ACT Chief Minister Andrew Barr has defended his government's spending after an independent economist blamed the territory's financial deterioration entirely on policy decisions. Saul Eslake delivered an interim report to the ACT Legislative Assembly, stating that spending increases and a large number of capital initiatives funded by debt have hit the territory's cash balance.
Eslake's report found that the ACT spends more per student on school education than any other state or territory but does not achieve better outcomes. It also noted that despite a higher proportion of Canberrans having private health insurance, wait times for elective surgery in public hospitals were the second-longest in the country in 2024-25.
Chief Minister Barr argued that the ACT is unique as a small jurisdiction with diseconomies of scale and is still suffering from the effects of the pandemic. He said the government made policy choices to invest in health, education, and generational infrastructure during a period of historically low borrowing costs, following advice from the Reserve Bank and Treasury.
The ACT's budget deficit was forecast at $1.1 billion in June 2025 but was reduced by more than $600 million in the mid-year budget papers. Treasurer Chris Steel noted a five-year deal with federal Labor worth $4.1 billion and plans to restrain public service funding.
Eslake acknowledged the ACT's unique challenges, including an inability to tax the Commonwealth and a lack of mining royalties. He suggested the ACT could reduce tax expenditures, such as the small business exemption from payroll tax, to improve revenue.
