The ACT government hopes delaying a return to surplus will partially protect the Canberra economy from federal cuts and global uncertainty.
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It will revert to its original plan, and now aims to get the budget back into surplus by 2015-16 instead of next financial year.
''In the context of contracting Commonwealth consumption, a moderating economy and softening revenue base, the focus of the 2012-13 budget is to support the economy and support jobs,'' the budget papers said.
The budget will be in deficit by $318.3 million next financial year, $130.2 million in 2013-14 and by $51.3 million in 2014-15, before returning to a surplus of $25.2 million in 2015-16.
ACT Treasury forecasts that gross state product will slow to 2 per cent this year, while state final demand is tipped to be a quarter of last year's level, at just 0.5 per cent this year. It does not expect any employment growth and the jobless rate is expected to rise.
ANZ economists Craig Michaels and Dylan Eades said ACT Treasury's growth forecasts were ''broadly consistent'' with their predictions.
''The ACT economy is relatively healthy at the moment, with the unemployment rate sitting at just 3.3 per cent [in trend terms] in April, down from 4 per cent at the same time last year. However, growth has moderated recently and is expected to slow further in 2011-12 and 2012-13,'' they said.
''This is largely due to the Commonwealth government's planned fiscal consolidation, which will result in lower government consumption and investment within the economy. Given that 43 per cent of economic activity in the ACT is comprised of public administration and the professional services that consult to it, fiscal consolidation poses significant downside risk to this economy.''
ACT Treasurer Andrew Barr said the budget was designed to protect rather than imperil local jobs, and take a ''sensible and measured approach'' to returning to surplus.
The budget includes $180.5 million of savings over the next four years, although $45.9 million of these are yet to be identified.
''New expenditure initiatives in this budget are fully offset by savings,'' the budget papers said.
The government will borrow up to $790 million over the next two financial years, but estimates that $490 million will be repaid by 2016.
''The infrastructure investment funded by this debt will assist the ACT economy, consumer confidence and enhance service delivery for ACT residents,'' the budget papers said.
The Government will also try to boost the economy by encouraging firms to hire more staff through increasing the threshold for payroll tax. Companies will have to spend $1.75 million on staff instead of $1.5 million before they have to pay the 6.85 per cent tax, which remains the same. This will reduce tax for 1865 businesses and leave another 115 exempt from paying altogether.
Businesses are expected to save about $5 million from abolishing insurance duties. Duties will also be scrapped for transferring many subleases, and wholesale unit trust schemes have been aligned with NSW requirements. Land tax will be folded in with rates, which will become a progressive system with three tiers.
''On average, general rates on a commercial property will increase by $1211 replacing inefficient taxes, such as duty on insurance and conveyance duty. However, most of this revenue replacement is on properties with a value above $560,000,'' it said.
The fire and emergency services levy will rise, adding an average $72.80 for each business a year.
The Utilities Network Facilities Tax - levied on gas, phone, power, water and sewerage companies - will be increased, too, and if passed on to households, will increase bills by $22 a year. While the Government will cut almost $1 million from the Live in Canberra program, it will now spend $2.6 million developing an ''ACT brand''.
There is $5 million to provide programs to diversify the private sector, $20,000 to try to get G20 events in the ACT and $70,000 for a Canberra Convention Bureau business development manager, as well as $50,000 to develop the business.act.gov.au portal and $30,000 for focus groups to ''better understand'' small business.
Chamber of Commerce chief executive Chris Peters said the budget would limit the damage done by the Commonwealth cuts and protect the ACT economy from recession. He welcomed the infrastructure spending and focus on broadening the business community, as well as the tax reforms.
Canberra Business Council chief executive Chris Faulks was disappointed the main focus was on roads, rates and rubbish instead of long-term economic growth. However, she welcomed the funding for the government's Business Development Strategy and the commitment to significant taxation reform.