The truth? The budget has in fact gone backwards from the forecasts issued by Chris Steel around six months ago and the treasurer’s media team should be commended for gallantly attempting to prove that black is white. JON STANHOPE & KHALID AHMED say the $632m budget turnaround claim is a joke.

The headline screamed in the news flash on the mainstream media “Steel to present $632 million turnaround in ACT’s mid-year budget”. 

An early April Fool’s Day joke? That is, assuming that no one had pulled a joke on an unsuspecting and compliant media.

Were we to believe that Treasurer Chris Steel had achieved in just one year that which Andrew Barr could not achieve in 12 – that is to actually turn the budget around?

That would be all the more remarkable because just a few weeks ago, Chief Minister Barr advised that there are no silver bullets to fix the finances, in other words, he had apparently thrown in the towel.

And the truth? The budget has in fact gone backwards from the forecasts issued by Chris Steel around six months ago.

Now there has been a regular sprinkling of “good news” through the federal government’s commitment to provide an extra $25 billion in funding for hospitals across Australia, of which the ACT would receive more than $500 million over five years.

While specific agreements between the Commonwealth Government and states and territories are not yet available, it is far-fetched to think that Treasurer Jim Chalmers or Finance Minister Katy Gallagher would allow the ACT or any other state or territory to simply pocket the money and use it for any other purpose.

Typically, the federal government will require performance standards and targets to be met, and a commitment that all states and territories maintain their own funding effort. This means that the additional federal funds will be subject to a commitment to agreed milestones and the funds being spent in the relevant portfolio area (health in this case) – hence no improvement in the budget.

In fact, on occasions the Commonwealth has demanded states and territories increase their funding to an agreed proportion of the Commonwealth’s additional funding. In such cases, the agreement would have an impact on the budget through the increase in spending above and beyond what the Commonwealth Government is providing.

Therefore, at best, the health funding boost would be budget neutral.

Table 1 presents the forecasts of revenue, expenses and the Net Operating Balance in the 2025-26 original budget, and the revised estimates in the Budget Review released on February 5.

In reality, therefore, a revenue shortfall of $22 million and an increase in expenditure of $79 million combined to increase the Net Operating Balance deficit from a forecast of $681 million to a deficit of $782 million – more than three quarters of a billion dollars.

On the measure used by the government, uniquely among all Australian jurisdictions, the deficit also increased by $74 million.

To be fair, the budget has not gone backwards as much as it did in the 2024-25 (last year) Budget Review as shown in Table 2.

In 2024-25, the budget bottom line had blown out by $373 million by the time of the mid-year review, and a further $171 million by the end of the year. We are yet to see if that pattern is repeated, or if the revised estimates will hold until the end of the year.

In other news, the cash deficit from operating activities has actually increased, market borrowings have increased and interest costs have increased in this Budget Review from the original budget estimates, and the ACT is borrowing more to pay interest on past borrowings.

The treasurer has added more than a million dollars a day in borrowing forecasts since the budget. Despite this, the government claims to be on track to achieve a surplus in 2028.

There are also a number of rather bizarre claims in the Budget Review documents. For example, while market borrowings are forecast to increase by around $4 billion in 2026-27 alone, and will continue to increase in the forward years, the government claims that it will both pay down debt as well as fund its infrastructure program.

We will provide a more detailed analysis of the updated budget position in coming weeks, but are of the firm opinion that the recently released budget documents should be filed under “fiction” .

In conclusion, the Treasurer should be congratulated for blowing the budget bottom line by a mere hundred million dollars and not by any larger amount. More so, his media team should be commended for their gallant attempt at proving that black is white.

To paraphrase Sartre, one does not need to go through the detail to see that a claimed “victory” is in fact a “defeat”.

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