Push for budget surplus hurting Canberra's economy
Housing construction is declining in the ACT. Photo: Glenn Hunt
The federal government's push for a budget surplus is adversely impacting the ACT economy as the public sector is forced to further tighten its belt, according to new economic research.
The Deloitte Access Economics Investment Monitor, to be released today, says that over the next five years the average annual rate of economic growth in the ACT is expected to be 1.8 per cent, which is lower than the 3.2 per cent projected Australia-wide.
The report says that because more than half of the ACT's workers are public servants, Canberra's economy is more susceptible to the decisions of the public sector, and particularly the federal government, than any matching jurisdiction in Australia.
''And the government's grip on Canberra's economy extends far beyond its employees,'' it says. ''To name a few examples, much of Canberra's non-government white-collar workers are themselves dependent on government clients, with Canberra's restaurateurs and hoteliers dependent on visitors flying in for meetings or events with federal departments; while the construction sector is dependent on steady growth in government employment.''
The report notes that the pace of efficiency dividends stepped up in late 2011, with departments now implementing another round for 2012-13. ''At the same time, the ACT's economy has to grapple with a downswing in the housing construction industry, while the stunning surge in office construction seen in the territory in recent years is finishing up,'' it says. ''Just as housing activity looks set to commence a modest recovery nationally, it is heading the other way in the ACT following an impressive effort in recent years.
''Put all that together and it says that the ACT's dominant public sector is pulling back, and that the key drivers of its private sector are doing the same. That means only slow growth for the ACT economy.''
Recent cuts to federal government spending and a recent glut of office projects, the report says, mean that office vacancy rates in the ACT are currently high and likely to keep commercial construction in the slow lane for some time.