The ACT economy has avoided recession after cuts to the federal public service although Chief Minister Andrew Barr has forecast an extra 1400 job losses and stagnated wages due to ongoing pay disputes.
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Budget papers reveal 532 Canberra-based public servants were retrenched in the final six months of 2015 although the ACT unemployment rate fell to a national low in April due to diversification.
Mr Barr has warned the extension of the federal government's efficiency dividend would cost 1400 Canberra-based jobs by 2020.
The modelling, which has already been subjected to scrutiny, assessed previous job losses, the agencies hardest hit and the scale of the Canberra based workforce.
The efficiency dividend will claw back $1.9 million in savings over forward estimates and has been criticised by all political parties in the ACT. It is also expected to take the total Canberra-based job cuts to 10,000 since July 2012.
Close to two years of protracted pay disputes and industrial action across the public service has been blamed for low wage growth and uncertainty.
Some of the largest government agencies, including the Defence Department and its 20,000 staff, are unlikely to sign new pay deals until after the federal election, with Labor pledging to renegotiate terms if elected federally.
"Given the delays that have already occurred in most Australian Public Service bargaining negotiations, subdued public sector wage growth is expected over the remainder of the forecast period," budget papers revealed.
Public sector job losses have also hurt investment in commercial offices across the territory with vacancy rates now the third highest in Australia at 14.9 per cent.
The federal government has continued to consolidate empty office space across Canberra in a scheme affectionately dubbed Operation Tetris, which saves money but causes headaches for property managers.
One-third of the federal public sector workforce is based in Canberra and the local economy remains exposed to the risk of further funding and staff cuts.
But public sector job advertisements have increased significantly since the federal government's hiring freeze was lifted in July 2015
With unemployment forecast to grow by 1.25 per cent next financial year, Mr Barr was willing to declare the ACT economy had turned a corner.
"When the Abbott government was elected and unleashed havoc on our labour market and our economy, it was clear we would need three budgets and the rest of this Parliament to undo the damage," he said.
"The ACT economy has bounced back from the deep Commonwealth public service job cuts of the past few years, and the improved outlook for economic growth has been accompanied by a pickup in the labour market."
Locally, ACT government sector expenses are forecast to grow by 5.7 per cent to $5.4 billion next year due to increases in transport, health, education staffing a small reduction in expenses.
The government will save $2.1 million over forward estimates by automating the long service leave applications of ACT public servants with an online calculator and approval system.
Another $80 million in savings have been identified through improvements to advertising, consulting, IT, water supply and record management.
The government will spend $107,000 on mentoring and training for Aboriginal and Torres Strait Islander staff to support career development in the ACT public service.
