Page 2248 - Week 07 - Thursday, 27 August 2020
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Throughout this period the ACT government has maintained its commitment to ensuring transparency and accountability by providing financial information and regularly reporting on the measures we have taken. So today we are the first government in Australia to release forward estimates forecasts across the entirety of a four-year forward estimates period. I note, though, that forecasting is a difficult task at the best of times but particularly in the current environment. What we have done is to show the long-term impacts of COVID-19 on the territory economy and budget based on the information that we have available to us at this time.
The economic and fiscal update details the territory’s current economic and fiscal environment and forecast projections through to 2023-24 and includes the policy decisions made by government to implement critical economic survival and recovery measures. It also outlines our support for local businesses, families and the community during the pandemic and details the territory’s 2020-21 infrastructure investment program and indicative land release program.
The magnitude of the current fiscal shock is easily the most significant faced in the territory’s history. These are a set of forecasts that will be repeated around the nation and around the world as all governments face rapid writedowns in revenue and increased expenditure to support their communities. For 2020-21 the headline net operating balance is forecast to be in deficit at $909.6 million. Across the forward estimates the government is projecting reduced deficits of $670.2 million in 2021-22, $452 million in 2022-23 and $399.8 million in 2023-24.
These are not the eye-watering numbers that we have seen in other jurisdictions, but they reflect significant reductions in GST revenue, primarily due to a reduced GST pool. They also reflect further reductions in the territory’s own-source taxation revenue resulting from the downturn in overall economic activity and they reflect the significant impacts on expenditure to support the COVID response, including the government’s economic survival package.
Over the comparable period from when we issued the 2019-20 budget review in February, total GST revenue for the territory is forecast to decline by nearly $1 billion—$974 million to be precise—while our own-source taxation revenue is expected to decline by $563.9 million over four years as a result of the public health and economic measures implemented by governments to address the pandemic.
Our economic outlook shows that, under the baseline scenario, the ACT’s gross state product is expected to slow to 1.5 per cent in the 2019-20 fiscal year, and economic activity measured by state final demand is expected to have fallen by around six per cent in the June quarter 2020.
Importantly, however, the ACT entered this global public health economic crisis with a very strong local economy. We had the lowest unemployment rate in the nation, at just 2.9 per cent in February of this year, and the territory has significant fiscal capacity to respond to the crisis. The impact of restrictions in the ACT has been less severe than what has been experienced nationally.
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