Finance Minister hints at $100 million of debt relief for the ACT in budget

The minister said Canberra can expect "an additional focus on housing" in the budget, the last before she will have to convince ACT voters to return her to the Senate.

"We've certainly been talking to the ACT government about how best to deliver that," she said when asked if the debt would be cancelled on Tuesday.

Senator Gallagher said the Albanese government was working carefully to rebalance Commonwealth support for the territory.

"I've been knocking around politics for a fair while now," she said in an interview with The Canberra Times.

"I can't think of another time where a government's been going through bit by bit and trying to address all the serious areas of underinvestment in Canberra.

"When I was chief minister, it was almost impossible to get any buy-in from the Commonwealth. Now, we have this partnership. We're talking all the time."

Chief Minister Andrew Barr has lobbied successive federal governments to waive Canberra's historic social housing debt of more than $100 million.

Ahead of the October 2022 budget, Senator Gallagher said the Albanese government would "not be in a position" to waive the debt, as the previous Coalition government had done for Tasmania as part of a deal with independent senator Jacqui Lambie.

In May 2022, Chief Minister Andrew Barr said he would raise the issue with the newly-elected Labor government as a priority.

At the time, Mr Barr said waiving the debt would save the ACT an expected $33 million in interest over 19 years.

Asked about her previous comment she could not be the Finance Minister for the ACT, Senator Gallagher said: "I should have probably prefaced it with, 'I'm always a Canberran, but I'm the Finance Minister for the country'.

"I want to make sure Canberra gets its fair opportunity, through the budget.

"When I advocate for Canberra, of course, I do it very strongly, but I also have to look at the big picture about what's happening across the country ... I'd like to think that me sitting at the table, being a senior decision maker, has helped there.

"It helps that we've got a PM who recognises the role the national capital plays, who lives in Canberra ... that certainly helps as well."

Senator Gallagher said negotiations with the territory were ongoing and subject to planning.

"We want to make sure that our investments maximise and align with the ACT government's investments," she said.

"[Canberrans are] getting a much better deal. It's not everything that everybody wants ... but it's a big step forward."