Infrastructure projects will be pushed back in the ACT as the government seeks to save $700 million over four years in the face of escalating building costs and a construction industry struggling to take on more work.
The long-awaited Kingston Arts Precinct will be a high-profile casualty of the changes, with the buildings for arts organisations to be staged over coming years while work starts first on car parking and artist housing.
Health, emergency services and sports infrastructure for North Gungahlin will also be delayed to complete other projects, including the $1.5 billion Northside Hospital and sports facilities in Gungahlin and Belconnen.
The cuts, to be outlined in Wednesday's territory budget, mark the end of the high, COVID-era infrastructure spending boom, when governments sought to take advantage of low interest rates to stimulate their economies.
But as interest rates and inflation have risen, pushing up the cost of workers and materials, the ACT government said it now wanted to "establish a more fiscally sustainable baseline for the next decade".
Chief Minister Andrew Barr said the changes to the infrastructure plan were necessary because the construction industry was already at capacity, works needed to catch up with rolled-over projects and the territory needed to adopt a fiscally sustainable position.
"There's no point borrowing for projects that just can't physically be built in the timeframe," Mr Barr said.
"So you'd be borrowing the money and it would just be sitting there because we couldn't procure a project because there isn't the industry capacity to deliver them."
Maintaining and replacing infrastructure in the parts of Canberra built during the city's rapid 50-year expansion between 1930 and 1980 would also become a focus for the government, he said.
The government said it would release an updated infrastructure plan in 2026-27.
Mr Barr last week declared the Northside Hospital would be the largest infrastructure project for the ACT government for the rest of the decade, casting doubt on the future timeline of extending light rail to Woden.
In an interview, the Chief Minister said it was still possible the light rail project could be completed by 2033, the previously stated completion date.
"It is feasible, but it will depend. That assumes a smooth passage through the approvals phase. So, I think if I can summarise, we're certainly not in a position to fast track the project and bring it forward," he said.
The contract to extend light rail from Commonwealth Park to Woden will not be signed until after the 2028 ACT election, meaning another ACT election campaign could be shaped by the project.
Mr Barr said the government had also made no decision to change the timetable for a new stadium.
"We'll make smaller and necessary investments in the existing infrastructure in the short term, but there's no change because the timeframe for the stadium sits out well outside the forward estimates and is not a decision that is needed in this year's budget," he said.
Next week's budget will be the first since the release of independent economist Saul Eslake's review of the ACT's fiscal sustainability, commissioned as part of a parliamentary inquiry forced by the Liberals and Greens.
Mr Eslake found there had been a significant deterioration in the ACT's financial position over the past decade, and the decline had accelerated in the past five years following the onset of the COVID-19 pandemic.
"And this deterioration has been entirely due to conscious policy decisions taken by the ACT government - to spend more on both delivering services and providing new infrastructure, without raising sufficient additional revenue from its own sources, or obtaining them from the federal government, to cover that additional spending," Mr Eslake's report said.
"Some of those additional spending decisions, particularly during the COVID-19 pandemic, were unavoidable: but many others, especially during the past three years, were not."
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Mr Barr defended his government's COVID-era decision to borrow more money when interest rates were historically low to fund a large infrastructure program but said the territory would need to settle on normalised approach.
"Some of those assets will be serving the community for 50 to 100 years. And so it was reasonable to bring them forward during a pretty significant economic shock, but that level of infrastructure delivery is not sustainable every year going forward," he said.
"And so, you know, we do need to settle back to a more sustainable program. The answer is not to have zero new infrastructure for the next 10 years, but equally we will not be able to have $1.5 billion a year of new infrastructure for the next 10 years either."
Mr Barr, the then treasurer, outlined a $5 billion, five-year infrastructure program in the 2021 budget, declaring at the time the ACT was "going full throttle" to support the economy.
Ahead of next week's budget, Mr Barr said the construction industry in the ACT would see a shift as the government prioritised housing and suburban infrastructure.
"So the asset renewal element, I think, will be an important opportunity for local construction over an extended period. There's a very strong pipeline of work that will flow in terms of upgrading existing infrastructure," he said.
