ACT News

Save
Print

ACT economy is doing well by 'dodging bullets': report

    

As the ACT economy bounces back towards better health, it is being tagged the "Speedy Gonzalez" of the Australian economic scene for its ability to dodge bullets.

The salute comes in a report being published on Monday by prominent economic analyst, Deloitte Access Economics.

It says the lull in cuts to the public service means the ACT's "economic pulse has been increasingly looking healthier".

Acting Chief Minister Simon Corbell welcomed the report but is concerned about Canberra being hit by funding cuts in the federal Budget.

The territory's jobless rate dropped to 4.3 per cent in March in trend terms – the lowest in the country.

Advertisement

The Deloitte Access Economics business outlook says the lifting of the public service hiring freeze of mid-2015 has helped job growth in the territory

"The improvement in the labour market has also been accompanied by a strong rise in the number of job vacancies," it says.

"Population growth is now showing signs of recovery after bottoming in late 2014, and has returned to slightly above the national average.

"Lower interest rates have supported Canberra's mortgage belt, as has the fall in petrol prices, and retail spending growth over the past year has been above the national average. Small business confidence is up and matching the national average."

The report suggests the ACT's economy is continuing to "dodge bullets" and succeeding in doing so to the extent that "things have been looking up".

"The biggest bullets to the ACT's economic prospects have been coming from a federal Budget delivering one revenue writedown after another," it says.

"In turn, that means more pressure on federal spending, and the likelihood of further bad news for the ACT's economy which is still a 'one company town' in many respects.

"You could call the ACT the Speedy Gonzalez of the Australian economic scene, given its ability to dodge bullets but that may not be good enough if it eventually turns out that there are more bullets to dodge.

"That is exactly the risk we do see for down the track: the federal Budget deficit hasn't gone away, and neither has the likelihood of further cuts to public spending.

"Even so, there continue to be some favourable short-term factors playing in Canberra's favour – for example, the hostile Senate gives Canberra's economy some further breathing space and we don't expect to see any major spending cuts in the lead up to an election.

"But, at some stage, upcoming federal Budgets can be expected to have to pay an accelerated efficiency dividend.

"That well-known departmental terror tool is very much a one-size-fits-all form of expenditure control, and although additional trimming in this manner (over and above what is already in the pipeline) isn't announced policy by either side of federal politics, it's nonetheless likely whoever wins the election.

"Accordingly, while the recent economic news has been welcome, it's likely that further challenging times still lie ahead for the ACT's economy."

Mr Corbell said the report showed the effective work of the ACT government to keep the local economy "ticking over" despite the cuts by the Federal Government.

"As indicated in the report, this has also been reflected in other areas such as our employment and population growth, our low unemployment and strong business confidence," he said.

"It's clear that the biggest threat facing the ACT economy remains more cuts from the federal Liberal Government in the upcoming Budget.

"This report also demonstrates the need to continue our investment in infrastructure projects to maintain economic growth.

"Stage one of the city-wide light rail project and Canberra's next public hospital at the University of Canberra are two critical projects our city needs to ensure Canberra families have access to employment opportunities outside of the federal public service."