It's practically de rigueur for Territorians to decry federal budgets, so often do they entail public service spending and job cuts. This year was meant to be different, with expectations the Coalition would honour a previous commitment to begin easing the widely despised 2.5 per cent efficiency dividend, adding heft to its "jobs and growth" rhetoric. No such luck. Scott Morrison's decision to keep the measure in place at least until 2017-18, which will condemn the smaller departments and agencies to shed more staff, has ensured his first budget (like so many others before it) is being held up as yet another exercise in Canberra bashing.
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This newspaper has long criticised the efficiency dividend as a blunt instrument and ultimately self-defeating economy – one that plays well to popular prejudices about "fat cat" public servants but has had a pernicious effect on the vital work performed by agencies such as the Bureau of Statistics.
This being an ACT election year, Chief Minister Andrew Barr fell on the broken promise with glee, accusing the Coalition of "an exercise in breathtaking hypocrisy" – one he claimed would result in about 1400 fewer Canberra-based public service positions. He might also claim the Turnbull government has not been especially generous towards the ACT in the rollout of it $50 billion infrastructure plan supporting economic growth. In many other respects, however, the Chief Minister – and Canberrans more generally – could feel moderately pleased with Mr Morrison's inaugural budget.
Happiest will be the owners and proprietors of Canberra's small businesses – a segment of the territory's economy whose size and importance continues to grow. Their tax rate is being cut to 27.5 per cent from July 1, and the turnover threshold at which their businesses are adjudged by the Tax Office as being medium sized rather than small is being increased from $2 million to $10 million.
Canberra's economy will also be a beneficiary of further funding increases for the two intelligence agencies, for the Australian Federal Police (all of which have enjoyed significant boosts in spending during the past decade). Then there is the outlay of $32.4 billion on defence for the coming year, consistent with the government's intention of increasing spending to 2 per cent of GDP by 2020-21. Hardware purchases will absorb much of that funding. However, a significant proportion is expected to go on job-creation – for even though the larger departments may have frozen or reduced their actual staff levels, they continue to hire large numbers of contractors and consultants as demand warrants.
There's even a hint of blue skies ahead for the ACT's other big employer – the higher education and research sectors. Overall funding for research and development is now indexed and expected to start increasing from 2017-18, in line with the recently announced National Innovation and Science Agenda.
Damaging the efficiency dividend certainly is, but the Morrison budget has not been an entirely one-way street for the ACT.
