Chief Minister Andrew Barr's eighth budget is an exercise in involuntary restraint. Having finally brought the budget into a surplus after five deficits in a row, it will be short-lived.
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The budget brought down by Mr Barr on Tuesday predicts an $89 million deficit for the 12 months from July and another in the year to follow. While surpluses are then forecast to return, don't hold your breath. Mr Barr will deliver an election budget next year and that means more spending. In addition, he will have to start funding some of the big projects that Canberra has been promised for some years.
![ACT Chief Minister Andrew Barr with senior cabinet ministers during the release of the ACT 2019-20 budget. Picture: Karleen Minney ACT Chief Minister Andrew Barr with senior cabinet ministers during the release of the ACT 2019-20 budget. Picture: Karleen Minney](/images/transform/v1/crop/frm/fdcx/doc75n457s5u5cdq041dlg.jpg/r0_0_5568_3539_w1200_h678_fmax.jpg)
However much Mr Barr wants to deflect blame to the federal government, the ACT government must face its own budget demons. The reality is that spending is outstripping revenue year on year: In 2019-20 revenue is up by $200 million to $5.9 billion ($2 billion of that is local taxes); spending is up $400 million to $6.2 billion.
The result is that debt is increasing, hitting $2.71 billion in 2019-20 and peaking at $3.36 billion in 2021-22. Mr Barr points to new national accounting standards which have inflated the debt figures, but the ACT's own decisions are responsible for no small amount of that increasing debt. Excluding the change due to the new accounting standards, debt jumps about $550 million over the coming three years.
The takeaway is that despite seven years of big increases in rates and land taxes - and years more to come - the ACT is still struggling to live within its means and the levers are tightening.
There is zero capacity to lean more heavily on rates - house owners are already facing increases of 7 per cent a year into the foreseeable future, and apartment owners were hit with a much bigger increase still in the changes over the last two years.
The government has relied on land sales to boost its budget for some years, but land supply, as Mr Barr often reminds us, will not last forever, so flogging off the ACT's remaining paddocks is at best a stop gap.
And, gloomily for the budget, the government is sharing profits for its vast new Ginninderry housing estate with the Corkhill brothers - what a deal that family secured! - and has lost control of another of the big new releases in coming years, the CSIRO land off the Barton Highway. Unless there is some way to wrest back an ACT government interest, that money will boost federal coffers, while reducing demand for the ACT government's own land.
All of which leaves little room to move as the government looks to pay for new things - the cost of running light rail stage two, for example, will trouble the budget if and when it gets built. Building it could cost up to $1.6 billion.
That is but one of a growing list of capital works projects. The government says its top priority is the new Canberra theatre, then there's a new stadium, the "land bridge" over Parkes Way, a new swimming pool - all of which are projects without numbers yet attached. All will only increase pressure on that most awkwardly positioned budget bottom line.
The good news of the budget, which has been eked out over the past week or so, is the decision to finally move ahead on a new hospital - the cumbersomely named SPIRE centre - and the decision to build an 80-bed prison outside the prison.
Both are overdue - the hospital has been crumbling before our eyes and the prison bursting in an unholy pile-up of remandees and violent long-stayers, first-time inmates and repeat offenders, women and men.
It is to be hoped that both projects are delivered promptly and properly. In the case of the prison, the government must do more than build 80 beds in a low-security complex. It must separate remandees and first-time offenders from the hardcore. And it should also give serious consideration to weekend and home detention.
In the case of the hospital, Mr Barr should not test our patience with yet another election promise to fund it. Rather, Mr Barr and his cabinet must get on with the job of building it.