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ACT governance and economy Professor Stephen Bartos FAIM, FAICD Director, National Institute for Governance Economic Society, 2 November 2006.

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Presentation on theme: "ACT governance and economy Professor Stephen Bartos FAIM, FAICD Director, National Institute for Governance Economic Society, 2 November 2006."— Presentation transcript:

1 ACT governance and economy Professor Stephen Bartos FAIM, FAICD Director, National Institute for Governance Economic Society, 2 November 2006

2 This presentation Have we been spending beyond our means? –Or growing below our capacity? Is the ACT governed effectively? How do cities compete?

3 ACT Budget Last budget based on functional review Headline spending cuts (eg to schools) Longer term structural change

4 Spending beyond our means? Clearly there were issues to be addressed But why a sudden crisis? Not unusual – compare with eg Canadian Program Review in 1994 –Governments tend to put off hard decisions

5 Growing below our potential? The 2-Ps of ACT economics –public service (26%) –property & business services (13%) plus construction, (7%) and ownership of dwellings (9%) Slow population growth –Leading to slow economic growth

6 Impact of self government ACT Self Government Act 1988 Unilateral decision of the Commonwealth A 1978 referendum on self government had been resoundingly defeated

7 Key features of self government Unicameral Small (17 members) 3 electorates, PR elections Combines State and local functions Commonwealth has override powers

8 Subsidiarity A principle of federalism –Responsibility (for anything – but especially government service delivery) should rest at the lowest level competent to handle it Basis of EU and other recently designed federal or quasi federal systems

9 The economic case More efficient to deliver services at a lower level More responsive to local demands More flexible –But has it worked like that in practice?

10 How do cities compete? David Ricardo - comparative advantage Recent manifestation in Michael Porter’s Competitive Advantage of Nations –Factor conditions –Local demand –Related industries –Domestic rivalry

11 If Porter is right, what does that imply for the ACT? Establish clusters of related industries Increase competition locally Factors “both advanced and specialised” Porter: Government can help or hinder, “but lacks the power to create advantage itself”

12 How do cities compete? Richard Florida –The Rise of the Creative Class –The Flight of the Creative Class A bohemian life is correlated closely with economic success Considerable debate on causality

13 If Florida is right, what does it imply for the ACT? Do school cuts send the right message to the creative classes? No On the other hand, Glassworks does send a positive message Need to make it easier for creative businesses to establish themselves here

14 The role of regulation Hernando de Soto The Mystery of Capital Looked at steps required to register title or establish a business Importance of property rights

15 If de Soto is right, what are the implications for the ACT? Reduce over-regulation (eg ACTPLA) Greater transparency The move to the cities – ever increasing and a key driver of growth –is Canberra missing out?

16 Questions and comment


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