explainers, act budget, andrew barr, chief minister
Better late than never. Chief Minister Andrew Barr will hand down the 2020-21 ACT budget on Tuesday, about eight months after it was due. It will be Mr Barr’s ninth, and perhaps most important, budget as ACT Treasurer, as he attempts to navigate the ongoing coronavirus recovery, vaccine rollout and a big backlog of long-planned infrastructure projects. February is typically when the ACT government hands down its mid-year budget review, offering a snapshot of the state of the territory’s books. But this February Mr Barr will table a full set of financial statements. No, he’s not running ahead of schedule, but rather months and months behind it. The 2020-21 budget was due to be handed down last June. Then the pandemic struck. The federal government’s decision to push back its usual May budget to October forced the states and territories – including the ACT – to delay publishing their own fiscal updates. With the October election not leaving much time at the end of last year, the ACT Legislative Assembly’s first sitting day of the year – February 9 – was picked as the date for a very late 2020-21 budget. No. While it didn’t contain all the detail a budget would, the government’s economic update in August did include all of the most fussed-over figures. The numbers weren’t as eye-wateringly bad as in other jurisdictions, but they weren’t exactly pretty either. The update predicted the territory’s deficit would swell beyond $900 million in 2020-21, while net debt was predicted to grow to $4.7 billion. The most recent quarterly figures, published late last year, did show some improvement. But the twin health and economic emergencies caused by COVID-19 has battered the budget from all sides. The tax relief, fee freezes and other rebates the ACT government had rolled out to support households and businesses had sucked revenue from the government coffers. At the same time, tens of millions of dollars in unplanned spending – including for a pop-up COVID-19 hospital on Garran Oval – had massively increased expenses. Put simply, money was flying out the door but not a lot was coming back the other way. Throw in a sharp decline in land sales, a shrinking GST pie and uncertainty over future coronavirus outbreaks, and Mr Barr and the boffins in Treasury were staring down the worst budget conditions in the territory’s history. It was relative, of course. The ACT economy held up better than other states through the worst of the lockdown period, propped up by its large public sector workforce and a sizeable increase in federal government spending. The ACT’s virus-free status has allowed restrictions to be relaxed to the point most industries are back up and running, at least to some extent. The economy has, as a result, bounced back quickly. Economic activity in the September quarter was up 2 per cent, spurred by an 8.7 per cent increase in private consumption. That’s Canberrans spending big in local pubs, cafes and restaurants, among other places. The news on the jobs front is also positive. Fears of a contraction in Canberra’s labour market have not eventuated, with Treasury now anticipating four per cent employment growth for 2020-21. All signs are pointing to a lower deficit than the near $1 billion figure forecast in August. But uncertain times lay ahead, particularly with the Commonwealth’s main support – JobKeeper and the JobSeeker supplement – scheduled to finish at the end of March. Mr Barr has said Tuesday’s budget will be focused on three objectives: supporting Canberra’s ongoing coronavirus recovery (which includes the vaccine rollout), delivering on Labor’s election promises and progressing items in the Labor-Greens parliamentary agreement. The customary stream of pre-budget announcements have included a mix of all three. The largest spending commitment announced thus far has been on climate action, one of, if not the main priority for the chief minister in what’s looming as his final term in the ACT Legislative Assembly. The $300 million package, due to be rolled out over the next five years, includes $100 million towards Canberra’s big battery project and $150 million for a fund offering low-interest loans for solar panels, household battery storage, zero-emission vehicles and efficient electric appliance. The budget will include $27.4 million for school-related infrastructure in Gungahlin, with the bulk of that money to be spent on roads to support a new campus in Kenny. Extra funding for homelessness services, speed cameras and planning work related to the next stage of light rail will also be confirmed on Tuesday. Typically, yes. Budget papers usually include rates settings for the next financial year, which for much of the past decade has meant steep rises for many residential and commercial property owners. But Tuesday will be different. Why? Because rates for 2020-21 have already been announced – all the way back in June. Most households have been spared a bill hike this financial year, although as The Canberra Times revealed more than 60,000 residential ratepayers were hit with an increase. That number was far higher than the 18,000 figure reported when Mr Barr announced the reprieve. Rates for 2021-22 will be announced before July 1, ahead of the second ACT budget for the year in August. The government is planning to start the next phase of its 20-year tax reform program next financial year, which will see residential and commercial rates rise on average 3.75 per cent. Whether that planned increase goes ahead, or Mr Barr chooses to grant another reprieve, will likely depend on the state of the economy at the time. As it was in 2020, the ACT remains vulnerable to a virus still raging around the world.
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Chief Minister Andrew Barr will hand down the 2020-21 ACT budget on Tuesday, about eight months after it was due.
It will be Mr Barr’s ninth, and perhaps most important, budget as ACT Treasurer, as he attempts to navigate the ongoing coronavirus recovery, vaccine rollout and a big backlog of long-planned infrastructure projects.
Aren’t ACT budgets due in June?
February is typically when the ACT government hands down its mid-year budget review, offering a snapshot of the state of the territory’s books.
But this February Mr Barr will table a full set of financial statements.
No, he’s not running ahead of schedule, but rather months and months behind it.
The 2020-21 budget was due to be handed down last June. Then the pandemic struck.
The federal government’s decision to push back its usual May budget to October forced the states and territories – including the ACT – to delay publishing their own fiscal updates.
With the October election not leaving much time at the end of last year, the ACT Legislative Assembly’s first sitting day of the year – February 9 – was picked as the date for a very late 2020-21 budget.
We’ve been in the dark about the ACT’s finances all this time?
While it didn’t contain all the detail a budget would, the government’s economic update in August did include all of the most fussed-over figures.
The numbers weren’t as eye-wateringly bad as in other jurisdictions, but they weren’t exactly pretty either.
But the twin health and economic emergencies caused by COVID-19 has battered the budget from all sides.
Temporary COVID-19 emergency department under construction at Garran Oval.
The tax relief, fee freezes and other rebates the ACT government had rolled out to support households and businesses had sucked revenue from the government coffers.
At the same time, tens of millions of dollars in unplanned spending – including for a pop-up COVID-19 hospital on Garran Oval – had massively increased expenses.
Put simply, money was flying out the door but not a lot was coming back the other way.
Throw in a sharp decline in land sales, a shrinking GST pie and uncertainty over future coronavirus outbreaks, and Mr Barr and the boffins in Treasury were staring down the worst budget conditions in the territory’s history.
It was relative, of course.
The ACT economy held up better than other states through the worst of the lockdown period, propped up by its large public sector workforce and a sizeable increase in federal government spending.
That was August – what about now?
The ACT’s virus-free status has allowed restrictions to be relaxed to the point most industries are back up and running, at least to some extent. The economy has, as a result, bounced back quickly.
Increased household spending has helped the ACT economy recover from the COVID-19 shutdown. Picture: Karleen Minney
The news on the jobs front is also positive. Fears of a contraction in Canberra’s labour market have not eventuated, with Treasury now anticipating four per cent employment growth for 2020-21.
All signs are pointing to a lower deficit than the near $1 billion figure forecast in August.
But uncertain times lay ahead, particularly with the Commonwealth’s main support – JobKeeper and the JobSeeker supplement – scheduled to finish at the end of March.
So what’s going to be in the budget?
Mr Barr has said Tuesday’s budget will be focused on three objectives: supporting Canberra’s ongoing coronavirus recovery (which includes the vaccine rollout), delivering on Labor’s election promises and progressing items in the Labor-Greens parliamentary agreement.
The customary stream of pre-budget announcements have included a mix of all three.
The largest spending commitment announced thus far has been on climate action, one of, if not the main priority for the chief minister in what’s looming as his final term in the ACT Legislative Assembly.
Budgets mean rate hikes, right?
Budget papers usually include rates settings for the next financial year, which for much of the past decade has meant steep rises for many residential and commercial property owners.
But Tuesday will be different. Why? Because rates for 2020-21 have already been announced – all the way back in June.
Rates for 2021-22 will be announced before July 1, ahead of the second ACT budget for the year in August.
Whether that planned increase goes ahead, or Mr Barr chooses to grant another reprieve, will likely depend on the state of the economy at the time.
As it was in 2020, the ACT remains vulnerable to a virus still raging around the world.
