The ACT Territory and Municipal Services is asking community groups how to cut its budget. But they’re focussing on little things like frequency of mowing in parks and cleaning of loos.

They have held a couple of meetings with representatives from a wide variety of ACT community groups. Apart from further eroding already degraded services to the community—these sorts of cut-backs will actually cause greater expenses in the future when the government tries to restore things to acceptable condition.

The key reason the ACT is in this situation is that the ACT Government has an unjustified aversion to borrowing for capital projects. Almost all major projects are funded out of annual revenue rather than specific borrowings. This sort of ‘cash accounting’ mentality might be acceptable for a trade subcontractor buying some tools, but even the tradie would buy their work vehicle through a loan or a lease. Avoiding borrowing makes bad sense for business, but it makes even worse sense for a government. Loans allow governments to amortise a major project over a period and population that will use the project. If the Gungahlin Drive Extension had been paid for via loan, the whole thing could have been built in one go. Instead we have twice the traffic snarls and an estimate $20 million in additional costs to do it in two bites.

What will really turn around the TaMS budget is for them to borrow funds to invest in projects that reduce ongoing expenditure. Things like more lakes for sportfield irrigation, planting in parks to reduce mowing, building a light rail network to reduce road construction.

TaMS needs to think big to save big.

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