The National Capital Authority narrowly dodged a bullet when the Hawke Labor Government was looking to prune spending such as "featherbedding" in the ACT, ahead of the 1990 budget.
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The Finance Department wanted to abolish the authority, then called the National Capital Planning Authority, following the completion of the National Capital Plan, and return residual functions to the Department of the Arts, Sport, the Environment, Tourism and Territories.
"When the plan itself has been completed, the further workload on the NCPA is likely to diminish significantly," Finance's submission says.
Cabinet papers released by the National Archives of Australia say the authority had 35 staff but 10 would be needed for DASETT to take over the functions.
"If the NCPA is to be retained as a viable separate organisation, it is doubtful that its size could be reduced below its present level," the submission says.
The authority was established in 1989 following self-government in the ACT and the consequent abolition of the National Capital Development Commission, so the Commonwealth could maintain a role in planning the national capital.
"Its essential function is to prepare and administer a National Capital Plan setting out the Commonwealth's specific interests in the infrastructure and form of Canberra as Australia's capital city ... the plan is to be in place by September this year," the submission says.
Finance warned the move could be criticised for reducing safeguards on the visual integrity and quality of the national capital.
However, ministers were told the selling points for the move were: less potential for interference in ACT government affairs and for conflict between the two governments; the ACT would be seen to be more in line with the states in its relationship to the commonwealth, "ie perceptions of featherbedding would diminish"; and after completion of the plan, the authority could be seen as an unnecessarily complex and costly apparatus.
DASETT opposed the move, saying the authority had operated for only 18 months and the National Capital Plan had not been completed.
"Failure to properly address future arrangements for carriage of the National Capital Plan would draw strong criticism of the government's preparedness to preserve and develop planning for the national capital," it said.
"DASETT is unaware of any assessment that would support the proposition that 10 ASL could perform the functions of the NCPA."
Treasury supported a "substantial reduction" in resources for planning purposes once the plan was in place.
The Department of Prime Minister and Cabinet had reservations about abolishing the authority.
It questioned whether handing the authority's functions to DASETT would reduce conflict between the federal and ACT governments.
The Expenditure Review Committee did not take up the savings proposal.
*The authority's base annual budget was later cut by 23 per cent in 2007-08.
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