ACT Budget 2021: ACT won’t need another shutdown, but it should “turbocharge” the post-COVID economy, says Andrew Barr | Canberra Times

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Prime Minister Andrew Barr said another lockdown was unlikely in Canberra due to high vaccination rates, and a balanced budget would have been delivered before the next election. But parliament will first face the highest deficit in its history, Barr said on the eve of his 10th provincial budget, and the government will prioritize public spending to kick-start the economy as the COVID-19 pandemic recedes. “Right now, the region’s economy will be in reverse. The September quarter will undoubtedly be a quarter of negative growth, and so we need to charge the remaining three quarters of the year if we’re going to see the economy grow during the full fiscal year 2021-22,” Barr said. “So a lot will depend on what we think will be the two main drivers of economic recovery. One will be public investment – and then the infrastructure program we have in our budget – and the other will be household consumption.” The budget, which will be delivered on Wednesday, will allocate $90 million for the ongoing response to COVID-19, which includes an additional $22.5 million for the vaccination program. Barr said each Pfizer shot costs about $40. The government will also allocate $65 million to manage the impact of the virus at ACT, and boost resources for the chief health officer. The money will cover additional contact tracing tools, staff on public health and COVID testing teams, along with compliance, quarantine and hospital costs. Mr. Barr said the area is unlikely to face another lockdown as it is on track to reach more than 95 percent of vaccination coverage, provided that vaccine-resistant strains of COVID-19 do not emerge. “I’m not ruling out anything in COVID,” he said in an interview with The Canberra Times. The prime minister also said he expects central business districts will not recover 100 per cent of economic activity prior to the pandemic, but that this will have less of an impact in Canberra as employment is spread evenly across the city. “I think we’re going to see city centers boom over the next 12 months in particular,” he said. Barr said strong public spending was the indisputably key to improving the ACT’s economic outlook. The prime minister said no one was advocating austerity, which was the path to stagnation and depression, because economic lessons had been learned from the 1930s. “If you take a different path in politics and say, ‘OK, we won’t have new infrastructure and no new public spending,’ the bottom line would look better, but the economy would look much worse,” he said. “We believe that the best course in the medium term is to not only build infrastructure that will be in place for a century and will be used by every generation for the next 100 years, but it will also create short-term jobs that will see more spending in our economy, which generates more rate local business turnover, and actually increases tax revenue for the government, which will help pay for its costs in the medium term.” The ACT government has already set a $5 billion infrastructure program over five years. Barr said the better-than-expected budget net profit recorded before the latest ACT virus outbreak has been wiped out during the shutdown period. The latest quarterly report showed that stamp duty revenue boosted the region’s books, adding $326 million in the past fiscal year. Barr said the strong stance spurred by the economic recovery after the COVID-19 outbreak last year gave him confidence that the region’s economy would rebound once again after the current lockdown. “If we continue to recover revenue of $300 million a year every year, then yes, I can present a balanced budget in this parliamentary session. But if we don’t, it is unlikely,” he said. “So at this point we are not going to expect budgets to be surplus to forecasts. But it is clear that things are changing very quickly and will be largely driven by the pace of the economic recovery.” More political action news: Barr said he expects strong consumer spending in the run-up to Christmas, combined with spending on domestic tourism, to help propel the ACT’s recovery beyond the lockdown, which is set to end next Friday. He said growth in the goods and services tax complex, expected when consumer spending rebounds in NSW and Victoria after restrictions are eased, would also help the capital law. “GST revenue has been growing at a rate of 5-7 percent per year; this year, I think it will only grow about 1.5 percent, due to the first-quarter loss,” Barr said. “But in the year after that, it will fully recover and resume a growth trajectory of between 5 and 7 percent per year.” This is critical to each state and territory’s budget position, because expenditures are growing 5 to 7 percent annually as well. We need revenue to keep up. “Mr. Barr said the budget had been significantly reworked in response to the recent COVID-19 outbreak, which had delayed the delivery of the budget.” We pretty much finished the budget rounds before we got the issues and closures started, because the budget was due two weeks later. Delivered in February, it counted on a successful vaccine release, no large-scale coronavirus outbreak and a gradual reopening of international borders. Our journalists work hard to bring local, up-to-date news to the community. This is how you can proceed to access our trusted content:

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