Thursday, August 19, 2010

Changing our economic base – a long, slow process

Changing and expanding the Territory's economic base is a challenge. Canberra as the national capital was designed to have federal government business as its economic base. However, self-government in March 1989 brought with it an onus on the ACT Government to create and manage its own economy.

In terms of gross value added by various industry sectors, government administration and defence continue to be the largest industries in the ACT (contributing 31% of current price Gross State Product, above its long-term average of around 28%), followed by property and business services, ownership of dwellings and construction. Figure 1 demonstrates the relative contributions over a 10-year period.

Figure 1: ACT industry value added contribution to current price Gross State Product, 2006–07

Note: includes Agriculture, forestry and fishing, Mining, Manufacturing, Wholesale trade and Taxes less subsidies on products; Source: Australian Bureau of Statistics 2007c

The major non-government industries are all strongly related to property, construction and land development.

The 2005–06 review of the ACT public sector and services also acknowledged that continued above average public spending on the back of, among other things, proceeds of land sales, is not sustainable. The government's intention with the review was to achieve structural reform to reduce expenditure, accompanied by revenue measures, so that land-based revenues would be a decreasing proportion of the overall revenues in the future (ACT Government 2007a:17).

Land-related economic activity has consequences outside of economic growth, leading to loss of significant biodiversity (see Conserving biodiversity issue).  However, Commonwealth and ACT legislation are in place to protect biodiversity.

A recent example is the proposed residential development in the Molonglo Valley. The Spatial Plan, adopted as part of the Canberra Plan in March 2004, identified land for future residential development in the short-, medium- and long-term. Propelled by demand, particularly in the latter part of the reporting period, the ACT Government made a concerted effort to release land for housing. As part of this program, development of the Molonglo Valley, identified initially in the Spatial Plan as a possible future urban area over the next 30 years, has been brought forward. While some of that proposed development will involve conversion to residential land of pine forest that had been burned in the January 2003 bushfire, other parts of it may affect threatened wildlife habitat unless a satisfactory resolution can be achieved. This reinforces the need for planning to be strategic, regionally focused and based on sustainability principles.

The ACT private sector is characterised by large numbers of small and micro business (Small Business Commissioner 2006, see About the data). The Australian Bureau of Statistics estimates at the time suggested small and micro-sized firms in Canberra accounted for around one-third of the Territory's total workforce, and represented over 96% of all private sector firms.

The Chief Minister's annual Export Awards highlight successful business ventures in the ACT (see In January 2007 the ACT Government released a new business prospectus, Investing in Australia's Capital, designed to assist business development and investment in the ACT.

Actions to support private business, such as the Canberra Commercialisation Council, the ACT Exporters' Network and the 'Live in Canberra' campaign, have received strong support from the Canberra Business Council. In its annual report for 2005–06, the council acknowledged the benefits of the ACT Exporters' Network in establishing links with other strategic groups such as Austrade, the Australian Institute of Export and Australian Business Limited to harness opportunities to grow the Territory's export community.

The Canberra Business Council also strongly promotes the interdependence between the Territory and its neighbours in the Australian Capital Region as a way forward.

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