Chief Minister Andrew Barr’s 13th budget unlucky for ACT, $831m in the red

Hefty infrastructure spending, higher wages for public servants, and spending to support Canberrans struggling with cost of living pressures has driven the ACT’s finances further into the red.

ACT Chief Minister Andrew Barr. Picture: NewsWire / Gary Ramage

Hefty infrastructure spending, higher wages for public servants, and spending to support Canberrans struggling with cost-of-living pressures have driven the ACT’s finances further into the red.

Chief Minister Andrew Barr’s 13th budget revealed the estimated deficit for this financial year will blow out to $831m, up from the $782m in the most recent fiscal review and nearly double the $443m forecast in last year’s budget.

In the last budget before the ACT election in October, Mr Barr broadened eligibility for stamp duty concessions for first-home buyers, introduced a one-off $250 payment for apprentices and expanded programs to fund low-income households to electrify.

The ACT’s longest-serving Chief Minister has also sought to raise revenues by hiking residential rates, introducing a new levy for short-term rental accommodation and bringing forward the implementation of a payroll tax on major companies operating in the ACT. Mr Barr defended the ACT’s fiscal position on Tuesday, saying the budget would improve each year and return to “balance” in the forward estimates, describing the Labor-Greens government’s approach as “calm and measured”.

“Despite rising costs of service delivery and infrastructure, as well as downgrades to some revenue estimates, the Territory’s financial position remains strong,” he said.

“Our plan allows us to chart a sensible and sustainable pathway for a balanced budget, one that will not expose Canberrans to the hardships of cuts to public investment and consumption for purely ideological reasons.”

With debts projected to climb over coming years, the deficit for 2024-25 will be $624m, versus a previous estimate of $417m.

Bigger spending commitments and a weaker-than-anticipated economy will delay a return to the black by a year to 2026-27, budget papers show, with a deficit of $148m forecast, instead of a $100m surplus previously predicted.

The budget papers estimate the Territory’s finances will be $80m in the black by 2026-27.

By the middle of next year, net debt is projected to climb from $7.3bn to $8.9bn, or 15.4 per cent as a share of the ACT economy – the third-highest in the nation, below Victoria’s 24.4 per cent and the Northern Territory’s 24.5 per cent, but above NSW’s 12.8 per cent.

Net debt will continue to climb through the forward estimates, reaching an estimated $12.5bn, or 18.1 per cent of gross state product by 2027-28.

Canberra Liberals leader Elizabeth Lee attacked Mr Barr for failing to address cost-of-living concerns for Territorians or to deliver a surplus in his decade since becoming Chief Minister.

Ms Lee said the opposition had pledged more support for ACT residents through its $65m cost-of-living relief package.

“Since embarking on his tax agenda, Canberrans’ rates have almost tripled and despite collecting more in taxes than ever before, Andrew Barr continually fails to deliver on the promises he makes to Canberrans,” she said.