Chief Minister Andrew Barr emphasised ‘cautious optimism’ for the next year as he released the mid-year 2021–22 Budget Review today.
The fiscal position, the Review states, had improved for all years since the ACT Government published the Budget in October, due to increases in the national GST pool and own-source taxation revenue.
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The ACT’s economy had been resilient in the face of the last two years of disruptions. Economic activity had decreased in the September 2021 quarter, during the lockdown, but bounced back once restrictions were lifted in the December quarter. The ACT’s economy was likely to grow for the first half of 2022, despite the omicron variant affecting growth in the March quarter.
Gross State Product is likely to grow by 2.5 per cent in 2021–22 and stabilise at 3 per cent per year from 2023–24, reflecting rising consumer and business confidence and stronger demand.
The Headline Net Operating Balance deficit was estimated to be $770.2 million in 2021–22, $181.3 million better than the Budget estimate.
Government revenue was expected to be $210 million higher in 2021–22, and $855.8 million higher over the next four years to 2024–25, than the Budget forecast.
However, expenses were expected to be $28.1 million higher in 2021–22, and $375.8 million higher over the four years to 2024–25, than the Budget forecast, due to the government’s pandemic response.
Net debt was forecast to be $5.364 billion in 2021–22 and $9.09 billion in 2024–25; around $357.4 million and $491.2 million lower than Budget estimates.
The omicron factor had affected the labour market, but a jobs recovery was underway, the Review stated. Unemployment fell to 3 per cent – the lowest of all states and territories – and employment would increase by 1.5 per cent in 2024–25.
The ACT Government’s economic packages – more than $475 million since the pandemic began – and policies for 250,000 local jobs by 2025 also aided economic recovery.
Nevertheless, the report warned that cost of living increases – high fuel prices, supply constraints, and higher interest rates – compounded by geopolitical instability (i.e., the war in Ukraine) might affect household spendings and savings. Other risks included inflation, a new strain of COVID-19, or vaccines becoming less effective, requiring the reintroduction of restrictions.
“All in all, today is good news, but we remain cautiously optimistic about the future, and we need to constantly monitor this period of significant uncertainty where things can change very quickly,” Mr Barr said.
“But today is exactly where I would like to be, given what we faced over the summer period.”
Mr Barr introduced more funding in the Budget Review: $185.8 million on infrastructure; and $105.3 million to prepare for more COVID-19 cases in winter.
The infrastructure funding includes $18.3 million in the Canberra Hospital’s new Critical Services Building, which will deliver more emergency, surgical, and critical care capacity for the ACT region, ACT Health Minister Rachel Stephen-Smith said.
“Overall, it’s a huge project but a very exciting one for the future of critical health care in the ACT,” Ms Stephen-Smith said.
At the 2020 ACT election, ACT Labor promised to expand the Canberra Hospital and hire more than 400 additional health professionals. Mr Barr said the construction of the facility would support hundreds of local jobs, helping Canberra’s economic recovery, which would in turn allow the government to hire more teachers, nurses, and doctors.
The ACT Government is preparing for a predicted surge in the BA.2 omicron variant, coupled with the ACT’s first ’flu outbreak in two years. The COVID-19 funding will allow more Canberrans to be tested, and the government to vaccinate the public.
“The pandemic is not over, and it’s important for governments at all levels to do what we can to prepare our healthcare system for winter,” Mr Barr said.
Canberra Liberals leader Elizabeth Lee said the “extremely disappointing” Budget Review contained nothing to ensure Canberrans got any choice of housing, or anything to make them confident they could dream of owning their own home.
Mr Barr had emphasised that the Budget invested in public health, the education system, and in making Canberra a better place to live.
Ms Lee, however, said the ACT had the worst waiting times and a bullying culture in hospitals, and crumbling infrastructure and overcrowding in schools.
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