The Canberra Business Council applauded the government on having the courage to make some fairly hard decisions, even though we might not have fully agreed with all measures taken. We still stand by that support despite the recent ACT budget.
There are a number of very good aspects of this budget, most noticeably the fact that a budget surplus is forecast. Not only is it a surplus but it’s a whopper, and the forward estimates are also very impressive. The Budget forecasts the ACT economy will grow by 4 per cent in 2007-08, the same as currently forecast for 2006-07 and slightly stronger than the Australian Government’s forecast for the national economy in 2007-08 – 3 ¾ per cent.
The Budget contains a number of important spending initiatives that the Canberra Business Council welcomes including:
. Funding for National ICT Australia of $6m
. Funding of some affordable housing initiatives of approx $9.25m
. Funding for ACT export and trade initiatives, including the Exporters Network and at least two ACT trade delegations to promote ACT business and industry in export markets – approx 1.85m
. New funding for the Live in Canberra Campaign – $400,000 over 2 years
. Funding of $492,000 over 2 years for ACT Skills Commission
. Funding for development of the local film and media industry through a revamped ScreenACT
There are no new taxes this year which is welcomed however total tax collections are forecast to increase by 8 per cent to $482 million.
Land tax collections are expected to rise by 14 per cent to $72 million and payroll tax by 9 per cent to $239 million, without any change in existing rates. By not increasing threshold levels to at least match the Wage Prices Index or CPI, especially at a time of skill shortages when businesses are having to pay top dollar to not only attract but retain staff, businesses continue to get inappropriately penalised.
The City Centre Levy and increases in gaming taxes announced in last year’s budget will take effect from 1 July 2007.
While there is some new spending for tourism including Floriade approx $1.6 over 4 years – which the Council welcomes – it is particularly disappointed the Government has not used its strong financial position to restore cuts to tourism funding announced in last year’s budget which take effect this year.
The Council would also have liked this year’s Budget to contain a commitment by the ACT Government to developing a new Convention Centre.
The budget should have addressed the shortage of parking spaces in Civic, which is damaging many City businesses and forcing many to relocate out of the city centre.
Development of improved water infrastructure is another area of pressing need, on which the budget is silent.
The Business Council is disappointed that the Government has not used its strong financial position to restore some of the business cuts it made last year.
Given the nature of last years budget and the fact that this is not an election year, you can’t reasonably expect this years budget would include a swag of new initiatives. However this Budget has missed the opportunity to invest considerably more in the Territory’s economic future to ensure future prosperity.
In order to encourage investment in this city and to continue to prosper, we need to remove taxes that are considered to put us in a very non-competitive environment against other jurisdictions.
The Government has missed the opportunity to reduce its reliance on property transaction revenue and profits from its own land development. Unless it reduces its reliance on land revenue, its praiseworthy Housing Affordability initiatives wont have the intended impact. For the economy to grow sustainably the ACT needs to recapture its lost advantage as a city where young families can find affordable housing.
However the Government needs to be investing in business and economic infrastructure to ensure the benefits of previous tough decisions are realised. This has not yet happened to the extent required but we will continue to work with government in the years ahead to ensure this matter is addressed.
The Government’s sound but painful measures last year have produced a healthy $103 million forecast budget surplus next year – and we confidently forecast the surplus will be much stronger than this. However the government has not included in the budget the impacts of the Territory going to Stage 4 water restrictions, which if such restrictions were enforced for the whole year we understand would have a negative impact of approx $50m plus the indirect impacts on business and the economy.
The credibility of the budget and forward estimates continues to be questioned when such impacts are excluded and when prior estimates bear little resemblance to actual results. This is an area the government must address.
Canberra Business Council