Trouble in the bubble

Written by: John McCluskey MD, Whizdom APSCo Director

Those that know me, know I am a very passionate Canberran and know our city is a wonderful place to live and work. Traditionally many said we were in a bubble in Canberra propped up by the Federal Government Canberra centric presence.

While some of this has some truth, Canberra had matured over the last two decades where private industry employment exceeded those working in Local and Federal Government.

Local Government policy, industry and the community is heavily influenced by Federal Government initiatives, and we are seeing this playout now.

As the Federal Government has pursued a path on in-sourcing “Thanks PWC” and a reduction on the use our consultants and projects increasing the public sector employees, allowing employees to work remotely, including other states, we are starting to see some of the impacts on the local economy.

With the lower industry patriation we have lower payroll collection, with the reduced local consumer spending we have reduced GST, largely effecting local government capacity to fund appropriate services.

With the in-sourcing, there is a reduced requirement for specialist skills that is putting downward pressure on rates and more competition for local roles, forcing many consultants like the public servants to move or work remotely.

Local Government has increased ACT payroll tax this year for medium and large enterprises that was already the highest in the country to offset the shortfall of revenue.

The ACT leads the country per capita in business insolvency, not something to be proud of, but rest assured there is another payroll tax increase coming next year to business to offset those losses.

Unfortunately, where we should be attracting new business to invest in Canberra it seems we are doing everything to deter them. With the highest costs of labour in the country you have to forgive those companies engaging talent outside ACT to reduce costs to make ends meet.