“The more than $100 million blowout surely warrants questions from the media and the opposition and an explanation from the treasurer. Unfortunately, all we have heard to date is a deafening silence,” say JON STANHOPE & KHALID AHMED as they expose revelations of the audited financial statements for the 2024-25 ACT Budget.

In the 2025-26 ACT Budget presented by Treasurer Chris Steel, the estimate of annual expenditure to June 2025 was $9.256 billion.

However, the actual expenditure, as shown in the just released audited financial statements for 2024-25 results, was $9.370 billion, an increase of $114 million on the forecast Mr Steel had made just three weeks before the end of the financial year, which is odd.

The more than $100 million blowout in the expenditure forecasts in just a few weeks should surely warrant questions from the media and the opposition and an explanation from the treasurer. Unfortunately, all we have heard to date is a deafening silence.

Unfortunately, the audited financial statements do not provide an explanation for the change in the updated forecast, as they provide only a comparison of the final (audited) results with the original forecast made in the 2024-25 Budget.

The 2025-26 budget statements had already forecast an increase of $254 million in expenditure for 2024-25 from the original budget. Readers would recall this was largely attributed to the need to provide additional funding for health care due to an increase in demand.

The audited statements now show that the blowout was in fact $369 million (4.1 per cent of the total budget).

We also have a better, and concerning, explanation of the blowout in the cost of health services from the notes accompanying the audited statements that refer, among other things, to a “higher use of agency nursing staff and visiting medical officers” to meet a “significant growth in demand for health services”. 

Feeble excuse for underfunding health

We are unable to confirm the claimed significant growth in demand for health care. In fact, the annual report of the Canberra Health Service, reports a drop in activity and service performance against the original budget targets. For example, the number of elective surgeries performed was 16,565 against the target of 17,450; an under delivery of 885 surgeries or 5.3 per cent. 

Just 51 per cent of triaged patients categorised as urgent were seen within the clinically recommended timeframe compared to the budget target of 75 per cent. 

Concerningly, the government could not achieve the 100 per cent target for patients requiring immediate resuscitation; the actual result was 99 per cent. We will provide a review of the health system performance separately, but note here that the claimed increase in demand is nothing more than a feeble excuse for underfunding health in the original budget, poor planning for activity and staffing, and an ad hoc use of temporary agency staff with resulting higher costs.

We note the Health Minister Rachel Stephen-Smith (as well as her officials) has declined to answer simple questions about unfilled clinical positions, with the latest response reported from the chief operating officer being: “I wouldn’t actually be able to say what [the] exact vacancy is because we’re in the process of allocating people who are suitable”, is worth framing as a prime example of bureaucratic obfuscation.

At last, the costs of Calvary

The audited financial statements provide, at last, complete information on the cost of the acquisition of the former Calvary Hospital. We note that while the budget papers have remained largely silent, that there are 42 references to Calvary Hospital in various parts and notes of the audited financial statements.

For interested readers, details of the settlement costs are provided in Note 36 on Page 87. The costs comprise a payment of $88.199 million in compensation; the ACT government forgiving $12.910 million in amounts owed; while accepting $47.926 million of accrued employee liabilities; and waving $0.220 million in Supreme Court costs, resulting in a total of $149.261 million in settlement costs.

We consider that while this information is much more comprehensive than the government has been willing to previously disclose, there are likely to be costs incurred but not reported separately and further additional costs budgeted in 2025-26.

The above figures do not include the legal costs incurred by the Territory.

The 2025-26 budget further includes two “initiatives” relating to project management resources to co-ordinate commercial and legal matters ($2.070 million) and capital expenditure for transitioning the hospital to the Canberra Health Service ($2.550 million).

Table 1 details the audited results for aggregate revenue, expenses and the operating balance, along with their comparison to the original budget forecasts.

The table highlights, once again, the entrenched habit of the ACT government of overestimating revenue and underestimating expenses, at the time of the budget.

Aggregate revenue fell short of the budget forecast by $174.5 million (2.1 per cent) and expenditure was higher by $368.8 million (4.1 per cent), which resulted in the net operating balance deficit increasing by $543.3 million (63.5 per cent).

The deficit as a proportion of the budget increased from a forecast 9.5 per cent to 14.9 per cent. Other than the 15.1 per cent deficit in the 2019-20 covid year, this is the highest deficit in the ACT since self government.

The blowout in expenditure in 2024-25 will almost certainly have implications for the 2025-26 budget, which had factored in expenditure growth of 3.8 per cent. At that time we had considered it to be insufficient to cover the natural growth factors such as inflation, wages and population.

The current budget estimates provide for expenditure growth of just 2.6 per cent. With wage growth at 3.25 per cent and CPI increasing at 2.75 per cent, according to the government’s forecasts, a blowout in expenditure in 2025-26 is inevitable.

Jon Stanhope is a former chief minister of the ACT and Dr Khalid Ahmed a former senior ACT Treasury official.