The Coalition's election win and a slowing economic growth outlook will hit the ACT government's budget this coming year, with Chief Minister Andrew Barr expecting an $89 million deficit in 2019-20.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Mr Barr's eighth budget, released on Tuesday, is expected to deliver a $43 million surplus in 2018-19, before falling back into an $89 million deficit in the next fiscal year ahead of the next territory election.
Mr Barr had forecast a deficit of about $28 million in 2019-20, though the financial situation has deteriorated since the mid-year update, and the Chief Minister had to throw out his assumptions the budget would be delivered under a federal Labor government after the Coalition won another term.
Rates for houses will rise an average of 7 per cent, while unit rates will increase 11 per cent, with $306 million from householders and rural landholders (up 7 per cent), $82 million from unit owners (up 11 per cent) and $211 million from commercial rates (up 6 per cent) in 2019-20.
That equates to about an extra $164 for the average Belconnen household, up from $2158 in 2018-19 to $2321 in 2019-20, while the average South Canberra household will pay an extra $442, with a total rates bill of $5551 in 2019-20.
For unit owners, the average rates bill will rise by between $130 and $170, with a Gungahlin unit owner's bill to rise from $1270 to $1383 in 2019-20 and a Weston Creek unit owner's bill to increase by $150, up to $1718.
The fire and emergency services levy will rise to $366 from the current $344, and Canberra drivers will face an extra $15 car registration fee linked to the new Motor Accident Injuries Commission. As a result, the government is expecting to make $147 million from car registrations, up from an expected $143.3 million this year.
Despite forecasts of a coming downturn in construction and the Coalition's re-election, and estimates net debt will grow to $3.3 billion in the next three years, Mr Barr said he remained cautiously optimistic of a return to surplus, though he did not want a surplus for the sake of it.
He also said that despite the downturn, he believed investors were returning to Canberra's property market after the federal election, given the Commonwealth would not be pursuing Labor's campaign proposals to change negative gearing and capital gains tax.
But Mr Barr, who characterised the budget as centred on infrastructure spending, said a new 10-year plan for infrastructure would not be released until later this year, with little prioritised for 2019-20.
He said while he would work with his federal colleagues to deliver more services and infrastructure, the territory could not afford to wait for the Commonwealth to deliver.
The budget confirms the government reached an $80 million surplus in 2017-18, and estimates show a $43 million surplus forecast for 2018-19, before the balance sheet heads into deficit the following year.
The estimates also forecast a second year in deficit in 2020-21, at $66 million, before the budget goes back into the black in 2021-22 with a $135 million surplus, followed by a big rise to an estimated $413 million surplus in 2022-23.
Budget papers show a rise in revenue of $38 million to $5.9 billion in 2019-20 compared to the mid-year update, mainly due to an extra $51.2 million expected in Commonwealth grants payment revenue.
There was also a boost in revenue of about $16 million due to increases in payroll tax and general rates revenue, offset by slightly lower stamp duty and land sales revenue.
But expenses are expected to rise at least $108 million compared to the mid-year outlook, partly due to an expansion of health services, extra money for schools and funds to provide a much-needed boost in front-line police numbers.
Despite the slowing construction sector, particularly in apartments, the government is forecasting economic growth of 3 per cent in 2019-20, down from 4 per cent in 2017-18 and an estimated 4.25 per cent this year, backed by low vacancy rates and high population growth, among other factors.
The budget shows an extra $79.8 million in revenue over the next four years, starting with almost $14 million in new funding in 2019-20, including an extra $2 million expected to be spent on the new motor accident injuries scheme, which is expected to also raise to about $5 million across the forward estimates.
The government will also expand its tax collection efforts after a previous expansion in recent years, with an extra $3.4 million in associated revenue expected in 2019-20, while estimates also show some extra $2.1 million in revenue from new building compliance measures.
A further roughly $800,000 a year will be raised via the ACT clubs community contribution scheme.
New spending initiatives since the mid-year budget update include $2 million on the new third party insurance scheme, $10 million a year to improve individual support for students, and $11.4 million to expand front-line services at Canberra and Centenary hospitals. The government will also soon launch a new $2.4 million-a-year climate change strategy.
READ MORE:
