The ACT Government will run budget deficits for the next three years in a bid to save the territory’s economy from a lunge into recession.
In the wake of news of big cuts to the federal public service, Treasurer Andrew Barr has told The Canberra Times that he will revert to the government original post-global financial crisis plan of a return to surplus in 2015-2016.
Capital spending in next months’ territory budget will be boosted to more than $800 million in the coming financial year as part of the “stimulatory” effort.
But Mr Barr said that nothing could save Canberra from a deep recession if the Liberal Party makes good on its threat to cut another 20,000 jobs if victorious at the next federal election.
ACT Treasury modeling on the full effects of the Tuesday’s Federal Budget will not be available for some days, but Mr Barr said he was concerned at the impactthat spending cuts might have on the local economy.
Mr Barr said that annual federal consumption – before Tuesday – accounted for $22 billion or 47 per cent of the territory’s economy compared to the territory’s 5.4 per cent in consumption.
“It’s very hard for us, with that level of leverage, make a dramatic impact, so we can’t run our budget policy in a way that can ameliorate entirely the impacts of what the Commonwealth has done,” the Treasurer said.
“But we can seek to and we will be running a more stimulatory set of policy settings in 2012-2013 in particular.
“We will have deficits and my choice now is to either plunge the economy of the ACT into recession by withdrawing from our capital program and our recurrent spend or maintain the ACT Government's current capital program."