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Thursday, May 13, 2021

ACT Budget: ‘Driving Canberra’s Recovery’

“Driving Canberra’s Recovery” following COVID-19 – the greatest economic and health challenge the ACT has faced since self-government – is the theme of this year’s ACT Government Budget.

“This is a defining moment in the ACT’s history,” Chief Minister and Treasurer Andrew Barr said. “Our actions now will determine the speed and confidence of our recovery from this global pandemic.”

The ACT is in a stronger position than other Australian jurisdictions. It has avoided the national recession, the Budget Outlook states; economic activity did not fall as far as feared, and recovery has been faster than anticipated.

“I’m cautious to say that the worst is behind us, because there is always the possibility that something really bad could happen,” Mr Barr said.

“The lived experience will tend to indicate that with a successful rollout of vaccination programs, the worst is behind us – but it comes with the usual caveat that COVID has thrown up the unexpected more than once in the last year.”

The ACT has one of the highest rates of economic growth in Australia, forecast to grow at an average of 2.7% over the next four years. The fiscal position has improved by $500 million over the next four years, including a $300 million improvement this fiscal year.

However, international border closures and a record low rate of population growth (0.25% over the next two years) will limit that economic growth to less than $300,000 p.a. over the next four years. Economic growth is expected to gradually increase to 3% in 2023/24, as tourism and education recover. International students could, however, return as early as Semester Two this year, Mr Barr hopes.

Although more than 10,000 jobs were lost at the start of the pandemic – particularly in hospitality, tourism and higher education – most of those Canberrans are now working again. The ACT has maintained the lowest rates of unemployment (3.7%) and underemployment (6.0%) in Australia, and the second highest participation rate (72.2%). Employment is expected to grow by an average of 1.7% – more than was expected.

But the Budget Outlook states that an effective public health response to the pandemic, support for the general economy, and assistance to those sectors and businesses most affected by the pandemic are necessary for the ACT’s good economic performance to continue.

The provision of health and economic support has affected public finances, the Budget Outlook states. Coupled with a weaker market and reduced collections of own-source revenue (including property tax, user charges, fees, fines), the return to surplus will be a prolonged process:

  • The Headline Net Operating Balance deficit for 2020–21 will be $603 million ($306.4 million lower than estimated in the August 2020 Economic and Fiscal Update, $432.5 million more than forecast in the 2019–20 budget review).
  • The net debt for 2020–21 will be $4.665 billion ($884.5 million higher than forecast in 2019-20 budget review).
  • The deficit is anticipated to reduce to $475 million in 2021–22, $406 million in 2022–23, and $369 million in 2023–24.
  • The ACT’s fiscal position has improved by $578.5 million over the coming four years, including a $306.5 million improvement in 2020–21.
  • Total revenue in 2020–2021 is expected to be $401.1 million higher than forecast in the August 2020 update, and $960.7 million higher over the next four years.
  • Total expenses are expected to be $88.6 million higher than forecast in the August 2020 update, and $404.1 million over the next four years.

“The expectation would be that by the end of calendar year 2021, with a successful vaccine rollout, the economy will have returned to its pre-COVID set of operating parameters,” Mr Barr said.

How the budget money will be spent

Through the budget, Mr Barr said the ACT Government would create more jobs; invest in health, transport, education, and training; rollout the coronavirus vaccine; build new schools and walk-in health centres; and make Canberra “the renewables capital of Australia”.

Health31%$2.0 billion
Education23%$1.4 billion
City services8%$503 million
Community services7%$437 million
Access Canberra and government services6%$395 million
Emergency services and policing6%$383 million
Environment, sustainable development, and climate change4%$274 million
Justice4%$285 million
Transport4%$277 million
Housing4%$225 million
Tourism, sport, events, and the arts2%$138 million

Health receives the biggest slice of the budget pie this financial year: 31% or $2 billion. Unsurprising, given we are in the middle of a pandemic. The ACT Government will continue its COVID-19 response over the next year at a cost of $15.7 million, costs shared with the Commonwealth.

COVID-19 vaccines will be rolled out from February – a major logistical and operational exercise, Mr Barr said, in partnership with the Commonwealth. The vaccination program will cost $12.75 million.

Other Health portfolio measures include:

  • Funding for the Chief Health Officer and her team
  • COVID-19 testing facilities, including funding for continued staffing and operational costs for case investigation, contact tracing, medical and public health specialists, and quarantine processes
  • Upgrade and refurbish Canberra Hospital buildings, supporting pathology and clinical research
  • Funding for acute medical services, birthing, and non-elective surgery at Calvary Public Hospital ($6.5 million)
  • Establish a walk-in health centre in Coombs ($250,000), and conduct a feasibility study into building four more walk-in centres across the city ($542,000)
  • An outpatient imaging service at the Weston Creek Walk-In Centre ($660,000)
  • More spending on mental health services ($1.95 million), including a COVID-19 Mental Health Support Package, the Adolescent Mobile Outreach Service (AMOS)
  • Expanding the Police, Ambulance and Clinician Early Response (PACER) service to respond to Canberrans in mental health crisis ($14 million)

Education receives almost a quarter (23%) of the budget, $1.4 billion. “Canberra is the Knowledge Capital,” Mr Barr said; “Our city’s strength lies in the lifelong education of its residents, from our youngest Canberrans through to the teaching and research conducted by our world-leading higher education institutions.”

Priorities include new public schools and scholarships for teachers to become qualified teacher librarians, policies Labor took the election and were last week announced pre-budget.

  • $27.4 million has been allocated for new and expanded schools in the ACT’s North. The Government will build new schools in Gungahlin at Kenny ($24.4 million) and Taylor ($2 million), opening in 2023 and 2024, while the Margaret Hendry Primary School in North Gungahlin will be expanded ($1 million).
  • Three-year-olds will have two more months of early childhood learning, from 40 to 48 weeks per year, as part of the ACT Early Childhood Strategy.
  • Ten Master of Education (teacher-librarian) students will receive scholarships each year for the next five years, totalling 50 full-time scholarships until 2025 ($888,000).

The ACT Government will undertake its largest ever infrastructure investment program, budgeting $914 million this year and $4.3 billion over the next four years. This includes:

  • Extending the light-rail from Civic to Commonwealth Avenue ($2.1 million), including raising London Circuit
  • Extending John Gorton Drive, including a bridge across the Molonglo River ($176 million, jointly funded by the Commonwealth Government)
  • Road improvements for Canberra’s south-west
  • Constructing a CIT campus and new interchange at Woden ($240 million over the next four years)

Climate action is also a priority for the Government. “The ACT will continue to be the renewable energy capital of the nation,” Mr Barr said.

  • The Sustainable Household Scheme ($150 million) will provide zero interest loans for rooftop solar panels, household battery storage, zero emissions vehicles, and energy efficient electric appliances. “This Fund will be one of the most significant investments in clean energy ever in the ACT, reducing the cost of living and creating jobs for Canberra into the future,” Mr Barr said.
  • The Vulnerable Household Energy Support scheme, a $50 million five-year program to improve building efficiency and sustainability for social and public housing, lower-income owner occupiers, and lowest performing rental properties.
  • The Big Canberra Battery, one of the biggest renewable battery storage systems in Australia. The Government will spend $1.8 million in 2020/21 and 2021/22 to design the system; construction is expected to begin in 2022/23.

Housing and homelessness are also addressed in the Budget. The Government has promised to renew and build new social housing, and to improve housing affordability over the next four years. The Government will increase emergency accommodation; continue funding three homelessness services.

The Budget was originally planned for release in June last year, but was delayed because of the pandemic. It has now been released when the Budget Review would normally take place. There will be no Budget Review this year.

New policy decisions total $298.7 million in expenses and $447 million in capital across the Budget and forward estimates, including $132.7 million in expenses and $42.9 million in capital in 2020–21.

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