The ACT government's net debt has risen more than $100 million in just six months, with the government drawing on borrowings to fund some $86 million in new spending pledges over the next four years.
Despite voicing warnings about the state of Treasury's coffers and rising levels of debt publicly last year, former Treasury policy director Dr Khalid Ahmed said the latest figures showed the problem was only growing.
Chief Minister Andrew Barr on Tuesday released the government's mid-year budget review, showing his planned $36 million deficit for 2018-19 had already shrunk to just $1.5 million, with a deficit forecast next year of $27 million.
Despite heading into the red, Mr Barr's budget review included about $22 million in new spending promises this year, growing to about $85 million by 2021-22 and Mr Barr pointed to not having to draw on his $50 million Treasurer's advance to fund the new measures.
While the mid-year update claimed net debt was still at 'prudent levels' - and the government's rating by Standard and Poor's have improved slightly - Dr Ahmed said the new round of borrowing was a significant concern showing the government did not have enough reserves to fund the new promises.
He said the rising debt was the biggest concern with the state of the budget now, with the $115 million in net debt underwritten by $200 million worth of market borrowings, a significant increase in the past six months.
"It is hard not to conclude that the budget has gone backwards, you've got the debt, but the balance has also gone about $72 million backwards, and the government has added new spending initiatives that will have to be paid off," Dr Ahmed said.
"It appears that all of that is funded by borrowings, over four years it's about $86 million in new spending plus capital costs, that appear to be funded by the $115 million net debt.
"It would be unwise to conclude these are just minor movements, these are quite significant changes that have occurred just six months into the [2018-19] year."
In the longer term, Treasury's net debt excluding superannuation investments passed the $2 billion in 2018-19, and is expected to rise to $2.9 billion by 2021-22, or up from 4.9 per cent of gross state product this fiscal year to 5.9 per cent in four years.
A spokeswoman for Mr Barr instead pointed to the general government sector net debt, which she said was $29 million lower than the budget forecast last year, a figure that does not include the government's trading businesses.
She said the government was maintaining a "broadly balanced budget" to ensure new borrowing was exclusively for investing in infrastructure and creating the fiscal room to pay down the debt over time.
Mr Barr's spokeswoman also said some $1 billion of the government's current debt related to the Commonwealth's loan to support the response to the Mr Fluffy asbestos crisis and the territory made the first scheduled $50 million payment in June last year.
Dr Ahmed also said that despite a fall in stamp duty revenue in the budget update of almost $26 million in the next four years, the territory's general rates revenue was still forecast to grow by $118 million in that period.
He said that if the government was actually keeping its 2012 pledge that stamp duty abolition would be 'revenue neutral', general rates should have been revised down, but it was not.
While that pledge was made before Mr Barr was Chief Minister, he has since referred to the 20-year reforms as 'broadly revenue-neutral in aggregate', though two analyses of the reforms have shown the territory's total own-source tax revenue to be outpacing growth in both wages and bracket creep.
Mr Barr's spokeswoman said stamp duty was volatile and difficult to predict, and since the start of reforms in 2012, the territory had seen duty revenue below and above initial forecasts.
She did not explain why general rates revenue was still forecast to grow, instead saying that the reforms would be "broadly revenue-neutral in aggregate" and taxpayers would be compensated for any year to year fluctuations over the 20 years of reform.
She also said the forecast in the mid-year budget update of a $1.5 million surplus showed the budget remained was still in "broad balance" and the government was only to fund new investment in infrastructure the city needs.