The ACT's economic recovery will hinge upon hopes that people will use their lockdown savings to spend big as the territory government posts its largest ever deficit of close to $1 billion.
Canberra's high vaccination rate will be the linchpin for this recovery, as Chief Minister Andrew Barr said this would give people confidence to get back out into the community.
Mr Barr touted the budget as a "full-throttle attempt to get Canberra's economy moving again" but pandemic business support will be tapered off by the end of the financial year.
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The territory's 2021-22 budget would rely on the ACT's lockdown being lifted as scheduled on October 15 with a further easing of restrictions on October 29.
The key assumptions underpinning the ACT's economic forecast include a 80 per cent vaccine coverage across Australia, no additional large-scale outbreaks in the nation and the opening of state and territory borders in 2022.
Consumers would also play a large role, Mr Barr said.
"We do anticipate a very consumer-led recovery and our businesses will be very keen for that," he said.
"There's a lot of pent-up demand."
The forecast deficit for the ACT is expected to blow out to almost $1 billion this financial year, almost double what was forecast in the 2020-21 budget.
The deficit is expected to be $951.5 million in 2021-22, but is set to decrease to $474.1 million by the 2024-25 financial year.
The ACT's debt is expected to grow to more than $9.5 billion over the forward estimates to 2025.
Mr Barr said there was no way this could be avoided.
"This is an emergency level of government spending there weren't really any other policy alternatives," he said.
"We're in this situation not by choice but by circumstance."
The ACT's economic growth is expected to be 2.5 per cent this financial year.
Almost all COVID business support measures will cease after this financial year, however, the government will set aside $50 million for COVID response in case it is needed.
It is hoped consumer confidence will rebound significantly, despite the fact the ACT's current lockdown has been tougher and longer since the first coronavirus-induced lockdown in early 2021.
"Experiences of previous lockdowns in 2020 supports expectations that household consumption will recover strongly as health restrictions are eased and consumer confidence returns," the budget papers said.
"Further, household saving is likely to have increased during this lockdown, providing scope for savings to be drawn down as the economy opens up."
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When asked whether previous experiences could be compared to the current lockdown given the virus would be active in the community, Mr Barr said vaccines had changed the game.
"We've got vaccines now, we didn't have them a year ago," he said.
"We'll have the most highly vaccinated community in Australia and the rest of the country will by Christmas have hopefully fully caught up with the ACT.
"Plus, of course, all of the people who are unvaccinated and have contracted the virus and recovered will have a degree of natural immunity as well."
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The ACT budget was set to be delivered on August 31 but was postponed due to the city's COVID-19 outbreak.
Many of the budget items had already been finalised but Mr Barr said it had to be significantly reworked as spending had to be dramatically increased.
"There would have been substantially reduced deficits this year in particular and over the forward [estimates]," he said.
"We would have had less expenditure in a range of areas and our tax revenues would have been higher so you would have seen both factors contributing to a better bottom line."
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