Treasurer Chris Steel with the Budget Review. No avoiding the pain. Photo: Ian Bushnell
Canberra’s almost billion-dollar-deficit man Chris Steel danced around the questions, but it’s clear this year’s June Budget has horror written all over it.
Mr Steel didn’t mention tax increases or service cuts when he addressed reporters on the 2024-25 Budget Review, but that’s what he meant when he said both revenue and spending sides of the ledger were on the table to bring a runaway budget to heel.
His slip of the tongue after being handed the Treasury portfolio in November when he said the government was “razor-focused” on making sure that it could deliver on its election commitments in a responsible way was portentous.
What he didn’t know then was that unanticipated surging demand at Canberra’s hospitals and health facilities would blow up the budget and threaten its sustainability. A hospital pass, indeed.
The government can fill the gap this time, but he was clear it can’t go on.
Mr Steel is hoping that the 16 per cent increase in presentations at ACT health facilities is a one-off and not a trend. If not, that means somehow curbing the number of people turning up, and that’s where preventative health and primary care comes in, or cutting services.
More money from the Commonwealth and NSW, with which the ACT has a funding agreement it wants to renegotiate, would help, but Mr Steel is also preparing the ground for some honest conversations with the community about the level of services across government.
And also how much we are prepared to pay for them.
The health blowout has brought to a head the issue of what the ACT Government’s priorities should be and what it needs to do to protect them.
In short, it can’t do everything and be all things to all people. This will be difficult in a community whose expectations are sky-high.
The infrastructure pipeline looks like it will stay intact, but there may be some adjustments to the timing.
Politically, the first year of the term is ideal for administering some medicinal pain. Hopefully, by the next election, we will all have moved on and appreciated the gains that came with it.
If Mr Steel is serious, then this is the year to do it.
The government does have going for it a strong economy with an excellent outlook, barring the Donald upending the global economy (not out of the question).
But the assumption of a billion-dollar turnaround in revenue for 2025-26 on the way to a small surplus in 2026-27 and $176.7 million in 2027-28 is heroic.
What can the government do?
Mr Steel was cagey on land sales, the usual way to sugar-hit the coffers, but as Planning Minister, he is looking at regulatory and zoning reforms to unlock new housing and drive economic activity and revenue sources through property taxes.
Whatever measures Mr Steel comes up with, it can’t be business as usual, and there will be losers.
Just as the Canberra Liberals could not get away with promising lower taxes and more spending, Mr Steel cannot scream “tough decisions” and not inflict some pain, although he will be keen not to hurt those who can least afford it.
Mr Steel will lose some short-term skin but the long-term gain will be a more realistic and sustainable government.
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