Governing the City State - Chief Minister and Treasury Directorate ...

expectations”. 33 Health spending currently accounts for around 30% of total ACTGovernment expenditure, growing at around 8% per annum, leading to the Minister’sobservation that she:…did not think the community would want big cuts in other areas of government spending toaccommodate rising health costs. I don’t think there’s an agreement in the community thatwe should therefore reduce services say in TAMS or education by ten per cent in order to pay34for it.The Government is continuing to work with the Commonwealth Government onimplementation of health reform agreements reached by COAG in April 2009. Central tothis work are issues of sustainability of health funding and recognition of the ACT’s uniquecircumstances.Approaches to cross border cost recovery in other spheres may also need to be reconsidered.While the CGC takes account of cross border service delivery costs, its consideration of anyadjustments relies on there being high quality and robust data underpinning the argumentsmade by the ACT. Moreover, achieving full cost recovery through the equalisation processespursued by the CGC is almost impossible.Although the Government must, under the terms of the relevant National Agreement, providepublic hospital services free of charge to residents of other states, there is no equivalentrequirement in other portfolios. The Government may well need, for example, to consideroptions in the future for charging cross border school students on a cost recovery basis. TheACT currently provides cross-border education services for around 3,450 non-ACT residents,but does not receive any funding contribution from the NSW Government. The CGCprovides $12.3 million to the ACT Government in recognition of this circumstance, but theACT has identified a net unrecovered cost of around $11 million for the delivery ofschooling to non-ACT residents. Similarly, estimates provided by the ACT Government tothe 2010 CGC Report on Goods and Services Tax Revenue Sharing Relativities suggest thatcross-border access to services such as the courts, policing and corrective services cost theACT around $20.7 million per annum.While a function of Canberra’s largely arbitrary historical location, these matters raisefundamental questions of equity, fairness and sustainability that the Government will need toengage with in the future, supported by strategic advice from the ACTPS. The collection andcollation of meaningful, accurate and consistent data on cross border service delivery will becritical to the ACTPS capacity to provide this advice, and to marshalling evidence uponwhich arguments to the CGC can be made.In facing these future fiscal challenges, the ACTPS will also need to engage with significantcross cutting issues like mental health, housing affordability, and sustainable development inan environment where the ACT Budget will be increasingly stretched. There are also33 Jean, P. (2010) “Gallagher Grim on Prospect to Fund Health Care” The Canberra Times 20 December.34 Jean, P. (2010).Context for the Review: 48