.

While funding for employment programs has been maintained, the ACT Public Service is set to increase the number of apprenticeships and traineeships that it offers in 1999-2000.

The budget also provides additional funding of more than $1 million for two major business development initiatives.

An ACT Industry Development Program will be established at a cost of $250,000. It will provide small businesses with strategic planning consultancy services and advice.

A total of $775,000 will be invested in marketing Canberra as a business destination both interstate and internationally.

In co-operation with the National Capital Authority, a new ACT Promotion Centre is to be constructed at Regatta Point, overlooking Lake Burley Griffin.

The ACT Government will contribute $1 million to the Centre which will showcase our city to business visitors.

Canberra Tourism and Events Corporation will also receive an additional $2 million for marketing and promotion, the second instalment of a $6 million funding boost over the term of this government.

Information Technology and Multimedia

Mr Speaker, this government is continuing to lead the way in encouraging the development of Canberra as a centre for information and advanced technology.

That leadership is in the form of the complete modernisation of our IT infrastructure across every agency and every service.

Our aim is to have all major government transactions available on-line by 2001 and we are well on the way to achieving this.

Our modernisation program will not only ensure that our critical systems are Y2K-ready by late 1999 but also position the Territory to offer better and faster services to all Canberrans.

$10 million has been allocated for the government-wide upgrading of information technology cabling along with another $8 million for the replacement and upgrading of key systems within the Department of Justice and Community Safety, The Canberra Hospital and the Emergency Services Bureau.

Superannuation Liabilities

Mr Speaker, this budget provides for the allocation of $300 million to help meet the Territory’s unfunded superannuation liabilities.

The money will come from a capital repayment by ACTEW Corporation.

It is a one-off payment allocated fully to the superannuation provision account and will not impact on the overall budget operating result.

It replaces the plan announced last year and is consistent with the recommendations of the Assembly’s Select Committee on Superannuation.

Mr Speaker, this is a second-best option but in light of the Assembly’s decision to reject the sale of ACTEW Corporation, the Government has been left with few alternatives.

From the 1st of July, all new entrants to the ACT Public Service will be able to choose their own superannuation scheme or they will be covered by a default scheme selected by the government.

The government contribution will be consistent with the superannuation guarantee levy of seven per cent, rising to nine per cent in 2002.

It should also be noted that the results of the latest triennial review of the Territory’s superannuation liability should be available in the second half of 1999, which will provide an updated estimate of our emerging costs and liabilities.

Efficiency improvements

Mr Speaker, this government has significantly improved the efficiency and cost-effectiveness of its operations since coming to office.

Over the past three years, the size of the ACT Public Service has been reduced by about 10 per cent or approximately 2,000 positions.

These reductions have been achieved without compromising on the high quality of services that are provided by our hospitals, our schools, our police or other key agencies.

In short, it is because we are working smarter that we can deliver the same outputs with fewer people.

For the Territory’s financial position to be sustainable in the long-term however, much more work remains to be done.

There are still tough decisions that need to be made in the years ahead and this government will not shirk from them.

In 1999-2000 therefore, it is anticipated that approximately 450 voluntary redundancies will be offered across the general government sector.

Again, these initiatives, together with other savings measures, are fully disclosed in the budget documentation.

Mr Speaker, it is important to note that these redundancies equate to a reduction of less than three per cent in total staff numbers.

They will occur at a time when our unemployment rate is extremely low and the bulk of Commonwealth downsizing in Canberra has been completed.

These changes in staffing profiles will form part of the restructuring of operations in a number of agencies, chiefly Urban Services, Chief Minister’s Department, Justice and Community Safety, The Canberra Hospital and CIT.

I cannot emphasise too strongly the fact that the only way we can achieve an operating surplus and ensure our long term financial position is to take these steps to reduce the costs and improve the efficiency of the services that we provide.

Revenue and Assets

Mr Speaker, while new and increased taxes and charges are electorally unpopular, it is the responsibility of the government to ensure that the Territory’s revenue base is both adequate and adequately protected.

This government makes every effort to minimise the impact of these revenue measures upon Canberrans, especially those who have lesser capacity to pay.

Total revenue is due to rise by nine per cent above the forecast outcome for 1998-99, however this is largely due to increased Commonwealth funding.

Revenue from taxes, fees and fines is forecast to increase by four per cent, or $24.7 million.

The largest single item is payroll tax which is growing strongly, reflecting strong employment and wage growth in the private sector.

We remain committed to keeping the general level of taxes and charges in the ACT at or below that of surrounding New South Wales.

A number of new revenue initiatives are detailed in the relevant budget papers as part of our commitment to full disclosure. They include:

The overall increase in rates revenue has been restricted to forecast CPI for the fifth consecutive year.

From the 1st of July 2000, the Government will be introducing a ‘polluter pays’ charge to reflect the costs that pollution imposes on our environment.

Mr Speaker, this budget also responds to the concerns expressed by some sectors of the Canberra community about problem gambling.

I can announce today that this government has allocated $500,000 for research into the social and economic impacts of gambling in the ACT to be carried out by the new Gambling and Racing Commission.

Once again, the approach we have taken to this important community issue is in stark contrast to that of the previous government which did nothing.

Finally, this budget does not rely on major asset sales.

Conclusion

Mr Speaker, without financial sustainability, attempts to produce equity and fairness through the budget will be built on foundations of sand.

The only way we can create a clever and caring community, and guarantee the maintenance of high levels of service is to first get our finances in order.

This budget marks a watershed in the financial management of the Territory.

It is not only fair and equitable, it is also financially sustainable.

It lays the groundwork for the budget to move into genuine surplus in 2000 - 2001, four years ahead of schedule.

This government has been aggressive in its leadership. We have encouraged Canberrans to believe in their city.

Our budget strategy reflects this can-do approach.

We have reversed a legacy of irresponsible financial management left by the Labor Party and reflected in the $344 million operating loss we inherited.

In its place we have boosted revenue, trimmed spending and won a better funding deal from the Commonwealth.

As a result, we will begin the new millennium with our budget in the black and our finances in better shape than at any time since self-government.

The only thing we have to fear is a future Labor government taking us right back to where we started.

I commend the 1999-2000 Budget to the Assembly.