ACT Treasurer Andrew Barr. Photo: Jeffrey Chan
The ACT government is offering no apologies for sacrificing budget surpluses in favour of pump-priming Canberra’s economy.
On Wednesday, Treasurer Andrew Barr revealed a $100million deterioration in the government’s budgetary position.
The 2013-14 budget review shows the territory’s deficit has blown out from $254million to $361million. The forward estimates are projecting there will be a $109million deficit in 2014-15, and a $20.5million deficit in 2015-16 before the budget returns to a surplus of $11million in 2016-17.
The government earlier forecast a return to surplus in 2015-16.
The increased deficit reflects lower earnings from water utility ACTEW and $50million actuarial adjustment to superannuation costs.
Mr Barr said the government’s focus was on supporting the local economy while returning the budget to a balanced position. ‘‘If we don’t inject into this economy in the coming few years, no one else will,’’ he said. ‘‘It’s as straightforward as that. Our economy will be smaller if we are not playing an active role through our capital program and though our budget policy settings. So we’ve indicated that we are not, as a policy objective, seeking to run a large surplus in the next few years.’’
Economic conditions remain strong in the ACT but there has been some softening before the federal budget and the release of findings by the Abbott government’s Commission of Audit. The government is also waiting to find out if the Commonwealth will renew “national partnerships worth $25 million to the ACT’’.
Mr Barr said: ‘‘You’re starting to see some of the demand pressures stripped out of our economy. In the housing sector, for example, rental vacancy rates are higher than they have been for quite some time. Our expectation is that population will begin to slow as the labour market slows. So I think we’re going into a period where we’re going to need some stimulatory economic activity.’’
Changes to water and sewerage pricing have reduced the amount of income the government will earn from ACTEW through dividends and tax-equivalent payments.
‘‘Clearly the implications of the ACTEW pricing determination are that Canberra households are better off to the tune of nearly $100 a year, but that flows through into the territory’s accounts,’’ Mr Barr said.
ACTEW Corporation dividends and tax payments to the government are expected to decrease by $175million over four years.
Shadow treasurer Brendan Smyth condemned the government’s management of the budget. “We all know that Labor governments are bad managers and this just confirms it,’’ Mr Smyth said. “What we’ve got is a government that has failed over the last decade to take advantage of the good times to prepare for the down times, which we all know come.’’
The budget review includes $38.1million of savings, including cutting a subsidy for the installation of dual-flush toilets and a reduction in mobile-library services. None of the cuts involve job losses.