ACT News


State of the States report prompts call to cut ACT costs

The ACT government is being urged to rationalise departments and cut other costs including the bus subsidy as a report demonstrates the slug to Canberra's economy from cuts to the federal public service.

The CommSec report, State of the States, to be released on Monday, points to a loss of momentum in business investment and continuing sluggishness of the territory's retail trade.

The ACT had the second weakest trend in annual economic growth rate in the nation, the report says.

However, it says the ACT is strong in housing starts, and wages and population growth.

The report says Western Australia remains Australia's best performing economy, while the Northern Territory has jumped ahead of the ACT, which now shares third spot with Queensland.

''The ACT's main weakness was a loss of momentum in terms of business investment,'' the report says. ''It also finished fifth on retail trade, unemployment and construction work.''


The CommSec report compares the latest readings of key economic indicators with decade averages.

ACT Chamber of Commerce chief executive Andrew Blyth said his group was concerned at the loss of momentum in business investment.

''It draws home the fact that we only allocate $10 million in the ACT budget for business development,'' he said.

''This report points to the fact that more needs to be done to support business development in the ACT economy, particularly in driving private sector growth.

''What I'm seeing is a slow but steady increase in unemployment.

''With only $10 million allocated to business development, we certainly need to see the ACT budget living within its means.

''I think there should be a rationalisation of government departments in order to underscore that fiscal environment.

''ACTION buses bleed $93 million to $100 million a year.

''The hospitals seem to be more expensive to run than in NSW or Victoria and our education sector seems to be more expensive than those of our NSW or Victorian counterparts.

''So, I believe there are areas within the ACT budget where the government could be more efficient in its service delivery and there is no better time than now to make sure that happens.

''We spend $10 million on business development, which is a drop in the bucket, really, when we spend $40 million locally on tourism.''

Canberra Business Council chief executive Chris Faulks said the report had pluses and minuses for the ACT, along with some indications of challenging times ahead.

''The ACT continues to grow although below the average 10-year rate,'' she said.

''We are still ahead of the big states, NSW and Victoria, and business confidence appears to be slightly more positive.

''We were first in dwelling starts, second highest in wages growth, and our population growth, at 2.2 per cent, is 43 per cent above the 10-year average.''

Ms Faulks said the most concerning outcome in the report was the ACT's economic growth being second weakest in Australia.

''We've known for some time that retail trade is soft,'' she said.

''There is a strong possibility the next report will show Queensland will have also overtaken us, which will put the ACT in fourth place, in the middle of the pack.

''It's not all that long ago that we were right up the top, that's just an indication - I think there are challenging times ahead.

''We are moving strongly to work with the ACT government and the federal government in conjunction with the business community to look for every possibility we can to stimulate growth and minimise any impacts of federal cutbacks.''

ACT Treasurer Andrew Barr said the CommSec report confirmed that the fundamentals of the ACT economy continued to be strong.

''The ACT continues to have the highest population growth of any of the states or territories at 2.2 per cent,'' his spokesman said.

''The ACT is in the strongest position for new housing construction, with starts almost 57 per cent above decade averages.

''This can be partially attributed to stamp duty reductions and the retargeting of the First Home Owner Grant to new or substantially renovated homes.

''The ACT has softening conditions for business investment, retail, unemployment and construction work.

''This isn't unexpected given uncertainty around public sector employment and Commonwealth investment.

''We do expect the economy to soften with the contraction of the Commonwealth public sector, but the ACT continues to be one of the best-performing economies in the country.''


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