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Push for budget surplus hurting Canberra's economy

Date

Chris Johnson

Housing construction is declining in the ACT.

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.

9 comments

  • Isn't it funny that Labor are trying to paint the Coalition as the wreckers of the PS, when their redundancies (3,100 of them), efficiency dividends and budget cuts are savaging the Canberra economy.

    The Coalition might yet be the saviours of the PS, and Canberra. The election last month proves that Canberrans are coming around to that way of thinking too.

    Commenter
    Hacka
    Location
    Canberra
    Date and time
    November 12, 2012, 9:26AM
    • Your right Hacka, my take home wage was far higher under Howard, than under Krudd or Gillard, what astounds me in this whole think, is that 36% of people would still vote for Labor. Come to think about,that 36% could be the same people from the previous story of people working remotely from home. .

      Commenter
      Grand Poobah
      Location
      Just up the road from you
      Date and time
      November 12, 2012, 9:46AM
    • Agreed. People are starting to wake up to the labor=greens spin. Sad that in Canberra there was still 50% that are still stupid enough to believe it and we have now ended up with a government run by one independant. They are cutting just as hard with sackings by stealth, yet treat the public like fools and point their fingers at liberal.

      Commenter
      Peter
      Date and time
      November 12, 2012, 10:06AM
    • Yea Liberal conservatives wont cut the public service will they .... what is state government doing in quite a few states?
      Yea Liberal government has heaps of great ideas & policies to fix our current problems.
      Maybe if we all jump up & down & shout 'NO' everything will get better.
      Keep Hacking Hacka.....

      Commenter
      Yuppy
      Location
      Yuppy Ville
      Date and time
      November 12, 2012, 10:10AM
  • Instead of continually whingeing about the Federal Government not spending enough on the public sector, why don't invest some time in changing Canberra's economy so we are not so reliant of tax payer funds to keep the place going?

    Commenter
    Richo
    Location
    Canberra
    Date and time
    November 12, 2012, 9:54AM
    • One day we have articles that the Canberra economy is going great, the next it is going to crash. Next day it is a massive shortage of housing and prices to grow strongly. Next day market is saturated and prices are falling and about to crash.
      Talk about having a bet on everything in the race and then proclaiming your betting ability.
      I guess as they say we only have economists to make our weather people look good. If people didn't turn off from listening to the bank and real estate employed economists long ago they really are naive sheepish suckers for punishment.

      Commenter
      Peter
      Date and time
      November 12, 2012, 10:00AM
      • Have no fear, Katy & Shane will fix it.

        Commenter
        COOL OLD DOG
        Location
        ACT
        Date and time
        November 12, 2012, 10:56AM
        • All this to prove Labor can actually deliver a budget surplus.......they can't and they won't, even the most staunch Labor support can see this. The biggest concern is the damage being done to the Australian economy, every dollar Labor take out as a saving measure is a dollar less for the economy as a whole, traditionally cutting government spending would reduce interest rates which in turn would stimulate the economy, unfortunately the last step is missing and our economy is still heading south.

          Dear Mr Swan, give it up! If Labor doesn’t return a budget to surplus it’s only only one of a litany of broken promises.

          Commenter
          Noel
          Location
          Sydney
          Date and time
          November 12, 2012, 11:10AM
          • This is what happens when you have a one trick pony. Canberra will only now feel what the other states have felt at the start of the GFC. Canberra was insulated until now, and I’m sure if the Fed. Government keeps tightening, Canberra will be very flat for years.

            Also don’t forget the impact on the Queanbeyan, Murrumbateman and Yass neighbours who cross the border for jobs too.

            Commenter
            Letto
            Location
            CBR
            Date and time
            November 12, 2012, 11:42AM
            Comments are now closed

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