Consultation has already begun for the 2026-27 ACT Budget, with the mid-year budget review due in the coming weeks. Pictured: Chief Minister Andrew Barr, Treasurer Chris Steel and Deputy Chief Minister Yvette Berry. Photo: Ian Bushnell.
When I ran at the last ACT election, I talked a lot about economic management and I was struck by how many voters didn’t even realise the Territory had debt at all.
When they learned how large it had become, the most common response was a shrug and a reassuring “that’s OK, the Federal Government will bail us out”.
The truth is far less comforting and the Northern Territory’s experience shows exactly why.
The Commonwealth does not bail out states or territories. It never has. Even when the NT hit a genuine fiscal crisis in 2018–19 there was no federal rescue package. What the NT received instead was something far more subtle and far more consequential – fiscal intervention.
The NT kept its parliament and its ministers – they still got paid. But real autonomy evaporated. Budget settings were effectively dictated by the Commonwealth through conditional funding, mandated plans and external oversight.
For businesses and communities, the impact was immediate – uncertainty, delayed projects and a government suddenly unable to make long‑term commitments because they didn’t have control.
The ACT is even more exposed than the NT. We are the national capital and cannot be allowed to drift into a debt spiral or a crisis of confidence.
That means the Commonwealth should act earlier, more quietly and with a firmer hand – not to save the ACT Government, but to protect national credibility. Intervention here would be about reputation management, not generosity.
The comforting belief that “the Feds will bail us out” is really a belief that someone else will take responsibility for our choices. That the taxpayers of Western Australia, NSW, Queensland and so on will be happy to pay.
But the NT example shows that the Commonwealth does not absorb territory debt. It does not rescue governments from the consequences of long‑term fiscal negligence. It steps in to impose discipline, not to relieve pressure.
As I have previously written, trust is important in a democracy. When people stop trusting that governments are managing money responsibly, they disengage or stop paying tax. When governments stop trusting voters with the truth, they drift into denial. And when both sides assume someone else will fix the problem, the space for good government shrinks.
The ACT still has time to avoid that path, but only if we stop comforting ourselves with the idea of a bailout that will never come.
Fiscal pressure narrows choices, erodes service quality and gradually shifts power away from elected governments toward creditors, credit agencies and then to the Commonwealth.
The real danger is not sudden collapse but the quiet loss of autonomy. Maybe Canberrans prefer that?
When interest costs are higher than those for essential services, governments lose the ability to set their own priorities. Budgets become reactive rather than strategic. Taxes rise just to pay down debt.
Treasuries and credit agencies don’t panic about debt because it is large. They worry when debt dictates decisions.
Two ratios tell the story.
S&P Global Ratings now expects the ACT’s total tax-supported debt to reach around 200 per cent of operating revenue, one of the highest ratios in Australia (after Victoria which is also in deep financial trouble).
At the same time, interest costs are projected to reach 26 per cent of taxation revenue by 2028–29, with interest alone predicted to be 10 per cent of total expenditure.
That is 10 per cent of the tax and charges we Canberrans pay going straight to multinational financial institutions.
History is blunt. Victoria in the early 1990s discovered that once interest dominates the budget, ideology becomes irrelevant. Then much of its public assets were sold to manage debt.
Does the ACT have time to choose a different path? Restoring fiscal sovereignty requires honesty, discipline and action.
The Libs and Greens have forced a review into the ACTs fiscal sustainability. Good. A clear fiscal risk statement now would set the baseline.
And the establishment of an independent ACT Fiscal Council would also provide credibility and early engagement with the Commonwealth, on the ACT’s terms.
Legislated protections are needed including interest caps and debt growth limits. Pausing non-essential capital spending would stop interest costs from compounding.
Our projected capital expenditure is over $8 billion and much of it can be responsibly delayed until finances improve.
But can the government resist pressure from the CFMEU and their construction companies to do that? I think not.
Will our federal elected representatives demand action? It’s Labor Governments at either end of this and a local Labor Senator is the finance minister. So maybe they will just write a cheque for $18 billion for their mates in the ACT?
That’d be a vote winner in the rest of Australia … not.
