Feds dash Territory's hopes of $100 million housing debt waiver ... for now

The Federal Government has dashed the hopes of the Territory government that it would waive the latter’s $100 million housing debt.

Finance Minister and ACT Senator Katy Gallagher told reporters in Canberra yesterday (12 October) the government was “not in a position” to forgive the debt.

That follows months of pressure from Senator David Pocock and Chief Minister Andrew Barr for it to do so since the Federal Labor government came to power in May.

Senator Gallagher said yesterday it was “not that easy” to forgive the ACT’s loan given all states and territories owed the Commonwealth a combined $1.6 billion in housing debts.

“But I’m not Finance Minister for the ACT – as much as at times I would like to be – I’m Finance Minister of the country, and I don’t think it’s right to waive debts for the price of a vote on the Senate floor, which is how it’s happened in the past. We’ve got grownups in charge.”

Senator Gallagher was referencing a previous deal in which the Morrison government waived Tasmania’s $150 million housing debt in exchange for Senator Jacquie Lambie’s support on another matter.

But she said work would continue on the issue.

“We’ll continue to engage with the ACT Government. I’ve had meetings with the Chief Minister about it,” she said.

“I know this is an issue that they would like to see resolved. We want to be a government that works with states and territories,” she said.

Senator Gallagher was critical of the previous Federal government for not having waived the historic housing debt or accepted the local government’s calls for refinancing it.

That hasn’t sat well with independent Senator Pocock. He has indicated he is still prepared to use his position on the crossbench to force the government to waive the Territory’s debt in exchange for his support.

Senator Pocock had pledged to do so during his election campaign.

“Senator Gallagher may, of course, say the Government won’t be doing any deals, but the fact remains, the government doesn’t have a majority in the Senate,” he said.

“I wouldn’t be doing the right thing by the people who elected me if I didn’t try everything possible to see this debt forgiven.”

Mr Pocock said the ACT was bearing the brunt of a crippling shortage of social and affordable housing and the money currently going towards interest payments would be better served going towards supply.

He also questioned how the government could afford billions in tax cuts but could not wipe $100 million of debt.

“This looks like a government choosing to let people sleep in cars while planning to give tax cuts to politicians and other wealthy Australians,” Senator Pocock said.

In response to multiple questions from Region, Chief Minister Andrew Barr said he was “disappointed” by the news the debt would not be waived in this month’s budget.

“We will continue to work with the Commonwealth to find a way for the debt to be waived,” Mr Barr said.

“In parallel, the ACT will seek to partner with the Commonwealth on other ways to increase housing supply and lower the cost of housing.”

The ACT Government has promised if the debt were waived it would use the money it’s currently paying the Federal Government to invest in social and affordable housing.

Mr Barr has been arguing the case for the ACT since the 2019 Tasmania deal. In May, he said he was “hopeful” the government would be more open to listening to the ACT’s case.

The ACT Greens are also up in arms about the news.

Greens crossbencher Johnathan Davis echoed Senator Pocock’s comments and questioned how the government could afford to back the Stage 3 Tax Cuts but not to wipe the debt.

“Unlike other state and territory governments who are advocating for their historic housing debt to be forgiven, the ACT Government has committed to investing savings from debt forgiveness dollar-for-dollar back into buying and building more public housing,” he said.

“Australians voted for a change of Federal Government because they wanted change. Tax cuts for the rich while more and more people struggle to find a home? Sounds like more of the same old ‘trickle-down’ neoliberal con to me.”

Opposition Leader Elizabeth Lee said it was “interesting” to see Senator Gallagher’s changed tune now she was in government.

“When she was in opposition, she was very quick to say to Senator Zed Seselja, ‘get on with it, it’s not that hard’, and now the tables are turned and she is not able to listen to her own colleagues,” she said.

Ms Lee said if Mr Barr could not get action on this issue, it would be clear his political alliance was more important to him than the needs of Canberrans.