Canberra’s economy is about to plunge to new, record breaking depths with the ACT Government forecasting an operating deficit of $332.8 million in 2014-15.
However, the Government will be borrowing more cash, taking out a record program of loans for a $2.5 billion program of infrastructure investment over four years.
In delivering the ACT budget (on 3 June) ACT Treasurer Andrew Barr blamed the Commonwealth and its budgetary programs for hurting the city and damaging Canberra’s economy through direct budget and staffing cuts to Commonwealth government departments and the consolidation of federal agencies.
He said the increased deficit for the net operating balance was due almost entirely to factors outside his Government’s direct control. The direct impact of Commonwealth decisions had forced a write-down of $375 million in revenue over four years and the loss of 6,500 jobs. This combined to dampen growth and would flow to other parts of the ACT economy, hurting the city, the vulnerable, business, households and the economy.
Lower Commonwealth health grants and the reduction in revenue from the land release program due to falling Commonwealth employment would add more than $80 million to the deficit in 2014–15, he said. Resultant concerns about job security would limit consumption and consumer confidence and delay businesses hiring and investing.
Mr Barr said the estimated recovery for Canberra’s economy with a modest surplus was still some years away in 2017-18 (the ACT elections will be held on 15 October 2016). And gross state product would grow by 1¾ per cent in 2014–15, reflecting slower growth in the public sector and household consumption.
He outlined a mixed program of investing in health, education and community services and providing transforming infrastructure to create jobs and economic activity.
The Government intended to borrow for a $2.5 billion Infrastructure Investment Program, including $735 million in 2014–15. This four-year capital program was the largest by any ACT government. He described it as “an investment in the future” and in the productive capacity of the ACT economy.
The money would provide spending for transformational projects such as Capital Metro (light rail), Australia Forum, City to the Lake and new court facilities. These projects would generate employment and services and “create a legacy for Canberra as we begin our second century”.
The program provided for spending on a broad range of projects across the ACT, such as a new government office building in Gungahlin, a new school in Coombs and infrastructure to support land release.
The Government would introduce taxation reforms designed to make taxes fairer, simpler and more efficient.
- Insurance tax – cut by one-third this year and abolished by 1 July 2016
- Stamp duty – cut on every property in Canberra, making home buying cheaper. The top rate of stamp duty will cut to a flat 5.25 per cent for all properties – residential and commercial – valued above $1.455 million
- The new Over 60s Home Bonus – cuts stamp duty; eligible buyers will pay only $20 in stamp duty, a saving of up to $20,500
- Payroll tax reform – local businesses will benefit. The threshold rises from $1.75 million to $1.85 million in 2014-15. Businesses with a payroll of $2 million will save $6,850 per year, and about 40 businesses will no longer pay this tax
The budget provides $1.4 billion for health in 2014-15, including around $40 million to cover the shortfall left by the Commonwealth. It includes $173 million over four years for growth and new initiatives in the health system.
- More services and more staff at local health centres, more outpatient services and more beds at hospitals
- Funding for a new sub-acute public hospital at the University of Canberra, a secure mental health unit, extra hospital beds and a car park at Calvary Hospital
Will invest more than $961 million in education – a 6 per cent rise – to improve learning outcomes for all students in all schools regardless of ability or background
- Childcare centres upgraded and improved training for pre-school teachers
- Capital funding of almost $82 million will improve education infrastructure and enhance information and communication technology in schools
- Construction of the new Coombs Primary School, a state-of-the-art facility for more than 700 students
More than $465 million for community services and housing, including disability and out of home care services, community housing and homelessness services.
- Children with disabilities will get extra support with funding for more school-based therapy intervention services
- Funding for a range of justice system reforms and improvements, notably to focus on preventive programs, a new Supreme Court facility, and upgrades to the Alexander Maconochie Centre
- $21 million for a joint fire and ambulance station in Aranda
Transport and parks
- More than $45 million to expand and maintain roads – particularly in newer suburbs in Gungahlin and Molonglo
- Significant investment in public transport, including more services to new suburbs, the start of work on the redevelopment of the Woden bus interchange, a new bus station for Erindale, and the establishment of a Community Transport Coordination Centre
- Light rail – $21.3 million for the start of the Capital Metro project. The Government will seek expressions of interest to build and run to network in the coming year. Building starts in 2016
- More than $15 million is allocated to urban parks and trees, shopping centres, and other community open spaces continue to be managed and maintained to a high standard
Fees and charges
- Most government fees will rise; for driver’s licences and car registration
- Eight more parking inspectors (around $3 million a year in revenue)
- $2 million levy on commercial properties for emergency services
- $34 lifetime care and support levy for catastrophic road injuries
- Provide $2.4 million for three Cricket World Cup matches at Manuka Oval in 2015
- Upgrade Lyneham tennis courts for hosting professional tournaments
- Funds for a water-play park in Tuggeranong
$75.5 million for a range of digital initiatives to make it easier and cheaper to do business with government
Financial support for former government employees to start their own businesses; young entrepreneurs will receive expert support
Regulatory reforms to improve efficiency, cut red tape and make it easier to do business with government