THE ACT will have to borrow “every cent” from here as government revenues collapse under the weight of responding to the health and economic demands of the coronavirus.
That’s the grim reality the Chief Minister Andrew Barr outlined while addressing a COVID-19 update press conference this afternoon.
He said the ACT would have to borrow to fill the gaps between the Commonwealth government’s funding programs and the territory’s needs.
The local priorities were funding the health system, community services and the business sector. He acknowledged positively the federal government’s wage subsidy program announced earlier this week.
He would not be drawn on disclosing any infrastructure plans for post-virus recovery saying it was too early for that.
Former Chief Minister Jon Stanhope says: “Notwithstanding the existing low-interest rate environment the current level and rate of increase in net debt is clearly unsustainable.”
Writing in “CityNews” this week he is highly critical of the ACT’s debt load before the community faces the coronavirus cost.
“Since releasing the debt genie from its bottle in 2013 net debt in the ACT has “ ballooned” to Skywhale proportions. From a position of negative net debt of $736 million in 2011 it has increased in giant leaps, somewhat akin to the cravings of an ice addict for methamphetamine, the more you have the more you need, to a debt of $109 million in 2013; $910 million in 2015; $1.453 billion in 2017 and $2.216 billion in 2019,” he warns.
“The ACT 2019-20 budget review accordingly advises that by June net debt will be $3.076 billion and will increase to $4.030 billion by June 2022 at which time it will be equivalent to 63 per cent of the ACT’s annual operating revenue.
“The budget review also confirms that the repayment cost that ACT ratepayers are being asked to cough up, in this year alone, for the debt that Labor and the Greens have accrued is $214.7 million”
The coronavirus borrowings will only add to this situation.