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The Canberra Times

National

Jasper Lindell

Another ACT lockdown unlikely but must 'turbo charge' economy: Barr

Chief Minister Andrew Barr, pictured inside ACT Health's COVID response operation centre, who will deliver his 10th ACT budget on Wednesday. Picture: Sitthixay Ditthavong

Another lockdown would be unlikely in Canberra due to high vaccination rates, and it was within the realm of possibility a balanced budget could be delivered before the next election, Chief Minister Andrew Barr said.

But the ACT would first face the highest deficit in its history and the government would prioritise public spending to kick start the economy as the COVID-19 pandemic subsides, Mr Barr said on the eve of his 10th territory budget.

"Right now, the territory economy would be in reverse. The September quarter will undoubtedly be a quarter of negative growth, and so we need to turbo charge the remaining three quarters of the year if we're going to see the economy grow over the full fiscal year 2021-22," Mr Barr said.

"So a lot's going to hinge on what we think are going to be the two major drivers of the economic recovery. One will be public investment - hence our infrastructure program in our budget - and the other will be household consumption."

The budget, to be delivered on Wednesday, will commit $90 million for the ongoing COVID-19 response, which includes an extra $22.5 million for the vaccination program. Each Pfizer shot cost about $40, Mr Barr said.

The government will also allocate $65 million to manage the impact of the virus in the ACT, and boost resources for the chief health officer.

The money will cover extra contact tracers, staff in public health and COVID testing teams, along with compliance, quarantine and hospital costs.

Mr Barr said it was highly unlikely the territory would face another lockdown given it was on track to reach above 95 per cent vaccination coverage, provided vaccine-resistant strains of COVID-19 did not emerge.

"I never rule anything out in COVID," he said in an interview with The Canberra Times.

The ACT will allocate $90 million to the ongoing COVID-19 response including the vaccination program, partly run from the AIS Arena, pictured. Picture: Karleen Minney

The Chief Minister also said he expected central business districts would not recover to 100 per cent of pre-pandemic economic activity, but this would have a smaller effect in Canberra given employment was spread more evenly through the city.

"I suspect we'll see the town centres thrive over the next 12 months in particular," he said.

Mr Barr said strong public spending was the uncontested key to improving the ACT's economic outlook.

The Chief Minister said no one was advocating austerity, which was the pathway to recession and depression, because the economic lessons of the 1930s had been learnt.

"If you took a different policy path and said, 'Right, we'll have no new infrastructure and no new public spending', the bottom line would look better but the economy would look considerably worse," he said.

"We think the better medium term path is to not only build the infrastructure that will be there for a century and utilised by every generation for the next 100 years, but it will also create the short-term jobs that will see more expenditure in our economy, which generates more turnover for local businesses, and, virtuously, more tax revenue for the government, which will help pay for it in the medium term."

The ACT government has already outlined an infrastructure program worth $5 billion over five years.

Mr Barr said the better-than-anticipated budget bottom line recorded before the recent ACT virus outbreak had been wiped out through the lockdown period.

Stamp duty revenue had bolstered the territory's books, the most recent quarterly report showed, adding $326 million in the last financial year.

Mr Barr said the strong position the economic recovery had driven after last year's COVID-19 outbreaks gave him confidence the territory economy would bounce back after the current lockdown.

"If we continue to have revenue recoveries of $300 million a year each year, then yes, I could deliver a balanced budget in this parliamentary term. But if we don't, it's unlikely," he said.

"So at this stage we won't be projecting surplus budgets over the forward estimates. But things obviously change very rapidly and will be very much driven by the pace of the economic recovery."

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Mr Barr said he expected strong consumer spending in the lead up to Christmas, along with domestic tourism spending, to help drive the ACT's recovery beyond the lockdown, which is due to end next Friday.

Growth in the goods and services tax pool, expected when consumer spending picks up in NSW and Victoria after restrictions are eased, would also help the ACT, he said.

"GST revenue had been growing at between 5 and 7 per cent a year; this year, I think it'll only grow by about 1.5 per cent, because of the lost first quarter," Mr Barr said.

"But the year after that it will have fully recovered and resume a growth path of between 5 and 7 per cent a year.

"That's pretty critical to every state and territory's budget position, because expenditures are growing at 5 to 7 per cent a year as well. We need revenues to keep up with that."

Mr Barr said the budget had been significantly reworked in response to the most recent COVID-19 outbreak, which delayed the budget's delivery.

"We'd largely finished the budget rounds just before we got the cases and the lockdowns commenced, because we were due to deliver the budget two weeks later," he said.

The budget, originally due to be delivered on August 31, was delayed along with sittings of the Legislative Assembly.

Projections in the previous budget, delivered in February, had counted on a successful vaccine rollout, no large-scale coronavirus outbreaks and a gradual reopening of international borders.