27 June 2023

ACT Budget: Barr banks on people power to take ACT back to surplus

| Ian Bushnell
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Andrew Barr with budget papers

Chief Minister and Treasurer Andrew Barr with the Budget papers: “It’s a comprehensive response that delivers now and for the future.” Photos: Claire Fenwicke.

The ACT Budget is forecast to return to surplus the year after next in a document handed down today that combines fiscal repair with cost-of-living assistance and major infrastructure investment.

“It’s a comprehensive response that delivers now and for the future,” Chief Minister and Treasurer Andrew Barr said.

The budget remains in deficit this year at $442.7 million, $50 million better than predicted, but over the forward estimates the position improves to a $141.9 million surplus in 2025-26 which grows to $212.1 million in 2026-27.

The operating cash surplus will also return to surplus and improve to $712 million by 2026-27.

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But the Territory’s debt will also grow from $6.5 billion in 2023-24 to $10.6b in 2026-27, which Mr Barr said reflected the government’s decision to invest in multi-generational and one-in-50-year infrastructure projects such as the new northside hospital, light rail, the Canberra Theatre redevelopment, a stadium and a convention centre over the next decade.

Mr Barr said it made sense to borrow for those kinds of assets.

“So effectively, what we’re doing by borrowing is saying to the community, well, multiple generations of Canberrans are going to utilise this asset,” he said.

“It’s not fair to ask this current generation, you know, in this four-year period, to entirely pay for it upfront. And so that’s why we borrow and our level of debt is very comparable, in fact, better than most other states and territories.”

That staggered infrastructure program is valued at $8.2 billion over the next five years.

Mr Barr said that the Territory’s bottom line would be even better when those one-off projects were completed and public service superannuation was fully funded in the 2030s.

The keys to the improving budget position are Canberra’s growing population, expected to be 10,000 a year and recognised through greater GST payments, higher by $774.9 million over the forward estimates, and full employment lifting payroll tax to be the highest source of locally generated revenue.

Chief Minister Andrew Barr

Chief Minister Andrew Barr at his Budget press conference: sensible borrowing for multi-generational infrastructure.

Mr Barr said the ACT continued to press the case for how the ABS calculates population to be reviewed because using Medicare addresses consistently understates the Territory’s numbers, translating to tens if not hundreds of millions of dollars.

The budget papers say total own-source taxation revenue is estimated to be $2.6 billion in 2022-23, $109.6 million higher than the 2022-23 Budget estimate, and over the four years to 2025-26, it is now expected to be $492.9 million higher.

Payroll tax receipts will now reach $1049.9 million in 2026-27, boosted by the introduction of a 0.25 per cent surcharge for big businesses – 0.25 per cent for businesses with Australia-wide wages above $50 million and 0.5 per cent for businesses with Australia-wide wages above $100 million.

Tax measures are estimated to raise an additional $121.4 million over the forward estimates.

Rates, levees and fees will rise on average by 3.75 per cent, the former as part of the government’s tax reform program, resulting in another cut to stamp duty.

General rates revenue is forecast to be $757.6 million in 2023-24, growing annually by 5.3 per cent to reach $896.2 million in 2026-27.

According to the budget papers, the government will collect $20 million more stamp duty than expected over the four years to $225.7 million, but this will be $400 million less than it would have been before the tax reform program began.

The Lease Variation Charge for property developers will also be increased to reflect higher market values, the first update since 2017

Mr Barr said a decade of suppressed wage growth had hit families hard as the cost of living soars, and measures such as the expansion of utility concessions and free preschool were designed to help them.

“Of course, every household in Canberra benefits from an energy concession,” he said.

“Basically, the biggest benefits go to the lowest-income households, but every single household will benefit, particularly when compared with what’s happening across the border in NSW, or indeed elsewhere on the east coast of Australia.”

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The budget assumes that inflation has peaked but that higher interest rates and cost-of-living pressures will continue to temper household consumption and business investment in the short term.

It expects ACT exports to continue to be strong, along with robust growth in employment and wages.

Growth is expected to fall below 3 per cent in 2023-24 to 2.25 per cent but resume at 3 or more per cent in the following years.

The government previously announced record spending on health, education, housing and police.

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Build a new Theatre and Stadium while the roads return to to dust. Hold, that’s their strategy. The roads become that bad people have no other option but to use the Chief Ministers Toy Train.

Linda Seaniger1:47 pm 28 Jun 23

Our chief minister does not understand basic maths. How can we be in surplus when we have a large loan deficit to pay for an ugly in efficient and expensive tram. Whilst ignoring all maintenance and necessary road infrastructure improvements in the long-term. Yes, Andrew would have us riding bikes in old age and walking in all weather scenarios, but then both means would probably be faster than the tram.

Roger Shelton3:55 pm 28 Jun 23

Perhaps you could give an explanation of why you think the tram is uglier than, say, a bus, and why you think the proven popularity of the tram should be ignored? You might also like to dispel the impression of a bias against Public Transport by quoting some of your boarding statistics from your MyWay record?

Stephen Saunders10:58 am 28 Jun 23

“Canberra’s growing population” – a totally brainiac economic masterstroke, Mr Barr. Not.
They want you to think, that everyone is doing Open Borders. Actually, It’s a classic Anglophone disease – CA, AU, UK, NZ. In the US, Biden and the woke media keenly want it – but they are checked and balanced.

For how many years can promised infrastructure remain in the planning phase and never physically built? Surely someone in the Canberra media is going to finally point out the emperor isn’t wearing any clothes.

Some Southside projects seem to have been in the ‘happening soon, it’s in our budget pipeline’ basket for a decade or so.

the problem is that while the ACT voters return the same mob each election, they cannot be held to account for their lack of progress on certain southside infrastructure projects like Athllon Drive and Monaro Highway.

One day, a government polly (want a cracker) might actually knock on my door. they’re not going to enjoy the conversation.

HiddenDragon7:17 pm 27 Jun 23

“The ACT Budget is forecast to return to surplus the year after next….”

The mañana surplus – a very familiar promise over the millennia of Labor/Labor-Green rule in the ACT.

Less familiar is the eventual appearance of the promised surpluses, and not just when there’s a bullet-proof excuse like a once-in-a-century pandemic.

A struggling opposition party looking for chinks in the armour could do worse than getting some keen staffers/volunteers to go back over budget papers for the last couple of decades to compare promised budgetary improvements with what was actually delivered. A website which set out the results would make interesting reading for Canberrans who care about the fiscal trajectory of the ACT government and what that means for rates and other taxes and charges.

Roger Shelton3:46 pm 28 Jun 23

To be balanced, the most recent decade that includes administration by the opposition should be analysed too.

Dear government advocate Roger Shelton, as that’s ancient history over 20 years ago, it’d be hard to see the relevance of this info. However, it might be interesting if all was objectively analysed, not by a government advocate, nor an opposition one.

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