Associations To Business

Federal Budget no good news for ACT

B2B Editor 28 May 2013

Does anyone else regard it as strangely incongruent that the Federal Government and Opposition recently rushed (quite rightly) to provide structural adjustment funding and transition support to the communities in Victoria that will lose1200 jobs when Ford closes its manufacturing plants in Victoria in 2016 but are silent when it comes to supporting the ACT community and private sector as thousands of jobs are shed from the Australian Public Service (APS) – effectively the “Ford” factory of the national capital? Like Ford employees in Geelong, Commonwealth Public Sector Employees account for a large percentage (39%) of the total employment in the ACT so any cuts to the APS have a disproportionately large impact on the local economy compared to other states and territories. This is exacerbated in this years Budget because the efficiencies are being targeted at the Executive (EL)and Senior Executive Service (SES) levels of the APS,of which 62% and 77% respectively are based in Canberra. The Treasurer opened his Budget speech on14 May this year by saying that the 2013-14 Budget is about supporting jobs and growth in an uncertain world. The reality is that there was very little in the2013 Federal Budget to support jobs and growth in Canberra. On the contrary, the Budget flagged further cuts to the Australian Public Service (APS)of 1200 jobs (on top of the 3000 that have already gone) and, if there is a change of Government after14 September this year, there will be thousands more. Like Geelong and Broadmeadew, it is not just the job losses and cut backs in procurement that are significant, it is the flow-on effect to the businesses that are in the supply chain. These are not car component manufacturers in Canberra but the many industries and hundreds of small businesses that supply goods and services to the public service or are reliant on customers who work in the APS – consultants, retailers, restaurants, printers, IT and software companies to name only a few. The Treasurer was right when he said that we live in uncertain times. Over recent years businesses based in Canberra have not only had to deal with all of the general uncertainties – constant reports of global economic volatility; political leadership instability; the persistently high Australian dollar; more taxes and increasing regulation. They have also been affected by peculiarly Canberra factors such as the in decision within the bureaucracy that flows from tight budgets and a seven-month “claytons” election campaign and the constant speculation about the magnitude of likely cuts to the public service and the impact that will have on the Canberra economy. Despite these challenges the reality is that, compared to almost every other advanced economy in the world, the economic fundamentals in Australia and in the ACT are strong and we are doing well. Add to this Canberra’s history of adjusting to the peaks and troughs of the APS employment and each time emerging with a stronger, more vibrant and diverse private sector and economy and we have every reason to be optimistic about the future. In the current economic climate, ACT businesses were hoping to see in the Federal Budget greater economic and fiscal certainty for the future, stability of policy settings, increased support for jobs and growth in the private sector in Canberra as the public sector shrinks, and a credible plan to return the Federal Budget to surplus over a reasonable period of time so that businesses would have the confidence to invest and employ. What they got was more ambiguity. It was only in last year’s Budget speech, that the Treasurer proclaimed that “the deficit years of the Global Recession are behind us, the surplus years are here, now”. Just 12 months later that promised$1.5 billion surplus has turned into a $19.4 billion deficit for 2013-14, $18 billion in 2014-15 and the Federal Budget now won’t return to surplus until2015-16. Apart from the serious credibility issue that this poses for the current Federal Government and its Budget forecasts, it generates a great deal of in security for business. No one questions the fact that, with a deficit of $19.4b, there is a need for fiscal restraint and measures to drive efficiencies. The problem with the 2013 Federal Budget is that there was no off setting investment in industry development or infrastructure in Canberra and the region to minimise the impact of the APS cut backs in the short term and nothing to assist Canberra to optimise the opportunities to diversify its economy in the medium to long term. The rhetoric of the Government and Opposition in relation to cuts to the APS reflects a lack of understanding of the synergistic relationship between the public and private sectors in Canberra and the magnitude of the impact that the proposed cuts will have on the economy here. Like Geelong, there needs to be a strategic and well-considered plan to support staff transitioning out of the APS; to assist small business to survive; and to encourage industry development, infrastructure, jobs and growth in Canberra and the surrounding region.


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