Chief Minister's response to the federal budget.

On Tuesday this week, the federal budget was released.

There is a degree of relief that the vacuum of speculation which has surrounded this budget – over many months – is now gone and we can assess it with some clarity.

Unfortunately, the budget’s release confirms a bleak outlook for our city with extensive cuts to the Commonwealth public service and deep, permanent cuts to the funding of essential public services.

While I respect the government’s mandate to pursue budget savings, the way they have done so is not in a spirit of nationhood and certainly not in one of fairness.

Our city has been singled out and our community has been treated like no other community would have been in this budget. Canberra will shoulder more than its fair share of the burden.

Job losses, cuts to services and programs, less support for our young and our old and, for many, more taxes to pay.

Today there are many Canberrans who feel insecure in their jobs, who face the prospect of unemployment, or who find themselves and their colleagues in an awful state of uncertainty.

While the threats posed by this budget are not of our making, the ACT Government will do everything we can to protect local jobs and support local families.

Our current estimate of ACT jobs to be cut is 6,500, including 2,000 in 2014-15. In the next financial year, around half of the reductions sought nationally by the Commonwealth will come from this town.

These additional reductions are on top of significant reductions already made in the past two years – around 2,000 in 2012-13 and a further 1,500 in the six months to December 2013.

Among the agencies which will be hardest hit in the next four years:

  • Australian Tax Office – 2,329 jobs nationally
  • Department of Industry – 732 jobs nationally
  • CSIRO – 489 jobs nationally
  • Department of Immigration and Border Protection – 400 jobs nationally
  • Department of Foreign Affairs and Trade – 535 jobs nationally
  • Australian Federal Police – 347 jobs nationally.

In a severe case of cost shifting, the Commonwealth has reneged on funding commitments and COAG reforms without consultation and without agreement from states and territories.

Nationally these cuts equate to some $80 billion over the next decade and in the order of $1.3 billion in the ACT based on our population share.

Health funding growth will change from next financial year. Over the next ten years the ACT will lose hundreds of millions of dollars in Commonwealth funding and well over $100 million in the budget forward years alone.

The Commonwealth has torn up the agreement made with every state and territory under national health reforms:

  • Funding in future years now ignores activity levels, appears to be provided on a population basis and appears not to recognise the 25 per cent of health services the ACT provides to the people of NSW.

  • The funding guarantee is gone, which will penalise the ACT because of our smaller scale and higher costs.

  • Indexation on Commonwealth funding will also fall and will see jurisdictions having to shoulder a far greater share of health costs into the future.

The value of funding received in 2013-14 from agreements expiring 1 July 2014 is $25.31 million and we estimate a further $10.45 million is at risk over the forward estimates.

The agreements ending this year include:

Funding in 2013 – 2014

Improving Public Hospital Services – $9.90m

Financial Assistance for Long Stay Older Patients - $3.21m

Training Places – Single & Teen Parents -$0.25m

Joint Group Training Program - $0.29m

Youth Attainment and Transitions - $1.14m

Improving Teacher Quality - $3.13m

Indigenous Early Child Development: Child and Family Centres Component - $1.11m

Home & Community Care for Veterans - $0.14m

ACT Emergency Services - $4.00m

Certain concessions for pension concession card and seniors card holders - $2.00m

TOTAL  $25.31m

Unfortunately, the Commonwealth stripping funding from health won’t make the costs go away. People will still arrive at the emergency department, they will still require operations, cancer treatment and renal dialysis. This decision simply shifts the burden to the states and territories.

The announced GP co-payment does not reduce the cost of primary health care in our community. It concentrates the burden on the sick and the poor.

In school education, the Commonwealth will abandon its previous commitment of increasing funding by 4.7 per cent plus enrolments growth each year and bringing all schools up to an equitable, national level of funding.

Instead, in the out years, growth in Commonwealth funding for schools will be reduced to CPI plus enrolments growth from 2018 onwards and the differences in funding that exist between different schools will remain.

In universities, the removal of fee caps on Commonwealth supported places from 2016, combined with changes to student loans, represents a big step away from the principle of universal access to higher education.

In relation to infrastructure, the ACT is disappointed that despite announcing a national infrastructure program of $11.6 billion, the Commonwealth has not provided any new infrastructure funding for the territory.

In a further blow to Canberra, the identified job cuts look set to be added to in the transfer of 600 jobs to the central coast of NSW.

Madam Speaker, cuts on this scale hold consequences for our city. Whilst our economy has shown itself to be resilient, the significant reductions in Commonwealth spending will have an impact across Canberra and across the region.

In economic terms, we expect the overall impact will run to many hundreds of millions of dollars in lost economic output.

For many Canberra households, the Commonwealth’s budget will translate into a struggle to meet mortgage payments, heating bills, school excursions and petrol costs, which are set to rise as a result of the re-introduction of fuel excise.

These costs will compound in households across the ACT as they are expected to cope with the combined effect of new taxes, costs to services and a dark cloud hanging over their jobs.

We often hear commentary about Canberra’s dependence on the Commonwealth, but the reality it, as our largest employer, the public service is our Holden; our BHP. It is the key driver of our workforce and economy and I hope it remains so.

The ACT Government believes that the public servants of Canberra are no less valuable than the workers of Holden or BHP and I caution anyone against trivialising or dehumanising them in this discussion, or suggesting their job is any less valuable than anyone else’s.

Since October last year, the Prime Minister has assured me on a number of occasions he has no wish to harm the ACT yet, whether through intent or indifference, this is the outcome of this Commonwealth budget.

I have been clear and consistent with the Commonwealth that Canberra should not be expected to absorb job losses on this scale. Any job loss is regrettable but for one community to be asked to cop losses two or three times greater than those we have seen in manufacturing cities – those which have drawn immediate transitional assistance – is extremely unfair.

Further, while these cuts and job losses have been clearly identified in the Commonwealth budget, no assistance has been provided to the ACT community. We have received no new infrastructure funding and the request for assistance to progress our new convention centre project has been rejected.

It is also disappointing that funding has been cut to precisely the sorts of institutions we would look to for growth and employment at this time. For example:

  • all Commonwealth funding for the National ICT Centre of Excellence, employing 70 Canberrans and developing digital innovations of the future, will cease by 2017
  • $25 million has been taken from the UC’s Centre for Quality Teaching and Learning
  • $6 million has been taken from the ANU’s HC Coombs Policy Forum.

The impacts of this budget will be felt beyond the ACT, through the capital region.

We are the economic centre of a region growing towards 1 million people, the workplace of almost 30,000 NSW residents and a key source of income for towns spanning 12 surrounding shires.

These towns too – their farmers, graziers, wine makers, tourist operators and other professionals – will feel the ongoing effects of the sweeping cuts which were announced.

Tomorrow, I will meet with mayors of these shires through the South East Regional Organisation of Councils and will have the opportunity to listen to their communities’ perspectives on the budget.

In the next few days, I will outline a range of steps which we will put in place to respond, in both the short and longer terms, to the impacts likely to hit Canberra.

I have sought an urgent meeting with the Prime Minister and will meet with other first ministers this coming Sunday.

Cabinet will meet over two days early next week for a post federal budget review and reconsideration of our budget.

I will be establishing a high-level Chief Minister’s Advisory Group to provide external counsel on strategic decision making in order to minimise impacts of the Commonwealth’s decisions on our economy.

I will also host four roundtables to hear directly from various stakeholders on impacts of the federal budget on their areas. These will include young people, knowledge based Canberra, construction and property, and community services.

Through these steps we will build a more thorough understanding of what is likely to happen over the next two to three years, talk to our community and business leaders, look at how we can support business confidence and present a united case to the Commonwealth around the need to provide assistance to the ACT should the announced cuts go ahead.

Together, we will seek a genuine commitment from the Commonwealth to work with the ACT in supporting our economy through the inevitable adjustments this budget will force upon us.

The ACT Government’s response will also include our own budget, which we are in the process of finalising.

The cuts outlined by the Commonwealth will have a significant downward impact on the ACT budget. Let there be no mistake, the decisions they have taken flow through to every revenue line and will put pressure on our expenditure lines including concessions, community services, health and education.

We will use our budget and our economic levers to maintain confidence and economic activity in the ACT wherever possible, looking hard at our revenue and expenditure to ensure we respond as best we can within our own constrained fiscal position.

In March we began stimulus measures to support our vital construction sector, working together with the industry on incentives for ongoing investment and building activity.

We will also continue with the commitment we made a year ago that, unlike other states which have slashed their public services, we will maintain our staffing levels with a focus on health and other frontline services.

Our next Cabinet meetings will discuss all the impacts and factor them into the formulation of the ACT budget.

We are realistic about our own ability to respond to Commonwealth cuts and as 9 per cent of the economy, our budget does not have the capacity to single-handedly maintain economic growth through stimulus.

Looking further ahead, we must look to the sources of strength which prepare us for this challenge far better than we were prepared when cuts of this scale last occurred, in 1996.

After more than a decade of solid economic growth, we have a much bigger economy and population, a larger private sector and a stronger export orientation across industry.

We have already weathered two years of decline in Commonwealth spending and the fundamentals of our economy, particularly our low unemployment rate, are stronger than they were in 1996.

A decade of Labor reforms in the ACT has also built the platform for a significant diversification of our economy, which has begun to accelerate in recent years.

Our world class researchers, IT professionals and academics have, together with government, taken the export reach of sectors in which the ACT excels to new markets and created important opportunities independent of the government sector.

This work will continue, with greater intent and greater importance than ever.

Wherever we can help Canberrans who may have the skills to transition from a government position to a private sector position, we will.

Our business community has already shown itself to be an excellent facilitator of exactly this process and, again, it is imperative that the Commonwealth provides assistance for this adjustment.

All Canberrans share a collective apprehension today about what is in store for our city.

There is no doubt we will be tested in the next couple of years.

Canberra will always be known as a government town, with an economy built first and foremost around the public servants who make Australian democracy work.

This ACT Labor government will always stand up for our city – its workers, its families, its communities and its future.

We will take each step as it comes, but always with the wellbeing of all Canberrans foremost in our minds.