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State of the States report prompts call to cut ACT costs

Andrew Blyth says the business development budget is a drop in the bucket.

Andrew Blyth says the business development budget is a drop in the bucket. Photo: Rohan Thomson

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.''

16 comments

  • Ms Gallagher, you are a municipal council, not Empire Builders, no more, no less.

    Commenter
    NITRO GANGSTERS
    Date and time
    January 20, 2014, 8:47AM
    • The ACT PS is a vehicle for employing Labor mates in redundant positions, while taking our money and regulating us to death. No wonder the economy is stuffed.

      Commenter
      Economist
      Date and time
      January 20, 2014, 9:24AM
      • Really? Let's talk about the current Liberal government giving jobs to mates then.

        Commenter
        amusedemuse
        Location
        Alexandria
        Date and time
        January 20, 2014, 11:53AM
    • Not the first time someone has said that the ACT Government should rationalise Directorates. The Hawke report in 2011 "Governing a City Sate" highlighted, amongst other things, the same notion. Of more waste and frustration is Directorate staff that service multiple Ministers - crazy. Surely less Directorates and better reporting lines (ie a Directorate looing after one Minister only) can only serve to be more efficient and by design less expensive.

      Commenter
      Mr DJ
      Location
      Canberra
      Date and time
      January 20, 2014, 9:49AM
      • I don't understand the bus point.
        Doesn't subsidising buses keep the cost of tickets down and increase the level of service, thus encouraging use, keeping congestion down and making it easier for people to be part of economic life (working and spending)?
        And doesn't it also keep people in jobs, so they can contribute more to the economy?

        Commenter
        ed
        Location
        burbs
        Date and time
        January 20, 2014, 9:53AM
        • Exactly. It would cost the taxpayer a lot more than $100 million a year in additional road maintenance if those who currently travelled by bus had to drive.

          Commenter
          Mike
          Date and time
          January 20, 2014, 11:16AM
      • The only rationalisation we need is to abolish self government. It is an expensive mistake that the people of Canberra never wanted in the first place. Abolish the Legislative Assembly and bloated ACT Public Service and give is a proper city council instead. We don't need 20,000 public servants for a population of 350,000 people. Brisbane has a population of 2 million and just 8000 Brisbane City Council staff, and that includes a much bigger bus network.

        Commenter
        Mike
        Date and time
        January 20, 2014, 11:14AM
        • Yes. It would certainly be a lot cheaper to operate the 'state level' services (Health, Housing and Education) separately and the rest like a council.
          We are over governed locally which costs us a fortune, but only because they fill their days being 'parliamentarians' instead of undertaking councillor-type duties. From what I can gather, councillors around Australia (certainly in Sydney) are part time and also have a 'day job'. Such a structure would keep our local pollies in the real world instead of the fairyland they inhabit at present.

          Commenter
          Mardi
          Location
          Tuggeranong
          Date and time
          January 20, 2014, 1:15PM
      • ''ACTION buses bleed $93 million to $100 million a year"
        bleed? it is an essential service, that one of the things out taxes pay for! idiots!
        What was it they spent installing, maintaining and policing the ticket system as opposed to what it earns? it would probably coast the same if the busses were free to all.

        Either way, I have a suggestion to save some money.. Stop wasting millions locking us out of our bush land via big gates and boulders, and start supporting some other forms of tourism like motor sports.. Dose anyone remember the Rally of Canberra?

        Commenter
        Dug
        Date and time
        January 20, 2014, 11:51AM
        • Legalising pot like colorado and washington state are doing will bring in around $300 million per annum in sales, taxes and tourism (planeloads of kiwis) + and do what mike says too That would save over $200 Million. Therefore ACT would be better off to the tune of $500 MILLION per annum..

          Commenter
          my name is earl
          Location
          crabshack
          Date and time
          January 20, 2014, 12:30PM

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