- The economic outlook is cautiously optimistic
- Stamp duty reductions and concession schemes will assist home buyers
- The deficit is estimated to reduce to $483 million and net debt is forecast to increase to $6.5 billion
The 2022-23 ACT State Budget, handed down by Chief Minister and Treasurer Andrew Barr on 2 August, shows that the Territory’s economy has performed better than expected.
Gross State Demand is forecast to continue growing at 3% over the forward estimates, supported by population, employment and wages growth, and the government’s major infrastructure program.
However, there are significant risks to the economic outlook. The spike in inflation and rising interest rates are key factors that may impact business and consumer confidence in the short term.
Labour and skills shortages also threaten to constrain the Territory’s economy. With rising job vacancies in the ACT and nationwide, the funding for skills, training and the tourism industry in this budget will only go so far to address the labour market challenges faced by businesses and employers.
The budget focuses on public healthcare, public education, infrastructure and housing to support the growing population, including a stamp duty reduction and concessions to help home buyers.
This is the third ACT budget, and the first Australian jurisdiction, to embed a Wellbeing Framework to measure progress and support decision making and investments in a better quality of life.
The government continues efforts to return the budget to balance. The deficit is estimated to reduce to $483 million in 2022-23, which is lower than previously forecast, and continue reducing to $229.4 million by 2025-26. Net debt of $6.5 billion is forecast in 2022-23, increasing to $9.9 billion in 2025-26.
Key budget announcements
Here are the key announcements to help CAs advise their clients and businesses.
Taxes and levies
In 2022-23, rates are expected to rise by 2.5% ($111 per year) for home owners, which is well below inflation. However, unit and town house owners can expect a sharper rate rise of 9.9% ($67 per year).
The Betting Operations Tax will be increased from 15% to 20% from 2022-23 onwards.
Approximately $2.2 billion will be spent on health in 2022-23, including new funding of $390 million for health and community wellbeing.
This is comprised of $59 million to continue the COVID-19 health response, $100 million over four years for critical hospital services, $70 million over four years for mental health and community health care support, and $160 million for health facilities and systems.
The budget provides a $7 billion infrastructure program over five years, including $1.4 billion in 2022-23. Major projects include the ongoing expansion of the Canberra Hospital in Woden, building the new Woden CIT campus and starting work on the Canberra Theatre Centre precinct redevelopment.
Housing affordability and supply
The government is planning for an increase of around 30,000 dwellings in the ACT over the next five years. In 2022-23 this includes work in progress on over 700 dwellings and delivery of 193 dwellings.
The budget provides $140 million of new funding for social and affordable housing over four years. This includes an additional $95 million for social housing and homelessness and more than $45 million to support housing affordability for low-to-medium households, with key initiatives including:
- raising the lowest conveyance duty tax threshold for residential owner-occupiers from $200,000 to $260,000, which will reduce stamp duty on homes between $260,000 and $1.455 million by $1,120;
- increasing the Home Buyer Concession Scheme income eligibility threshold from $160,000 to $170,000 (the threshold continues to increase by $3,330 per child up to a maximum of five children);
- increasing the Deferred Duty and Disability Duty Concession Schemes price eligibility thresholds from $750,000 to $1 million; and
- continuing the Vulnerable Household Energy Support Scheme for community housing providers, eligible private rental providers and low-income homeowners to install insulation and replace gas appliances with more efficient appliances.
An additional $20 million over four years is also provided to improve housing choice and quality.
The budget also promotes build-to-rent opportunities, with developers provided with incentives to construct build-to-rent-projects with a portion of affordable rental units.
Jobs and the economy
The budget provides more than $35 million over four years to support the ACT’s economic development priorities. This includes a welcome $22.4 million to deliver initiatives focused on knowledge intensive sectors, the commercialisation of research, investment attraction and facilitation, development of the Territory’s innovation ecosystem, and the creation of new businesses and jobs.
Funding of $3.1 million is also provided boost recovery of the tourism industry.
Skills and training
Over $35 million is provided for skills and training. This includes a further $31.2 million for the CIT Woden project and $4.2 million to extend and refresh Study Canberra through partnerships with tertiary education institutions to attract and retain more students.
In 2022-23, a record $126.3 million will also be provided for apprenticeships, traineeships and other vocational education activities, including through the User Choice and Skilled Capital programs.
The budget commits $21.4 million to strengthen the ACT Digital platform, making it easier to transact across a range of online government services. Funding is also allocated to e-invoicing for the ACT Government and increasing staff at Access Canberra. Revenue collection is supported with a $9.5 million upgrade to the ICT systems at the ACT Revenue Office.
Cost of living concession
An additional one-off $50 increase in the Utilities Concession will be provided in 2022-23 to support low-income households. This will bring the value of the concession to $800 and benefit around 31,200 households.