This budget has its good and bad news for Canberra. Some will call it dull, which will no doubt please Tony Abbott, who seems desperate not to offend after last year's disaster. But it contains a sting for this city: it effectively locks the ACT into no more than sluggish growth for years to come.
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The good news? The wild ride that began after the 2013 election has ended. Public service workplaces shed staff so quickly over the past 18 months that they are within reach of the Coalition's pledge to cut 16,500 full-time-equivalent jobs (a neat, if arbitrary, target that allows the government to say it returned staffing to Howard-era levels, down from the "waste" of the Labor years).
That target was meant to be another two difficult years away. Instead, the redundancy offers will now dry up; the strict limits on hiring will ease; and the pall over this city will lift – but only a little.
Because the Coalition is not about to let a rare "success" story undo itself. Its clamp-down on the public service is one of few promises it managed to keep last year. And it hasn't actually done as good a job as the public might think.
While the bureaucracy managed to dismiss about 2500 more full-time staff this financial year than expected (a costly exercise, due to the payouts required), restraining spending proved much harder. In 2014-15, running costs – spending on wages, contractors, and the goods and services required to operate government – are expected to blow out by half a billion dollars. In 2015-16, the government's running costs will be almost $3 billion higher than it had forecast a year ago.
So it's easy to pledge "smaller government"; it's even relatively easy to retrench staff. But if a government is unwilling (or unable) to reduce its activities, it will struggle to reduce spending.
Nonetheless, the government will keep trying – and therein lies the bad news for Canberra. Historically, the Commonwealth's running costs (or departmental expenses) have tended to dictate the ACT's economic prospects. And, over the three years from July 2015, the Finance Department predicts that running costs will grow by just 0.9 per cent a year – well below inflation.
Is that possible if the bureaucracy is no longer shedding staff? Only if it refuses to offer its remaining employees real pay rises. The budget papers suggest the government's total wages bill will creep forward by just 0.5 per cent a year over the three years from July. (And given that military personnel will receive a 2 per cent a year raise, civilian government staff will likely pocket even less than 0.5 per cent.)
So public servants can expect more of that to which they have become accustomed: few promotion prospects, a gradual loss of income (in real terms), and the slowly tightening squeeze of the efficiency dividend, which remains at an historically high level. But at least the guillotine blade has been removed. Small blessings.
