As the ACT government anxiously awaits Joe Hockey’s first federal budget next month, a new report indicates the territory’s economy is slowing in the key sectors of retail trade and construction. According to CommSec’s quarterly “State of the States’’ report, a slowdown in these sectors has in part caused the ACT’s economy to slip to the middle of the pack, behind Western Australia, the Northern Territory and Queensland. On trend annual growth figures the picture is even gloomier, with the ACT among the three worst-performed economies in the nation. Only on the indicator of population growth is the ACT continuing to perform strongly. A report by Deloitte Access Economics is more sanguine about the ACT’s short-term economic prospects, insisting that business outlook continues to remain buoyant but acknowledging that “there is undoubtedly a burst of bad news coming down the pipeline’’. Even there, however, Deloitte takes the glass-half-full approach, suggesting the budget cuts won’t be “as tough on Canberra as the 1996 budget’’.
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Canberrans will be hoping that assessment proves correct as the 30,000 public sector jobs which were cut by the Howard government in 1996 pushed the ACT into a recession, causing bankruptcies and the unemployment rate to rise and house prices to slump.
While the job losses which began under the Rudd/Gillard governments, and which have accelerated under the Coalition, are unlikely to reach 1996-98 levels, the prospect of Canberra-based departments being shifted to other states remains a live one. Were the federal government to pursue this course of action, the impact on the ACT economy could be as devastating as that of almost two decades ago. There is already an inkling of what could happen in Tuggeranong, where Defence Department personnel were recently shifted out of offices in the town centre to new accommodation at Brindabella park. There are rumours that the Department of Social Services could be moved, too, after the lease on its premises runs out.
The area in and around the town centre and overlooking the nearby lake now contains a disturbing number of empty shops, a situation that has prompted Liberal Senator Zed Seselja to call for both a clean-up of Lake Tuggeranong and the re-direction of greenfields housing development back towards Canberra’s south (taking in the area west of the Murrumbidgee River). That may be a bridge too far given the Commonwealth ruled out urban development across the Murrumbidgee many years ago, but Senator Seselja’s suggestion of Keynsian pump-priming (including the construction of a new tertiary education facility) to lift Tuggeranong out of its economic doldrums has much to commend it.
As it happens, the federal government is pushing an infrastructure barrow at state level and encouraging governments to sell off assets to fund such development, though it favours roads and motorways over urban renewal projects. As Senator Seselja would be aware, however, the ACT government has no assets of any size that it can liquidate to help fund the economic resuscitation of Tuggeranong.
Fortunately, other parts of the ACT do not present nearly as gloomy a picture, reflecting the fact that the territory’s economy is a far broader and more diversified entity than it was in 1996. The booming construction sector is now a major economic driver, though as CommSec warns commercial activity is slowing. That may be the short-term outlook for home building too if the federal government continues to keep public sector job creation to a minimum.
Aside from the 1996-98 recession, the ACT economy has generally been a model of consistency in recent years – performing not far below the turbo-charged resource-rich states of WA and Queensland but comfortably above economic laggards such as South Australia and Tasmania. The Gallagher government’s attempt to amend planning laws to enable commercial developments to be fast-tracked indicates it wants to maintain this enviable economic track record. The challenge, however, cannot be underestimated.
