A successful vaccine rollout, no large-scale outbreaks and a progressive reopening of international borders from July this year will be relied on to spur the ACT's recovery from the coronavirus-induced economic shock, budget papers show.
Key assumptions about Australia's COVID-19 response underpin Treasury's optimistic outlook for the territory budget, as the ACT economy emerges from the toughest period in its history.
Chief Minister and Treasurer Andrew Barr's delayed 2020-21 budget, handed down on Tuesday afternoon, confirmed the territory's budget bottom line had improved significantly from what was anticipated in August.
While warning the pandemic could yet take an unexpected turn for the worse, Mr Barr was hopeful that the pending rollout of the vaccine would return the ACT to the nation-leading rates of economic and employment growth it was enjoying before the global crisis stuck.
His main goal is to return the ACT's unemployment rate, currently at 3.7 per cent, back to its pre-pandemic level of 2.9 per cent.
"I'm cautious to say the worst is behind us because there is always the possibility that something really bad could happen," Mr Barr said.
"But the lived experience would tend to indicate that with a successful rollout of vaccination programs that the worst is behind us."
The budget papers showed the forecast deficit for this financial year was expected to be $603 million, about $306 million lower than the August estimate.
Net debt is expected to grow from $4.6 billion to $7.65 billion in 2023-24. The interest bill on the ACT's market borrowings is projected to swell from $170 million to $253 million over that period.
"Comparatively speaking, the ACT's situation is much stronger that other states and territories," Mr Barr said.
"From a global perspective, we are in extraordinarily rare company as a AAA-rated sub-national government."
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As expected, the budget did not include any major new infrastructure projects or industry support packages, with the Barr government focused on delivering the long-awaited Canberra Hospital expansion, light rail expansion and Woden CIT, as well as its main election promises and items in the Labor-Greens parliamentary agreement.
About $914 million of the government's four-year $4.3 billion infrastructure program was allocated this year, according to the budget papers.
The timing of the budget meant it did not include usual announcements on rates settings and government fees and charges for the following financial year.
Announcements on both will be made before the end of June 30, although Mr Barr has already confirmed that the next phase of tax reform - which includes annual rates hikes of 3.75 per cent - will start in 2021-22.
The ACT's fiscal position has rebounded on the back of a surge in government revenue, which came as COVID-19 restrictions eased through the second half of 2020.
Total revenue this year was up $401 million on the amount forecast in August, the result of a jump in land sales, a $77 million boost in GST grants and almost $50 million more than anticipated in stamp duty and payroll tax.
The territory's bottom line will remain deep in the red over the forward estimates, although the size of the forecast deficits were expected to gradually fall until it reaches $369 million in 2023-24.
There was no set timeframe for a return to surplus, although Mr Barr said it would likely happen when the federal budget was back in the black.
Treasury's outlook for the ACT economy suggests the worst of the pandemic is behind us, with Canberra's gross state product and already-strong labour market forecast to keeping growing in the coming years.
But the ACT's path back to prosperity does rely on the underlying assumption that Australia will continue to keep the coronavirus pandemic under control.
Treasury has assumed that an effective vaccine would be rolled out as scheduled in February, reaching "population-wide" coverage across Australia by the end of 2021.
It also assumed that there would be no large-scale coronavirus outbreaks in Australia, and restrictions continued to be lifted.
It has banked on state and territory borders remaining largely open, and a progressive reopening of Australia's international border from July 1 this year.
It predicts international borders will be fully reopened in 2022.
Mr Barr said travels bubbles between Australia and countries such as New Zealand, as well as the return of some international students, could happen in the second half of 2021.
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