Yesterday’s ACT budget was never likely to get much attention outside
of Canberra, having to compete with New South Wales and Queensland on
the same day. But Jon Stanhope’s first budget as Treasurer is not
without interest. Like NSW, the ACT is going substantially into
deficit: $80 million, compared with a $120 million surplus for the
current financial year. Unlike NSW, it seems to actually be doing
something serious to address its underlying fiscal problems.

Stanhope outlined the problem clearly:

Since self-government, ACT governments have consistently
spent more, across the board, on services, than governments in the rest
of the country. And we have done so even though, on the face of it, our
needs ought to have been lower. We are more affluent, more highly
educated, younger and healthier than the rest of the nation… We have
been living beyond our means.

The budget takes a range of drastic measures including
closure of 39 schools and pre-schools, abolition of statutory
authorities, cuts to public sector superannuation, the loss of 500
public service jobs, and increases in rates, fees and levies.

In both scope and depth the expenditure cuts are reminiscent of the
Kennett government’s first budget in Victoria in 1993. I worked as a
staffer in that government, and the rhetoric coming from outraged
interest groups is certainly very similar. Nothing comparable has been
attempted in any of the other states over the intervening 13 years,
partly because no other state has dug itself into quite such a fiscal
hole.

In terms of political context, the big difference is that the Kennett government
was dealing with the excesses of its predecessors. Stanhope, however,
has been in government for five years, and really has no-one else to
blame. Opposition Leader Bill Stefaniak, according to The Canberra Times,
supported some of the cuts but “argued that tax increases could have
been avoided if the Government had been more prudent in the past”.

Stanhope is generally seen as the most left-wing of the country’s Labor
premiers and chief ministers – witness his stand last year on the
anti-terrorism laws – so there is something ironic in his emergence as
a budget-cutter. No doubt it’s partly due to the seriousness of the
ACT’s problems, but it may also reflect the fact that Stanhope has a
bit more leeway before the next election than his counterparts in NSW
and Queensland.