A $1 billion windfall to government coffers over the next three years will be banked to rapidly reduce the deficit, after a booming Canberra population handed the territory a larger share of goods and services tax revenue.
Chief Minister and Treasurer Andrew Barr said the extra money was not needed to deliver more services in the territory because the government was already meeting demand.
The territory was now receiving its fair share of Commonwealth tax revenue and that made up part of the difference between the government's spend and deficit, he said.
"We have already committed that level of expenditure that reflected service demand and the population increase, we just weren't getting the revenue that reflected that," Mr Barr said.
Budget papers released on Tuesday also showed the government expects the ACT economy to continue growing about 3 per cent a year, and forecast deficits to shrink.
The ACT's 2021-22 deficit is estimated to be $580.4 million, which is $371 million lower than the $951.5 million deficit forecast in the last budget. The deficit is expected to decline to $229 million by 2025-26.
Net debt is expected to almost double over the forward estimates, up from $4.99 billion in 2021-22 to $9.88 billion in 2025-26. Rising interest rates mean the government is set to pay more than $130 million more over three years to service new loans.
The government has budgeted $2.2 billion for health, the largest area of spending, and $1.6 billion for education. City services is the third largest area of expenditure, making up $527 million of the more than $7 billion budget.
Budget forecasts showed the ACT government would receive an additional $197 million in GST revenue this financial year and the tax revenue is expected to total more than $460 million over the next three years.
The ACT's share of the GST, which is collected and distributed by the Commonwealth, has been increased after Australian Bureau of Statistics population estimates undercounted the number of Canberrans.
The 2021 census revealed Canberra's population was larger than expected, up 14.4 per cent to 454,000 people since the last count in 2016 and well above the estimated population of 432,000.
"The last 10 years has seen the ACT's population grow faster than any other state or territory and this is a very significant impact and determining factor on the budget we have delivered today," Mr Barr said.
"That explains why we have seen such strong demand for housing, such strong enrolments in our schools and pressure in our health system."
Mr Barr said he was working with the statistics bureau to improve population estimates for the ACT to ensure the territory continued to receive the correct portion of funding.
Budget papers have forecast the annual rate of population growth in the ACT will slow again to its 15-year average of 2 per cent. Over the past five years, the annual growth rate has been 2.4 per cent.
Mr Barr said the change in Commonwealth government had allowed the ACT to be more ambitious on its housing agenda.
"We have a partner now in the Commonwealth, and so we'll be working with them to implement their housing policies that align well with our housing policies. And the sum total of that is more public housing, or community housing and more affordable housing in the ACT," he said.
However, Mr Barr again foreshadowed a slow-down in the government's infrastructure program. There were no new significant infrastructure works announced in the budget other than funding for work already foreshadowed, including the Canberra Theatre redevelopment, Canberra Hospital expansion and increased work on public school infrastructure.
"If we've learned anything over the last few years of COVID, it is to expect the unexpected, and to be ready to respond should that occur. And so we leave that flexibility. And we have that flexibility within our budget. But we recognise that at the moment, in the infrastructure sector, things are going full tilt," he said.
"We look to continue our budget repair, build on the $800 million improvement from the last budget [and] to move away from emergency levels of both recurrent and infrastructure spending."
The budget's forecasts assumed there would be further COVID-19 waves in Australia but these waves won't affect economic outcomes, that inflation will peak at the end of the year and longer-term migration returns to pre-COVID levels.
It is also assumed that the invasion of Ukraine and rolling lockdowns in China will continue to challenge global supply chains.
Mr Barr said businesses had recovered strongly since the COVID lockdown in spring last year, and now the issue facing the private sector was skill shortages.
"One of the issues that has been raised with us is we just don't have enough people in Canberra. Well, clearly the population growth is there, the momentum is there. The challenge for a number of businesses will be their ability to bring people, and sponsor people, from overseas or indeed to bring people into Canberra from interstate," he said.
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