CANBERRA, AAP – The nation’s capital is emerging from the coronavirus pandemic with the lowest unemployment rate and one of the highest growth rates in the country.
But like other jurisdictions across across Australia, the ACT’s 2020/21 budget is wearing the battle scars of last year’s economic downturn with relatively large deficits forecast over the next four years at least.
ACT Chief Minister Andrew Barr belatedly handed down the territory’s 2020/21 budget on Tuesday, the first since he led Labor back for a sixth consecutive term of government in October with the aid of the Greens.
Mr Barr, who is also the territory’s treasurer, delayed the release of the budget from last June because of the COVID-19 crisis, which toppled the national economy into its first recession since the early 1990s.
“It is a budget delivered under difficult circumstances, but one which has a simple purpose,” Mr Barr told the legislative chamber in his budget speech.
“To deliver what we promised the people of Canberra and to drive Canberra’s recovery from the COVID-19 pandemic.”
This budget provides funding for major projects, like $100 million for the Big Canberra Battery and $50 million to encourage the shift to zero-emissions vehicles, as well as continuing support for the health sector to deal with the coronavirus.
The territory avoided the technical recession suffered by the national economy, posting growth of 2.4 per cent in 2019/20.
Growth of two per cent is expected in 2020/21, driven by household consumption and then between 2.75 and three per cent over the following three financial years.
This assumes COVID-19 vaccines are rolled out from February 2021 and reach nationwide coverage by the end of 2021, while proving effective in minimising the health impacts of the virus.
It also assumes there are no additional large-scale coronavirus outbreaks and localised outbreaks are quickly contained, that state and territory borders remain largely open and international border restrictions will be progressively lifted from July 2021.
The 2020/21 budget deficit is expected to be $603 million, $432.5 million higher than predicted in the 2019/20 budget review and prior to the pandemic.
However, the deficit is $306.4 million smaller than feared in an economic update provided in August as a result of higher GST revenue and a stronger than expected housing market.
The deficit is expected to only gradually shrink over coming years.
Net debt will be $4.665 billion this financial year, $884.5 million higher than predicted in 2019/20.
The territory lost some 10,300 jobs in April and May last year when health restrictions in response to the pandemic were first put in place.
But as restrictions eased and private sector economic activity picked up, employment rebounded to around pre-COVID levels, although the recovery has been uneven across industries.
The ACT enjoys an unemployment rate of just 3.7 per cent and an underemployment rate of 6.0 per cent, the lowest in the country.
“High labour force participation, along with low unemployment, is expected to continue over the forward estimates period,” the budget papers say.
“There is a likelihood of skills shortages emerging until net overseas migration improves.”