The federal public service could be hit with another round of swinging cuts to rescue the Budget from a "sea of red ink", according to an economic forecast to be released on Monday.
It warns that new Treasurer Scott Morrison is already increasing the rhetoric about spending being the problem, not revenue.
However, the Deloitte Access Economics Business Outlook says job growth in the ACT has continued to pick up, growth in retail sales is slightly ahead of the national average and small business confidence is also slightly ahead of the national average.
"In addition to the stimulus from lower interest rates, the house building sector – the most volatile sector of the ACT economy – is seeing some additional activity due to the ACT government's recent initiative to buy and demolish homes affected by asbestos," it says.
Chief Minister Andrew Barr said the report was another example of how the ACT was continuing to "turn the corner" from the impacts of the cuts inflicted by the federal government on the APS, with the forecast State Final Demand revised upwards.
"Other reports have shown that retail trade has remained positive over the past few months, residential approvals are up significantly through the year to August 2015 and our unemployment rate remains at one of the lowest rates in the country at 5.1 per cent, well below the national average," he said.
"There are still threats to our economy which Deloitte have identified. The ACT government is, however, continuing to invest in our economy to stimulate growth.
"Our economy has been in a position to largely absorb the job losses in our largest employer far better than in 1996 when the ACT fell into a recession."
The Deloitte report says the number of federal public servants in Canberra means the city is "still very much a one company town".
"While some commentators have been prepared to say recently that the worst of the public service cutbacks are now behind us, we have long been sounding a note of caution about the risk of further cutbacks," it says.
"Australia's federal budget remains a sea of red ink, and the problem of budget repair, therefore, remains as much of a problem for new PM Turnbull as it was for his predecessor.
"And while some might have hoped that the new leadership would take a softer approach on spending cuts, new Treasurer Scott Morrison has already been ramping up the rhetoric around spending being the problem rather than revenue.
"There is, therefore, a risk that there is a renewed emphasis on reining in the public service with the usual implications for the ACT's economic outlook."
That potential threat is "down the track," the report says.
"For now, however, the latest data indicates that job growth has continued to pick up in recent months into moderately positive territory," it says.
"And while job growth is hardly shooting the lights out, job vacancies have been on an upward trend."
The recent rise in residential building approvals is an encouraging sign, the report says.
"That comes at an opportune time given the current headwinds, and particularly so given that the ACT has seen a big lift in housing supply in recent years (which is why residential vacancy rates are high and rents charged to tenants are falling)," it says.
"Even so, and despite the helping hand on offer from housing construction, it is hard to escape the question marks over the ACT's outlook.
"You can see that in the fact that the rate of population growth is well down on the level seen in late 2012."
The report predicts the ACT economy "continuing to underperform" in the near term.
"The ACT is expected to lose further share of national output across the next five years," it says.