The ACT government has abandoned work on a new convention centre in its mid-year budget update, where the planned return to surplus was narrowed to just $5 million in 2018-19.
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The government had planned to spend $8 million in the year from July preparing an investment-ready proposal for the new "Australia Forum", a landmark convention centre long called for by the city's business and tourism sector. It was planned to stand at the head of Commonwealth Avenue.
But the project was removed from the budget in this week's mid-year update, put on the backburner because of what Chief Minister Andrew Barr cites as a lack of federal government interest.
"The project is only feasible with significant financial support from the federal government," a spokesman said. "Should the federal government show any interest in becoming a partner in the project, the ACT government would look at funding further work on it."
The budget update shows an improved position this financial year, 2016-17, with a forecast deficit of $119 million.
But the return to surplus looks shakier than ever. While the government still forecasts a surplus in 2018-19, it now stands at just $5 million.
In each budget update over the past 18 months the figure has steadily deteriorated, from $50 million, to $33 million in June last year, to $16 million in the pre-election update, to $5 million now.
Some economists doubt it can materialise at all without tax increases or drastic spending cuts.
The government is already raising significantly more year-on-year in rates, land tax and a range of levies - which are increasing at a pace well beyond inflation.
In the 2016-17 budget, the overall rates intake is forecast to be 6 per cent higher than the previous year, From July, it increases 9 per cent, and 9 per cent again the year after.
Revenue from land tax is forecast to be up 9 per cent this year, then 18 per cent from July.
The range of levies are up significantly this year, many of them indexed to rates well above inflation. Levies include the fire and emergency services, the ambulance levy, the utilities levy, an energy levy, the new domestic violence levy and a lifetime care and support levy. In all, these kinds of taxes raised $242 million in 2015-17 but are expected to raise $286 million this year, an increase of 18 per cent. They are forecast to raise 8 per cent more again in the year from July.
Stamp duty, the tax on people buying houses, is being slowly phased out in the ACT, and the government predicts its stamp duty take this year will drop $10 million on 2015-16, to $276 million. The figure is nevertheless more than budgeted.
Among changes included in the mid-year budget are:
- An increase in the indexation of the water abstraction charge, to 3 per cent a year from July 2017, raising an extra $370,000 in the first year, rising to $1 million by the third. The government says it will also continue increasing the utilities levy by 5 per cent a year.
- $7 million for business case and other work on the light rail line to Woden.
- $75,000 for consultation on an ice sports facility in Tuggeranong
- $110,000 for the Art, Not Apart, Festival
- $250,000 for the new "Floriade Fringe"
- $230,000 to restore arts grants
- $100,000 for schools to support gender diverse students and staff, replacing federal funding
- $140,000 as a one-off this year for Environmental Defender' Office
- $1 million a year savings from July 2017 with the end to funding for the greyhound racing industry, with the first year's savings going to a transition program for workers and greyhounds
- $279,000 lost income for the trial of free daytime buses for seniors and concession card holders, although this is funded only until July
The budget review said the changes reflected Labor election promises and the parliamentary agreement with the Greens. More commitments would be delivered in the 2017-18 budget and in coming years - so those figures will change again.
"The government will implement the most urgent items and then progressively prioritise and deliver further commitments in the years to come," it said.
Mr Barr pointed to the strongest growth in the ACT economy since 2010-11, at 3.4 per cent.
He said the government had used the budget to keep the city out of recession.
"Unlike other governments in Australia, we have not cut vital services to improve our financial position," he said."...This strategy worked and we are now seeing our economic position improve while staying on a path to a balanced budget."
