The ACT can thank its resilient economy in the face of the COVID-19 pandemic for a better than expected bottom-line forecast for 2020-21, but the number is still the worst in ACT Budget history.
Chief Minister and Treasurer Andrew Barr will unveil an ACT Budget today showing that the forecast deficit for 2020-21 will be $603.1 million, $306.4 million less than the $909.5 million predicted in the August Economic and Fiscal Update August update.
Mr Barr said this represented a $578.5 million improvement in the ACT’s finances over the forward estimates compared to the August update.
A better jobs market and an improved forecast Gross State Product for 2020-21 is behind the smaller deficit.
Mr Barr said the Territory’s highly effective public health response to COVID-19 had been a driving factor behind the improvement in the ACT’s economy, which avoided the recession experienced nationally and instead grew by 2.4 per cent in 2019-20.
Although the pandemic fallout destroyed about 10,000 ACT jobs between April and May 2020, the employment market has bounced back. It is now expected to grow by 4 per cent over the year to June, compared to the 0.25 per cent contraction forecast in August.
”Through the careful easing of restrictions, as well as the ability to stop the virus spreading into the Territory from other parts of Australia, local businesses have been able to stay open and keep people employed,” Mr Barr said.
He said economic recovery measures from both the Territory and Commonwealth Governments had also been effective in keeping people employed and injecting cash into the economy, including programs such as Jobs for Canberrans and the fast-tracking of suburban infrastructure that had protected hundreds of jobs across the Territory.
But Mr Barr warned that ACT’s economic recovery was not complete and that the government would continue to invest in jobs as the spectre of COVID-19 hangs over the nation.
“While the rollout of the national vaccine program is promising, it’s important that the ACT Government continues to be one of the mains drivers of economic development in the Territory to help protect local jobs,” he said.
Mr Barr said today’s Budget would support the government’s Jobs and Economic Recovery Plan by investing in large and small infrastructure projects that will create and protect local jobs, including the big-ticket items such as the Canberra Hospital expansion and light rail Stage 2A.
”The Future Jobs Fund will support growth in new and emerging industries, and our significant climate action agenda will support and create jobs across the renewables sector,” he said.
The Budget also includes targeted assistance for sectors hit hard by international border closures, including tertiary education and tourism.
”The More Than campaign will target domestic tourism over 2021 to support our venues, hotels, arts and hospitality businesses and the people who work in them. This direct support will be essential to Canberra’s economic recovery, with both sectors making a significant contribution to the ACT’s labour market,” Mr Barr said.
The ACT Jobs and Economic Recovery Plan has set a target to grow the Territory’s employment base to 250,000 by 2025, and Mr Barr said the ACT remained well on track to meet that target.
The ACT’s unemployment rate of 3.7 per cent and underemployment rate of 6.0 per cent in December 2020 remains the lowest of all jurisdictions. The participation rate of 72.2 per cent is the second highest of all jurisdictions.
Mr Barr said the government had been particularly concerned with the disproportionate impact that the pandemic had on women and young people in the workforce, but the employment levels for females and youth aged 15 to 24 are now above the March 2020 levels.
This is the first of two Budgets this year after last year’s was cancelled due to the pandemic emergency. Mr Barr will hand down the 2021-22 Budget in August.