THE Territory budget is headed $107 million further into deficit, according to the ACT Budget Review announced today by Treasurer Andrew Barr.The review forecasts a $360.6 million deficit for the 2013-14 financial year, and the Treasurer says the ACT Government won’t be making any deep cuts to services in a race to return to a surplus.
Mr Barr says future spending decisions will aim to return the ACT to a balanced budget “as soon as practicable, whilst ensuring a flexible approach to allow decisions to be aligned to economic circumstances”.
Forward estimates now show a $109.5 million deficit in 2014-15, a small $20.5 million deficit the year after that, and a tiny $11.2 million surplus for 2015-16.
The Treasurer blames the declining position on three factors, including Commonwealth Government grants worth $22.7 million being paid to the ACT during the 2012-13 financial year instead of 2013-14 as expected.
He also cites the June 2013 determination on water and sewerage prices by the Independent Competition and Regulatory Commission, which reduced dividends to the ACT Government by $22.4 million and income tax equivalents by $10.1 million, along with “changes in the valuation of superannuation liabilities”, which reduced revenue by $50.4 million.
Economic growth forecasts for 2013-14 remain unchanged from those of the Budget, but will be reviewed in the 2014-15 Budget, to be released on June 3.
“Economic conditions remain strong although uncertainty around continuing contractions of the Commonwealth Public Sector is leading to softening of some conditions, particularly ahead of the 2014-15 Commonwealth Budget and the recommendations from the [Federal Government's] Commission of Audit,” Mr Barr says.
“Some positive factors for the Territory’s economic outlook include population growth and low interest rates, which combined are anticipated to lead to improved household consumption and housing demand in the longer term. However, job security concerns are likely to see cautious consumer spending in the short term.”