This year’s ACT Budget delivers on existing priorities, with the timing now right for the Government to explore new avenues for investing in economic growth.
The Chamber, in partnership with Meyer Vandenberg and CareSuper, successfully hosted our annual ACT Budget Breakfast this morning at The National Press Club. We heard first hand from the Chief Minister what the budget means for business. Thanks to all who attended.
Our Budget Summary is below and our Media Release can be found here.
2017-18 ACT Budget Summary
- Total ACT Government expenditure for 2017-18 is $5,596m, up 3.4% from $5,410m in 2016-17.
- Total ACT Government revenue for 2017-18 is $5,341m, up 3.4% from $5,166m in 2016-17.
- A total of $250m in new expense initiatives over four years.
- A total of $868m in new infrastructure and capital initiatives over four years.
- A net operating balance deficit of $83.4m in 2017-18 is expected, up from the 2016-17 deficit of $73.9m.
- The ACT Budget is still predicted to return to surplus in 2018-19, but the expected surplus has been reduced from last year’s estimate of $33.3m to $9.8m.
- The growth outlook for the global economy is expected to improve over the next two years, led by the advanced economies.
- The growth outlook for Australia’s major trading partners remains robust.
- The Australian economy is expected to grow at or above trend rate, rising from 1.75% in 2016-17 to a forecast 2.75% in 2017-18, then 3.0% each year through to 2021.
- The ACT economy’s growth is expected to moderate down from 3.25% in 2016-17 to 2.75% in 2017-18, stabilizing at 2.5% each year through to 2021.
- The ACT’s inflation rate is forecast to remain relatively stable, fluctuating around the 2.0-2.5% mark – well within the RBA’s target band – through to the forward years.
- Wage growth in the ACT is expected to be stronger than the CPI, steadily rising from 1.75% in 2016-17 to 3.0% by 2019-20.
- The ACT’s economic growth is underpinned by high population growth, low interest rates, and the low Australian dollar.
Budget initiatives impacting on businesses in the ACT include:
Taxes & Levies
- From 1 July 2018 conveyances duty on commercial properties worth less than $1.5m will be abolished.
- From 1 July 2018 vacant rental properties will be charged land tax.
- From 1 July 2017 the lease variation charge on residential units will rise from the previous maximum of $7,500 to a flat fee of $30,000.
- In 2017-18 rates for residential dwellings will rise by an average of 7%, with unit rates rising by 19% due to a change in the calculation methodology.
- In 2017-18 the land tax calculation for multi-unit dwellings will be based on total AUV of the land rather than the individual AUV of the unit.
- Paid parking fees will increase by 6% in 2017-18.
Business Development & Support
- $8m over two years to provide improvements at the Gungahlin and Tuggeranong town centres, and Kambah group centre.
- $15m in continued funding for the Confident and Business Ready package to support innovation programs, key industry sector development, Canberra brand marketing, trade and investment facilitation, and the Office for International Engagement.
- $3m over four years to promote Canberra as a study destination, in partnership with the education sector.
- $1.3m to partner with the private and university sectors to build expertise in autonomous vehicle technology.
- $1.3m to provide a 50% tax discount to small and medium clubs.
- $4.1m over four years to help the ACT tourism industry grow through a new Major Events Fund, partnerships with international and domestic airlines, and an increase in grant funding to the Canberra Convention Bureau.
- $4.1m over four years to support major sporting venues.
- $7.5m over four years to support significant events in the ACT.
Transport & Infrastructure
- $1.4m over four years to fund the new City Renewal Authority, and $57m over four years to fund capital works under the auspices of the authority.
- $53m over three years to design and do procurement work on Light Rail Stage 2 – City to Woden.
- $30m to fund the Gundaroo Drive duplication Stage 2.
- $35m over four years to rehabilitate landfill sites.
- $11.5m to improve Manuka Oval broadcast and media facilities.
- $8m over two years for Canberra Brickworks road upgrades.
The ACT Government made its priorities clear during last year’s election campaign, and the 2017-18 ACT Budget is consistent with those priorities. As such it contains no significant surprises, which provides welcome certainty for businesses.
Canberra Business Chamber supported the ACT Government’s fiscal stimulus during the period in which the Federal Government implemented a significant reduction in its expenditure in the ACT. It is now economically responsible that the government maintain its position of achieving a balanced budget by 2018-19, especially as the economic conditions are now quite positive.
The recognition and support the budget provides for the ACT’s booming services sector, particularly export-orientated service industries such as higher education, is welcome. The ACT’s significant tourism sector appropriately receives ongoing funding as one of the major growth sectors for the economy. The Chamber also supports the ongoing investment into the Capital Metro light rail network.
What’s missing from this budget is an investment into productive non-transport infrastructure that has the potential to further transform the ACT economy in the future. One such example is the Australia Forum convention centre. While the Chamber recognises that the gestation period for such investment spans multiple budget cycles, it is important to take advantage of the current low interest rate environment to develop a pipeline of investment for the future.
7 June 2017