ACT budget $603m in the red due to COVID and climate action

COVID-19 and climate action have driven Canberra’s budget into deficit but ACT chief minister Andrew Barr says there is hope for a recovery.

ACT Labor leader and Chief Minister Andrew Barr at the Mitchell Light Rail Depot in Canberra. Picture: Sean Davey.

Coronavirus and climate action have driven Canberra’s territorial budget towards a $603m deficit this year, but ACT Chief Minister Andrew Barr says there will be a $500m recovery if COVID stays dormant and state borders remain largely open for the rest of the year.

The ACT’s long-delayed 2020-21 budget shows government expenditure is up $232m on the previous year and will only continue to grow in the next four years, but strong growth and taxes will see Canberra recoup as much as $200m in the next year alone.

In his budget speech to the ACT parliament, Mr Barr said Canberra would see an average growth rate of 2.7 per cent in the next four years, putting it in as good a fiscal position as any other state or territory recovering from the pandemic.

“The ACT’s fiscal position has improved by around $500m over the coming four years, including a $300m improvement in this fiscal year,” he said. “We also forecast economic growth at an average of 2.7 per cent a year in the next four years.

“The latest data shows that the ACT’s strong response to the pandemic, our success in controlling the virus, and delivery of significant fiscal support where needed, has resulted in a strong recovery in the labour market, with employment growth even higher than expected.

“Employment growth is now forecast to continue across the budget and forward estimates at an average of 1.7 per cent.”

The ACT’s COVID response is still expected to cost $51.5m over the next two years, but is projected to end by 2022-23.

The only Labor-Greens government in the country is also pursuing a $300m climate action package, including $100m for a big battery project to provide renewable power for Canberrans.

“The global battery storage market is predicted to be worth $400bn by 2030, and the ACT is an ideal launching pad for those wanting to invest in this rapidly emerging industry,” Mr Barr said in his budget speech.

“We will partner with the community and private sector to deliver the Big Canberra Battery which, when operational, will be one of the biggest renewable battery storage systems in Australia.

“This investment will generate revenue opportunities for the ACT and improve the resilience of our distribution network.”