Weak ACT budget makes territory vulnerable to coronavirus hit, former official claims

Dr Khalid Ahmed's warning has been balanced by a senior ANZ economist, who says the ACT is well placed to weather the challenges confronting the territory and the country.

The comments came as Chief Minister Andrew Barr suggested funding for major local projects, including light rail and a major upgrade of Parkes Way, could be included in Scott Morrison's multi-billion dollar plan to stave off a coronavirus-induced recession.

While there are still no confirmed cases of COVID-19 in the ACT, the Barr government believes it is only a matter of time before one is recorded.

Even without any confirmed cases, the global outbreak has had implications for the ACT, particularly for universities who have had international students stranded overseas due to travel bans.

The tourism and retail sectors had already taken a hit from the smoke haze, freak hailstorm and fire threats which plagued Canberra in January.

Mr Barr last month said Australia was experiencing the "most dramatic economic shock" since the global financial crisis, as he handed down a mid-year budget which showed the territory was falling far deeper into deficit than originally projected.

He has repeatedly defended the increased spending which contributed to the deficit, insisting that now was not the time to tighten the purse strings.

Dr Ahmed - an outspoken critic of the Barr government - this week said the coronavirus outbreak should not have a major affect on the ACT budget, given the territory relied mostly on rate revenue and federal government grants.

But where threats did exist, Dr Ahmed said the ACT budget wasn't in a strong position to combat them. He pointed to years of budget deficits, along with territory's escalating debt levels, which was forecast to reach almost $4 billion by 2022-23.

"The budget is not in good shape to begin with," he said.

"We've been running deficits, which has eaten away at our capacity to deal with what I will call 'unforeseen fiscal shocks'.

Latest ANZ figures show the local economy was performing strongly before twin threats of bushfires and coronavirus emerged, with the ACT growing above trend in the December quarter - the only jurisdiction to achieve the feat in that period.

Unemployment was at a decade-low rate of 3.1 per cent, house prices were on the up and household spending was tracking above the Australian average, according to the bank's figures.

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ANZ senior economist Cherelle Murphy said of all the state and territory economies, the ACT's was "probably the most resistant" to the challenges facing the country.

However, she stressed the ACT would by no means pass though the global health crisis unscathed, saying the local tourism sector, for instance, would struggle in the near future.

Prime Minister Scott Morrison was on Tuesday reportedly putting the finishing touches on a $10 billion economic stimulus package to prop up the economy amid the coronavirus outbreak.

While Mr Morrison has signaled that the package would target businesses and individuals, Mr Barr remains hopeful that funding for major infrastructure projects would also be included.

Mr Barr said he had put forward a number of proposals to Mr Morrison, Treasurer Josh Frydenberg and Deputy Prime Minister Michael McCormack, including a joint funding agreement to deliver a long-planned upgrade of Parkes Way.

If the federal government stumped up cash for light rail, the ACT government would match it, Mr Barr said.

Mr Barr did not respond directly to the question of whether the ACT government was preparing to roll out its own stimulus package, but said he was aware of the importance of government spending in times of economic uncertainty.

"With our budget under a number of external pressures and the economic outlook being fairly bleak, now is not the time for Canberra to take a step backwards," Mr Barr said.

"We will continue to prioritise these investments."