What cost of living crisis? Barr government goes for broke with revenue grab

Australia Broadcast Center

5 hours ago

Every Canberran could sense in February the abject implosion of the ACT's finances that apparently only dawned on the Barr Labor government sometime after its re-election in October.
Only now, in the sheer breadth, size, and audacity of its lunge for new revenue, coupled with persistent deficits for another four years, can we truly appreciate the extent of its fiscal desperation.
How else to explain the head-spinning array of higher fees, levies, and taxes the new ACT Treasurer, Chris Steel, has conjured in his first budget?
Hiking land rates, business taxes, parking fees, and vehicle regos, while painful, are standard and obvious 'go-to' targets for cash-strapped treasurers peering at oceans of red ink on the books.
Showing a flair for creativity, Mr Steel has gone so much further in his 2025/26 debut.
False fire alarm activations? Ka-ching.
Volunteers helping coach kids' sporting teams? A new fee.
Dumping an old tyre? Up by more than 200 per cent.
These charges will be annoying to many, but they pale in policy significance when compared to the novel 'health tax' every household in the territory is about to be hit with.
Not that any government would use or accept the term 'health tax'; the Barr government has opted for the more banal "levy to support the public health system".
Whatever Canberrans might feel about paying it — some may see it as an entirely reasonable contribution — this non-means-tested annual $250 impost is a most 'un-Labor' thing to do.
It challenges our federation's compact that Medicare and federal health funding grants funnelled back to the states and territories — even if inadequate — are the bedrock guarantee of universal, fee-free access to health care in public hospitals.
For ACT residents forced to pay it, the new 'tax' is akin to a compulsory 'co-payment' for hospital services.
A 'co-payment' charged whether they use public hospital services or not, applied to a population already more likely to pay out-of-pocket fees if they visit a GP, with nationally lagging bulk-billing rates.
Where were ACT Labor MLAs between January and the May 10 federal election when Anthony Albanese pulled out his own Medicare card, extolling Australia's unique health-funding system as "a declaration of Australian values" and railing against anything that resembled an extra payment to access services?
The Barr government argues the $205 million 'tax' (the total to be collected) is temporary, conveniently expiring in the fiscal year in which the next territory election is held, in 2028/29.
This assumes several entrenched flaws in the ACT's health services are resolved by then — that demand stabilises, growth in costs slows, and, most importantly, that the Albanese government succumbs to pressure from all states and territories and generously expands total national hospital funding of $34 billion per year.
Chris Steel would be supremely, perhaps dangerously, optimistic if he banked on the Commonwealth suddenly coming to the rescue at a time when it's running its combined deficits of almost $180 billion through to 2028/29.
The ACT's tax' also has the potential to disadvantage Andrew Barr in crucial negotiations at federal cabinet.
Having uniquely and unilaterally taken the plunge into what's called 'own source' hospital revenue for the first time, why wouldn't the feds then discount the $200 million the territory's raising from whatever future offer it makes to the chief minister?
In this respect, the ACT is isolated because it's unlikely any of the six states would create their own version of a hospital tax, in view of the constitutional questions it could create.
An equity argument arises with NSW, too. Unless there's to be a matching increase in cross-border payments for its residents using the Canberra Hospital, aren't territory residents doing more of the heavy-lifting relative to those coming from elsewhere for treatment?
If, as is likely, none of these underlying problems are resolved when we reach fiscal year 2028-29, what then?
Would the next territory government have to extend the charge? Index it? Increase it?
Stepping back from the Steel budget's biggest surprise on hospital funding, under the heading 'sustainable revenue,' this budget scrapes together more than half a billion dollars in new or higher taxes and charges over four years.
Not all of them are applied directly onto individuals, as is the case with land rates; some go via employers (payroll tax) or companies, including telcos and electricity networks.
Either way, a significant proportion of the tax hikes could find their way onto residents' bills.
This budget effectively signals that we've passed 'peak cost-of-living' thinking among the politicians and treasury officials who wrote it.
While inflation was sitting in the seven per cent range a couple of years back, as much as they reasonably could, governments across the land deliberately shied away from politically unpalatable revenue increases that might have pushed indebted households to the brink.
In the steely resolve to go so hard in his inaugural budget, the ACT treasurer seems to be suggesting those days are over.