ACT budget reveals Canberrans to be slugged with higher debts due to pandemic spending

Forward estimates in the latest ACT budget show by financial year 2025, Canberra's total debt bill will have ballooned to more than $9.5 billion, driven in part by the massive fiscal support offered during the lockdown and a bold multibillion-dollar infrastructure investment plan.

For the current budgetary period, the ACT's total debt bill stands are $5.7 billion, equating to a per capita debt position of roughly $13,199 for each Canberran.

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By the 2024-25 budget, the rising debt is touted to cause that per capita ratio blow out to around $22,000.

The rising net debt bill is in the backdrop of slower population growth due to the cut-off of overseas migrant workers and students, and a base case forecast of gross state product for 2021-22, to grow by 2.5 per cent.

In the following year GSP is anticipated to grow by 3.25 per cent in the central forecast.

The Reserve Bank of Australia anticipates gross domestic product in 2022 will grow above 4 per cent.

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ACT's total debt per capita is roughly the same amount of debt accrued by Victoria.

In the current budget, net debt will make up 12.6 per cent of GSP and is anticipated to surge to 18.2 per cent by the 2024-25 budget.

"The [ACT] Government recognises the importance of budget repair and its fiscal and budget strategy for the medium term remains focused on restoring public finances and stabilising net debt," it said in its budget outlook.

"In the short term, the need to continue a strong public health response and economic support measures is paramount."

In the outlook, the budget also highlights the "disproportionate intergenerational" impact the rising debt levels will have on younger people, claiming further investment into skills development would be a priority.

The ACT government flagged it is banking on strong activity in the housing and commercial property markets as a major revenue to course to repair books.

ACT Treasury confirmed recent changes made by the prudential regulator to cool home lending and the RBA citing flagging a potential clampdown to curb soaring property prices, have not fully been forecast into its economic forecasts.

This is in part due to the recent developments coming after the budget forecast cut off date.

Net financial liabilities over the forward estimates are expected to increase and by the 2024-25 budget, exceed $15 billion.

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ACT Treasury also noted the current lockdown has had a more profound impact on retail spending in comparison to the first lockdown in April last year.

The budget outlines stronger economic growth in the coming year, however wage growth would remain moderate over the coming year.

Total revenue is expected to be $425.3 million higher and $772.6 larger over the next three years.

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