GOVERNMENT'S STRONG RECORD ON ECONOMIC MANAGEMENT CONTINUES

ACT Treasurer, Katy Gallagher MLA, today tabled the Budget Review which shows considerable improvement in the Territory's estimated bottom line, confirming that the Government's approach to managing the economy through the global financial crisis has been the right one.

"The Budget Review shows a $129.1 million improvement in the Government's estimated Net Operating Balance and forecasts a budget deficit of $5.7 million for 2009-10," Ms Gallagher said.

"This confirms that the Government's decision to adopt a longer-term strategy for returning the Budget to surplus, and not to respond to the economic slowdown by slashing funding and services, was the correct one."

Since the Budget Update, the global and national economic outlook has improved considerably and the Territory's economy has also benefited from the Federal Government's stimulus measures.

The Treasurer said the stronger Budget outlook was due to a range of factors including:
• better than expected economic activity, leading to improved estimates for conveyance revenue and payroll tax;
• an increase in GST revenue;
• a recovery in the financial markets providing a positive impact on investment returns;
• increasing interest rates improving earnings on cash and investment balances; and
• higher than expected dividends and tax equivalents arising from the land release program.

"While the projected deficits across the forward estimates have also improved by around $70 million a year on average, we are still looking at considerable deficits over the coming years - in fact as high as $142 million in 2011-12," Ms Gallagher said.

"I welcome the fact that our economy is recovering more quickly than expected, however, the outlook for the Territory remains somewhat uncertain as we expect the Commonwealth to moderate spending as it works to bring its Budget back to surplus. This will put downward pressure on economic and employment growth in the ACT.

"Let's not forget that the estimated outcomes, while significantly better than expected, factor in wage restraint and government efficiencies so we still have a challenging savings task ahead.

"The financial crisis wiped a billion dollars in revenue off our Budget and it will take some time to recover despite the positive improvements in all revenue lines.

"However, the strength of our Budget Plan is that we will be able to adjust it to the changed circumstances and outlook. That's what a flexible plan does," Ms Gallagher said.

As part of this Budget Review process, the Government has taken the opportunity to re-profile its capital works program in response to industry concerns about capacity constraints.

"We've listened to industry concerns and revised our capital program with $105 million in expenditure re-profiled into later years. Our revised program for 2009-10 is $676 million. There has, however, been no change to the individual projects that will be delivered," Ms Gallagher said.

"This action should help local industry to better deal with the current high demands on them this financial year, particularly as a result of the Commonwealth stimulus initiatives."

Media Contact:

Kathryn Roberts
6205 0242
0402 399 907
kathryn.roberts@act.gov.au