ACT Budget Maintains Course Toward Balance with Education and Health Funding Increases
The Australian Capital Territory's budget is projected to return to a balanced position before the next election, according to a government spokeswoman. This announcement comes ahead of the mid-year budget update, which is scheduled for release next week.
The government has confirmed that public schools will receive additional funding in this update, addressing ongoing pressures in the education sector. Furthermore, the local hospital system is set to benefit from a new national funding arrangement expected to be finalised at the upcoming national cabinet meeting.
Budget Strategy and Financial Outlook
The government spokeswoman emphasised that the current financial trajectory aligns with forecasts established in last year's budget and the broader budget strategy. "This is consistent with the forecasts that the government set out in last year's budget and in the budget strategy," she stated.
Notably, the mid-year update will not require a second appropriation bill, as machinery of government changes and budget control measures will help maintain expenditure within existing appropriations. This contrasts with last year's situation, when the Legislative Assembly passed emergency funding for the health system due to escalating demand.
Details on Education and Health Funding
While specific figures have not been released ahead of the formal update, the spokeswoman confirmed that extra resources will be allocated to public schools facing significant challenges. "In addition, the ACT is expected to secure additional funding for local hospitals at the national cabinet meeting on Friday," she added.
It is understood that the Prime Minister has agreed to provide additional funding for smaller jurisdictions, including the ACT, under the proposed National Health Reform Agreement. This funding, however, has not been incorporated into the mid-year budget update and will instead be reflected in the 2026-27 Budget in June, further strengthening the territory's financial position.
Historical Context and Financial Pressures
The 2025-26 ACT budget, released mid-last year, projected a headline net operating balance returning to a modest $49.9 million surplus by 2027-28. However, the deficit expanded to over $1.13 billion in 2024-25, reaching its highest level according to the ACT's September quarter financial report.
The Auditor-General previously warned that the ACT could face annual interest payments of $1 billion on government borrowings, with potential further downgrades to the territory's credit rating unless strong action is taken to achieve a meaningful surplus. The Audit Office's assessment of the 2024-25 financial audits highlighted sustained pressure from higher expenses, underscoring structural challenges within the territory budget.
Independent Review and Government Commentary
An independent review of the ACT's finances will be commissioned by a select parliamentary committee. This review aims to evaluate the fiscal position and sustainability of the ACT, as well as assess the government's performance in seeking additional federal spending.
Chief Minister Andrew Barr expressed scepticism about the committee's ability to resolve all issues within Australia's federal financial relations system. "Good luck. I will make the bold prediction that you are not going to get there on that point. But having said all of that, this process may or may not produce some useful outcomes. I hope it does. But there are no silver bullets out there. It is tough, grinding work," he told the Legislative Assembly in December.
The government remains committed to its budgetary goals, with the mid-year update poised to provide further clarity on the territory's financial health and strategic priorities.
