Treasurer Chris Steel believes he’s on a winner, but health and education remain significant risks. Photo: Ian Bushnell.
On the face of it, the Budget Review is vindication of Treasurer Chris Steel’s approach to repairing the Budget after the monumental billion-dollar deficit result in his first budget last year.
The deficit is now heading for about half that amount thanks to the mix of revenue measures, including the notorious health levy, and public service efficiencies Mr Steel prescribed.
That’s still a hefty number, but the promise, as ever, is for that to shrink and then jump to the other column in the ledger.
And there’s the rub. We have heard the surplus promise many times before, but like characters in Kafka’s dream-inspired novel, The Castle, we never actually get there.
Achieving a surplus is not for its own sake or even a sign of economic expertise, but it does provide a cushion and space for important spending, something Mr Steel has acknowledged.
The difference this time, Mr Steel tells us, is that the Budget Review shows that his plan, over four years, will work.
It also means that it is very likely that the health levy, despite the more than $700 million Commonwealth funding deal, isn’t going anywhere. Nor other increases in taxes and charges from last year’s Budget.
In fact, but for the stink about the health levy and the government’s decision to reduce it, the bottom line would have been even better.
When asked about rates relief in June, Mr Steel preferred to talk about stamp duty cuts as part of the government’s tax reform program, which are predicated on rate rises. So don’t expect any change there either.
The public service efficiencies are making a difference, but they are only slowing the rate of government spending, which is still increasing.
Mr Steel is right to say the government still needs to invest in services and new infrastructure, but this is also driven by the desire to avoid political pain.
Last year, so early in the term, was an opportunity to go harder than he did to cut spending in low-priority areas.
But such is the all-care and no-responsibility attitude of the Legislative Assembly that this, no doubt, would have provoked howls of protest.
So Mr Steel has taken a longer route. The trouble is no one knows what’s around the corner, and his best laid plans could be ambushed.
There is still the unresolved issue of public service pay, with a new enterprise agreement yet to be negotiated, and how that will impact the budget.
Then there are the two elephants in the room: health, now taking a third of the budget, and education.
Both have required funding injections, and their needs are not getting any smaller.
The Commonwealth health deal is more than welcome, but it won’t fix the structural problems that every jurisdiction is facing as demands continue to grow.
Health Minister Rachel Stephen-Smith says Canberra Health Services continues to find efficiencies, but this only risks eroding services.
It’s no easy thing, but prevention and keeping people out of hospital will be the keys to reining in the galloping health dollar.
Mr Steel is waiting on the results of the school resourcing inquiry, which found most ACT public schools were going to blow their budgets.
This is just operating expenses, not the capital projects such as the Telopea Park and Majura school upgrades listed in the Budget Review.
So where school funding will land remains a big question mark.
Mr Steel believes his plan will put the Territory’s finances on a sustainable footing, but health and education costs will continue to undermine his efforts.
He probably cannot go to the tax well again, which leaves spending.
A small but illustrative example of where money could be saved in schools is the equipping of every classroom/learning space with whopping great TVs.
At a recent visit to a new school, I was shocked to see the big screens in Preschool to Year 2 areas.
Call me a Luddite, but I fail to see the educational benefits of such tech for young children.
It may be a minor thing, but small items can add up. The Territory is a small jurisdiction with a limited revenue base, trying to provide quality services and infrastructure, and, on the whole, succeeding.
But Canberrans and their politicians need to adjust their priorities.
