ACT is losing up to $1.8 billion a year in federal funding, Labor MP warns
The ACT is losing as much as $1.8 billion a year because 1988 funding promises haven't kept pace with costs.
When the ACT became self-governing in 1988, the federal government promised to fund about two-thirds of the territory's state-level services. Today it funds only about 44 percent, while Tasmania gets 60 percent, says federal Labor MP David Smith.
Using the 1988 benchmark, Smith estimates the territory is missing between $1.3 and as much as $1.8 billion every year. That's comparable to the ACT's entire operating deficit.
The gap exists because the Commonwealth pays no local rates or payroll tax, unlike private employers and property owners. Smith says this exemption was a deliberate choice in law, not an accident of federation, and it can be changed.
Smith's submission to a parliamentary inquiry calls for a federal review of self-government arrangements and a new payment to replace an outdated municipal services grant.
- 44 percent of ACT services
- Commonwealth funding
- 60 percent of state services
- Tasmania funding
- $1.3-$1.8 billion
- Annual funding gap
- $1.4 billion
- ACT operating deficit 2024-25
Why it mattersIf the funding gap is real, the ACT faces either service cuts, tax rises or a fundamental renegotiation of how the federal government supports the capital territory.
AustraliaThe ACT's ability to fund schools, hospitals and infrastructure depends on resolving whether 1988 funding promises remain fair and adequate for a growing territory.
✓ Claims checked against the source. checked 2 h ago
