Lower land sales, spending boost to send ACT budget into red

The ACT government's budget is heading for a $27 million deficit next financial year, due to lower land sales revenue and an extra $22 million in spending promises wiping the forecast $36 million surplus to just $1.5 million this year.

Chief Minister Andrew Barr on Tuesday released his mid-year budget review, also showing the government has delayed some school expansions and the rapid bus network funding, as it boosts funds to a Gungahlin school and the justice system.

ACT Chief Minister Andrew Barr says despite a deficit forecast next year, his budget is still 'balanced'. Photo: Karleen Minney

ACT Chief Minister Andrew Barr says despite a deficit forecast next year, his budget is still 'balanced'. Photo: Karleen Minney

The budget review showed the government's budget balance may return to positive figures in 2020-21, with a $5 million surplus forecast, before rising to about $77 million in 2021-22; though that is contingent on improving economic circumstances and no change in government in 2020.

It showed the value of the territory's large-scale renewable energy generation certificates fell $61 million this fiscal year, with land sales and deferred site releases in Taylor, Throsby and North Wright sending land revenue down $20 million.

That was partly offset by a $21 million increase in Commonwealth grants; but the government has spent an extra $22 million in 2018-19 in new initiatives since last year's budget, with almost $18 million of capital works delayed.

But Mr Barr said despite the surplus, he believed he would still deliver a "balanced budget", which he defined as within $50 million either side of breaking even; though the territory government does not publish an underlying figure often used to gauge federal budgets.

The review also shows several risks to the budget position stemming from low land sales, including tightening credit availability putting pressure on buyers to pay government asking prices; and new developments across the border competing for free-standing house blocks in the ACT.

It also highlighted other risks in achieving statutory approvals; the capacity of industry to deliver infrastructure and estate works and "the capacity of the market to absorb the additional supply offered through urban renewal development".

Mr Barr said such issues were challenging for the government to navigate, but it was attempting to get more land to the market through both the urban renewal agenda and the broader land release strategy, though rejected concerns it would have a wider budget impact.

The government will also spend $6.5 million to demolish the former CIT campus in Woden, with a view to selling off part or all of the block, despite previous pledges it would be used for community purposes.

But Mr Barr would not say what the government estimated the land would be worth once cleared, saying final decisions about its value and any potential had to follow the demolition works, due to be completed in 2019-20.

Of the $22 million in new initiatives, most regarded previously-announced projects like funds to subsidise cuts to the number of poker machines in the city to 4000; though an extra $10 million will be spent on a host of new justice projects.

Those would include, the review shows, a potential new bail accommodation service for low-risk inmates leaving prison, costing $1.1 million this year, rising to $6.2 million over three years; as well as expanding the Yarrabi Bamirr justice reinvestment program.

The government will also buy two new mobile speed camera vans, costing about $500,000 a years to run, in a bid to raise about an extra $1 million a year in revenue.

The review also shows the government has pushed back spending plans as part of an $80 million program to provide more student places in schools in Molonglo [P-6], Gungahlin and at Campbell Primary School from 2018-19, though the government maintains all the extra places will be funded by 2021-20.

It has also brought forward about $6 million in funds to expand schools in Gungahlin, though the government says that should still be finished by the July 2021 deadline previously forecast.

Mr Barr said his core priorities for 2019 would be improving health, education and city and municipal services across the territory, and that the decline in the state of the territory's finances were largely due to factors outside of his control.

He also said the future of the territory's budget, while currently rates as AAA neutral by Standard and Poors - a slight improvement on last year - would be subject to both the coming April federal budget and the impending federal election.

Mr Barr said the failure to meet the forecast revenue for land sales were not material to the budget, as it was related to the 'timing' of settlements, despite the Suburban Land Agency last year missing the government's revenue targets by some $200 million.

Opposition leader Alistair Coe said he believed the government had been good at raising revenue, but not at delivering 'value for money' for Canberrans, citing rising rates and taxes bills, as well as government land sale prices exceeding $1000sqm in some areas.