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Barr defends new spending as GST blow helps drive Budget deeper into red

Ian Bushnell 13 February 2020 53
Chief Minister Andrew Barr

Chief Minister Andrew Barr: it’s time for the government to step up and support the economy. Photo: Dominic Giannini.

Less GST revenue, fewer land sales and extra spending has sent the ACT deeper into the red but Chief Minister Andrew Barr is unrepentant, saying the times demand greater government support for the economy after a summer of disasters and the unknown impact of the coronavirus outbreak.

The Mid Year Budget Review released today (13 February) shows next year’s forecast $89 million deficit has blown out to $255 million, with a small surplus of just $9 million expected in 2021-22, and only $250 million the following year instead of the projected $400 million.

With the full impacts of disaster recovery and the coronavirus still to come, there are fears the Budget situation could be much worse by June.

Revenue this year has taken a $103 million hit, with $422 million less over the four years to 2022-23

A big chunk of that is Commonwealth grants revenue from the GST, which is now down $17.6 million in 2019-20 and expected to cost the Budget $172.6 million over the forward estimates, while there is $51.3 million less from the Suburban Land Agency and the City Renewal Authority.

A higher take-up of the home buyer concession scheme has impacted conveyance revenue by $15 million and an expected $45 million over the forward estimates, although Mr Barr sees this as a good sign for the housing market.

Net debt has increased by $300 million and over the forward estimates it will blow out by $1 billion.

There is $80 million worth of new spending this year, and $164 million over four years, much of which has already been announced, including $60 million to keep the Canberra Hospital running.

The Budget Review papers also show separate infrastructure initiatives of $57 million in 2019-20 and $121.8 million over four years, including $31 million for design work for light rail Stage 2A and $2.5 million for raising London Circuit.

Mr Barr said that with the bushfires and unknown impact of the coronavirus crisis, now was not the time for a government to be concerned about Budget surpluses, noting that even the Federal Coalition Government had dropped its surplus goal as a priority.

“Now is the time for government play a larger role in supporting the bushfire recovery, and supporting the tourism and hospitality, and higher education sectors through the coronavirus period and investing in long-term infrastructure,” he said.

Mr Barr said the ACT economy remained strong and the Budget situation would have been worse, with the loss in GST revenue, if the government had not embarked on its tax reform program to ensure a more reliable revenue base.

He said the government’s next phase of rates increases would continue but at about half the rate as before, with the heavy lifting behind the government.

He attacked the Canberra Liberals’ rates freeze pledge saying they would be digging an even bigger budgetary hole that they would have to pay for through cuts in services or increases in other taxes.

Mr Barr rejected suggestions that the government had lost control of the budget.

“If there is a proposition that we shouldn’t be investing in the health system, in bushfire recovery and responding to the coronavirus and supporting the economy then they [the Liberals] are welcome to put that position to the people of Canberra,” he said.

“What the Opposition can’t do is criticise the government for making these investments but then seek to walk both sides of the street.”

He defended the $60 million top-up for the health system, saying demand ebbed and flowed and last year’s flu season had taken its toll.

“You can’t just close the emergency department because your 250,000th patient walked through the doors in May rather than the end of June,” he said. “You simply have to keep services operating.”

He warned that with the coronavirus being a flu-like illness “this kind of public health investment is going to be necessary over this fiscal year and into the future”.

Mr Barr said the economic impact of the virus on the ACT was being felt, with thousands of Chinese students stuck in China that would be otherwise spending money in Canberra, not to mention their friends and relatives.

He said tourism and higher education had been big anchor’s of the ACT economy over the past five years and it would be necessary to put in place quite significant support levels.

The situation highlighted the need for the education market to diversify beyond China.

Asked whether the situation also allowed a government in an election year to spend more, Mr Barr said the circumstances provided the government with an opportunity to demonstrate its capacity to respond to economic shocks and that its budget management philosophy allowed it to do so.

Opposition Leader Alistair Coe said Labor’s ticking debt bomb of over $3 billion was something that Canberra’s families would have to pay back with interest.

“Once again, Labor is refusing to take responsibility for their financial management,” he said.

Mr Coe said Mr Barr was using the fall in GST payments as an excuse for Labor’s ballooning borrowing.

“It’s clear that after 19 years of Labor, there are no excuses for this repeated financial mismanagement that is costing Canberra families more and more every day,” he said.

Mr Coe said Commonwealth funding to the Territory in 2019-20 was still expected to be $50 million more than last year.

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53 Responses to Barr defends new spending as GST blow helps drive Budget deeper into red
Catherine Higgins Catherine Higgins 2:23 pm 14 Feb 20

Naomi Lee Robbie Ladbrook interesting take on the focus for ACT

Cary Elliot Johnson Cary Elliot Johnson 11:10 am 14 Feb 20

Barr announces no new homes to be connected to natural gas, despite it being in the Utilities Act as being an “essential service”, and whatya know, we get a gas bill letter that states that our monthly payments will double, despite our usage not doubling.

Raewyn Bastion Raewyn Bastion 9:17 pm 13 Feb 20

He won’t have to worry about it, probably the mess for someone to clean up

Wayne Warton Wayne Warton 8:53 pm 13 Feb 20

Any excuse will be used. This government only knows how to spend and over tax us.

    Luke Bennett Luke Bennett 9:34 pm 13 Feb 20

    Wayne Warton yet somehow taxing us less than the average of all states/territories...

    Raffy Sgroi Raffy Sgroi 5:05 am 14 Feb 20

    Luke Bennett june 2019

    “Mr Barr also said the move to land taxes over duties meant the ACT did not have a huge hole in its budget from lost stamp duty when the property market softened.”

    Considering the tax per person was lower in Queensland South Australia Tasmania and Northern Territory, ACT results aren’t great!

    Luke Bennett Luke Bennett 6:31 am 14 Feb 20

    Raffy Sgroi cherry pick data all you like, but we live in the state/territory with the highest average income in the country, but below average taxes per person. That’s not a bad outcome.

Bill Pappas Bill Pappas 8:38 pm 13 Feb 20

Sure.... up go the rates yet again

Jim Hosie Jim Hosie 7:18 pm 13 Feb 20

Because we’ll just pay higher and higher rates...

    Greg Garth Greg Garth 8:22 pm 13 Feb 20

    Jim Hosie Go some where that doesn’t, if you can find such a place.

Hans Dimpel Hans Dimpel 7:05 pm 13 Feb 20

The ACT needs to sto[ being a safe Labor seat, with 1 Labor and 1 Liberal senators. why are Canberrans so dumb?

    Sher Young Sher Young 7:34 pm 13 Feb 20

    Hans Dimpel wish we had decent options

    Margaret Welsh Margaret Welsh 2:35 am 14 Feb 20

    The ACT has a population of almost 400,000 with two senators. Tasmania has a population of around 530,000 and twelve senators. That's why it's almost impossible for the ACT to have anything other than one Labor and one Liberal senator. We need to be appropriately represented.

Bill Gemmell Bill Gemmell 6:55 pm 13 Feb 20

This joint will always be on the financial precipice unless we develop a new industry like coal mining or natural gas production.

    James Kozanecki James Kozanecki 7:01 pm 13 Feb 20

    Yes, investing in coal is exactly where the ACT should go... said nobody ever.

    Mal Briggs Mal Briggs 7:05 pm 13 Feb 20

    Bill Gemmell what precipice?

    Government is supposed to borrow money to invest in infrastructure during a downturn, it stimulates growth

    Bill Gemmell Bill Gemmell 7:26 pm 13 Feb 20

    Mal Briggs been borrowing since 1989 as far as I can tell. Pretty shallow downturn

Malcolm Campbell Malcolm Campbell 6:44 pm 13 Feb 20

When ever they are spending some one else’s money there is never a problem

Nathan Bennett Nathan Bennett 6:38 pm 13 Feb 20

The fundamentals of the economy stay strong though, well done. Dont get what everyones obsession with a surplus is, the money is there to be spent. I'd be more frustrated if they didn't spend the money I pay into this city on this city.

Plus its so cheap for them to borrow at the moment that is just makes sense to invest.

And Hell we've just had a massive summer of fires and smoke and they've just put a massive investment into the ESA, parks, and fire services to help recover and prepare for the next one.

Really what have you got to complain about?

    Daniel J. Fitzpatrick Daniel J. Fitzpatrick 6:54 pm 13 Feb 20

    Nathan Bennett how dare you ask me about how much I have to complain about, as a typical Canberran I can and will whinge and whine about everything!


    Mal Briggs Mal Briggs 7:03 pm 13 Feb 20

    Nathan Bennett correct all round. We are seeing a downturn in GST and land sales across the country as the economy reacts to the effect of a federal surplus (plus disasters) the worst thing the ACT government could do would be to close the purse. Spending by government is exactly what is needed. Low interest rates are specifically designed to encourage spending.

    Denis Svob Denis Svob 7:18 pm 13 Feb 20

    Nathan Bennett 100%

    Rick Reeks Rick Reeks 9:24 pm 13 Feb 20

    Nathan Bennett I suppose you run your household the same way. Crazy.

    Richard Perry Richard Perry 11:19 pm 13 Feb 20

    Rick Reeks it's not a household. It's a government. You don't peal an orange the same way as an apple.

Stan Vizovitis Stan Vizovitis 6:11 pm 13 Feb 20

So where did all the money go you gouged out and frittered away

    Leigh Brady Leigh Brady 6:14 pm 13 Feb 20

    What gouging? ABS stats indicate ACT is one of two states that hasn’t increased overall tax revenue per capita (all other states have)

    You don’t realise how good you have it.

    Charlie McDonald Charlie McDonald 5:58 am 14 Feb 20

    Leigh Brady Rates and land tax have increased by 50% under Barr

    Leigh Brady Leigh Brady 9:41 pm 14 Feb 20

    yeah rates have... so what? We’ve got progressive tax reform... more of it is moving to rates... but overall.. same. Which they promised.

    What exactly is your issue? Same taxes?

David Brown David Brown 6:02 pm 13 Feb 20

Look out. I feel a rates increase in my waters.

Thank goodness it is an election year. He will have to wait until 2021.

    Daniel J. Fitzpatrick Daniel J. Fitzpatrick 6:52 pm 13 Feb 20

    David Brown good one.... although rates were increased as a response to a taxation report that was commissioned to find best practice taxation models for the ACT. How dare a government actually listen to a professional report I mean they should just get the report, hear the findings and do nothing, as per gonski or Henry, every royal commission ever!

    David Brown David Brown 6:57 pm 13 Feb 20

    Daniel J. Fitzpatrick The rates were increased because Baa and his cronies wanted more revenue and home owners were sitting ducks. He can cite any expert in support but Canberra’s home owners suffered and I expect the suffering is not over.

    Nathan Bennett Nathan Bennett 7:42 pm 13 Feb 20

    David Brown only home owners who are suffering are in rich and heritage suburbs.

    So what suburb do you live in mate?

    Rob Chalmers Rob Chalmers 8:37 pm 13 Feb 20

    Nathan Bennett Rich and Heritage suburbs baloney !!

    Daniel J. Fitzpatrick Daniel J. Fitzpatrick 11:23 pm 13 Feb 20

    Rob Chalmers didn’t claim it wasn’t. You are right light rail has been a monumental failure....wait a second!!


    Peter Reichstein Peter Reichstein 8:43 am 17 Feb 20

    Nathan Bennett I’m so stoked that Spence is now considered rich and heritage listed 😆😆

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