The ACT will dip into deficit over the next two years as the Government ramps up infrastructure spending to meet the demands of a fast-growing national capital and the shortfall left by the federal Coalition’s re-election.
Chief Minister Andrew Barr says with interest rates at historic lows and Canberra growing by 8000 residents a year there is no reason to wait, and the ACT will borrow more within its AAA rating framework to deliver the biggest infrastructure program in the history of self-government.
This amounts to a $469.5 million investment in services and a $787.2 million pipeline of capital projects over the next four years.
As a result, net debt will increase from $2.1 billion to peak at more than $3.36 billion in 2021-22, before receding slightly in 2022-23, but Mr Barr says this is prudent and affordable.
While there will be deficits of $89 million and $66 million in 2019-20 and 2020-21, Mr Barr says there will be a return to a $400 million surplus in 2022-23, with cumulative surpluses of $500 million over the next six years.
Chief Minister Andrew Barr says the Territory government will forge ahead with infrastructure spending plans despite the coming deficit. But crunching the numbers is a challenge post Federal election.
Posted by The RiotACT on Monday, 3 June 2019
Mr Barr is banking on the ACT’s resilient housing market, whose outlook remains positive despite declines in other overheated cities such as Sydney and Melbourne.
On the revenue side, residential rates revenue will rise from nearly $360 million to $388.4 million in 2019-20 due to a larger property base and tax reform.
But for the first time, rates for houses and units will be rated differently in response to the 2018 Legislative Assembly inquiry into the methodology for setting unit rates.
Rates for houses will go up 7 per cent, the same as last year, while unit owners will face an 11 per cent rise, which the Government say will mean around 98 per cent of unit owners having to fork out $100 more per quarter or less.
Mr Barr says the Government is aware that households are hurting from the impacts of tax reform, and that the heavy lifting is now over, with the rate of growth in rates to slow as the ACT moves towards the next five-year phase of the tax reform program.
Commercial rates, which have also drawn the ire of businesses, will go up 6 per cent, with 2018-19 revenue of $199.1 million, increasing to $211 million for 2019-20.
From 2020-21 the Government will lengthen the period used to calculate the average unimproved value for commercial properties, a change that will be implemented in consultation with industry over the coming year to deliver more predictable rates bills for commercial property owners.
Stamp duty will continue to decline as a revenue source but it will still contribute about $190 million in 2018-19, less than expected due to a softening in the housing market, and much the same in 2020-21 before picking up again.
Household fees and charges will be held to the Wage Price Index, but motor vehicle registration will also include a levy of $16 per vehicle to help establish the new Motor Accident Injuries Commission.
But there is money for a new opioid addiction clinic on the northside and planning for a new college also on the northside where population pressures are building.
The Government will also press ahead with planning for a safe injecting facility.
Light rail may be off the fast track, but Mr Barr says the Government remains committed to extending the line to Woden, with $68 million earmarked for design and enabling work, and getting the Woden interchange ready.
Affordable housing is on the agenda with a new Common Ground project to be built in Dickson delivering 40 units.
In the coming year, the Government will commence the next stage of its $100 million housing strategy to deliver 200 more homes and renew 1000 properties.
The 2019-20 Indicative Land Release Program will see another 15,600 sites for homes released to the market over the next four years in a mix of urban renewal areas and new suburban estates. In 2019-20, this will include 488 affordable housing blocks, 140 sites for social and community housing, and 294,085 square metres of land for community uses.
The Government has moved to speed up development applications with an immediate $1 million for extra staff, growing to $3.8 million over the forward estimates, funded by an increase in application fees.
The Government will release a new Climate Change Strategy and Living Infrastructure Plans in coming months. They say the first investments will be in transport, reducing natural gas use, and mitigating the heat island effect by increasing tree canopy and other living infrastructure.
Amid concerns that the city’s urban forest is not being replenished, the Government plans to plant 17,000 more trees over the next four years.
It will also re-establish the Ingledene Forest, which was destroyed in the 2003 bushfire, at a cost of $1.7 million over four years, and create a new special purpose reserve in the Molonglo River area for the conservation of native plants and wildlife by remediating the former Molonglo Sewerage Treatment Plant.