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Canberra braces for federal budget 'black Tuesday'


Noel Towell and Phillip Thomson

The Abbott government's first budget paints some dark days ahead for Canberra.

The Abbott government's first budget paints some dark days ahead for Canberra. Photo: Getty Images

Canberra is braced for "black Tuesday" with the Abbott government's first budget set to plunge the city back into the economic stagnation of the 1990s.

Pre-budget announcements of thousands of public service sackings, departmental shut-downs and mergers have prompted political and business leaders to warn that Canberra faces a business slowdown, higher unemployment and falling house prices.

The merging and abolition of more than 70 government agencies and the slashing of 16,000 public service jobs nationally – with the potential for more than 6000 of them in Canberra – was condemned on Monday as an ideological push for smaller government.

But the Abbott government defended its "tough decisions" with Public Service Minister Eric Abetz saying public service salaries were being paid for with money borrowed from overseas.

As the city digested the news on Monday of the full extent of the cuts it faced in the budget, government departments buzzed with rumours of mass sackings, with public service bosses unable to provide any concrete information to re-assure their workers.

Canberra Labor MP Gai Brodtmann said the capital was frightened and that it faced a "black day" on Tuesday.

Confusion reigned at six of the city's national cultural institutions after it was revealed that their back-office functions would be merged but senior managers were unable to give any details on the plan.

Real estate experts warned that both the residential and commercial sectors were braced for a tough time and Ms Brodtmann said her constituents had been telling her they were frightened.

"Tuesday is going to be a black day for Canberra," she said. "It’s going to have a huge affect on Canberra in terms of jobs, not just in the public sector but in the private sector, it’s going to have a huge effect on the economy, a huge effect on house process and a huge effect on the capital region."

"Tomorrow night is going to be dreadful for Canberra. Canberrans are bracing themselves, they are frightened about what’s going to happen because of this budget."

Senator Eric Abetz's office issued a statement on Monday, saying the government was actually protecting the long-term survival of the public service.

"The future of the public service can only be guaranteed with a viable budgetary position," Mr Abetz said. "We cannot keep borrowing from overseas for recurrent expenditure, so tough decisions need to be made today so even tougher decisions won’t have to be taken in a few years’ time."

Parliamentary Library research shows Canberra house prices fell three years in a row in the mid to late 1990s, gross state product dropped to almost 0 per cent, and total bankruptcies doubled within a few years of cuts put in place when John Howard reduced the bureaucracy in Canberra by 15,000 after his election in 1996.

The territory was home to 40 per cent of federal public servants and, if the cuts were proportional, commercial real estate executive Andrew Balzanelli said, more than 6000 jobs cuts in Canberra would put another 96,000 square metres of vacant office space onto the market, which already had 12 per cent of office space unused, within a few years.

Mr Balzanelli said this would leave about 15 per cent of the city's office space sitting empty and there would be further vacant space "hidden" from view as departments were pockmarked by abandoned desks.

"Canberra is still one of the cheapest office accommodation markets in the country – if they wanted to be saving money on office rent they'd be closing offices in Sydney and Melbourne, which can be up to double the cost," Mr Balzanelli said.

Paul Powderly from Colliers International in Canberra said much of the hidden vacant office space may be carried by the Commonwealth which in numerous cases has recently signed 15-year leases.

Mr Powderly expected the residential home market – in which prices have stopped growing – to plateau in the short term.

But he said he did not envisage a huge drop in values because many in the public service were close to retirement and hoped to receive redundancy payouts to buy properties.


  • Black Tuesday... Haha pllllleaase, you are having a laugh with this headline CT!
    If the act government stopped hand feeding the construction industry, we wouldn't have an over supply of commercial and housing property.

    Get a grip
    Date and time
    May 13, 2014, 3:24AM
    • Far, far too negative again CT.
      There is realism but this 'Black Tuesday' label is adding to negative sentiment.

      Date and time
      May 13, 2014, 5:45AM
      • Tony Abbott could you please place the ACT back under federal control? Why should ACT tax payers fund prostitution rehabilitation programs proposed by liberal politicians?

        The ACT Labor-Clown government is wasting tax payers money on botched projects and sex tours. So it would be good if you and Hockey took all power away from the idiots who run the ACT.

        Date and time
        May 13, 2014, 6:41AM
        • This is what government using ideology rather than facts looks like. The reality is that Australia has one of the smallest public services for a country this size, compared to other OECD nations.

          Ranger Reg
          Date and time
          May 13, 2014, 7:18AM
          • That's what happens when you get stamped as a Labor-voting Public Service comfort zone.
            Your comeuppance means nothing to the rest of Australia.

            David Black
            Date and time
            May 13, 2014, 7:33AM
            • This allegation by Abetz that public servant salaries are being paid by borrowed money is the biggest crock of doggie do do I have ever heard. If the government have no money to pay public servants it is because they have mismanaged the budget. Abbott and co have doubled the deficit in the past 8 months and need to take responsibility for their own actions instead of blaming everything on public servants.
              Perhaps Abbott should be taking a look at 50% payrises and all the lurks and perks and most generous super scheme in the world for politicians and departmental secretaries, there is a large black hole in the budget right there that perhaps he should be fixing. Make the large corporations pay appropriate amounts of tax - Gina Reinhart, Google, Microsoft, Apple, etc.
              Sacking a whole bunch of public servants will have a negligible impact on the budget but the impact on those left to pick up the additional workloads will be massive.

              Date and time
              May 13, 2014, 8:05AM
              • Lets get the rich richer, the poor poorer and kill the economy just for the sake of it.

                ray pace
                Date and time
                May 13, 2014, 8:28AM
                • In some ways, the Budget will release the ACT as for months now, many workplaces have been waiting for first the commission of Audit to be released, and then the Budget. hopefully, agency heads will be able to quickly tell staff what the consequences are.

                  But I fear each of us is going to continue hearing from colleagues who has taken a VR and who had no choice.

                  Been there
                  Date and time
                  May 13, 2014, 8:57AM
                  • I hope the budget amalgamations include the Department of Parliamentary Services, Department of the House of Representatives, Department of the Senate, Office of Parliamentary Counsel, and Parliament of Australia.

                    Five 'departments looking after a square kilometre seems a bit excessive.

                    Oh and a limit on the number and salary of Ministerial advisors would help too.

                    Date and time
                    May 13, 2014, 9:42AM
                    • With some personal experience I can say that one area of the public service that should be boosted urgently and that is the good folks at FEG or the Financial Entitlements Guarantee scheme who pay the entitlements of employees left significantly out of pocket when their employer has gone bust. Having applied last October I still do not have any comfort that my case will be assessed by the end of this financial year. They just say that they are snowed under. With an expected increase in business failures the situation will only get worse.
                      Now I know there are hundreds of bureacrats that 'can't be fired' waiting for re-assignment. I would urge that re-assignment to FEG for some lowly assessment work would be in everyones interest - perhaps the Abbot government would prefer that they drag out this process as long as possible.

                      Date and time
                      May 13, 2014, 11:37AM
                      Comments are now closed

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