The ACT government’s finances deteriorated over the past decade because of conscious policy decisions to spend more on services and new infrastructure without raising enough extra revenue, according to Saul Eslake’s final report on the territory’s fiscal sustainability.

General net government debt rose from $910 million at the end of the 2014-15 financial year to $9.15 billion at the end of the 2024-25 financial year, with more than half of the $8.2 billion increase coming in the past three years. Eslake said there had been a significant deterioration in the financial position of the ACT public sector over the past decade, especially in the past five years, and warned the territory’s position could not be described as sustainable.

The report lands after a parliamentary inquiry was established in late 2025 when the Greens and Liberals worked together to force the government’s hand. It compares the ACT with other states and territories and says the local economy has still performed strongly over the past decade. Even so, Eslake said the territory’s finances had worsened sharply, while net debt as a share of gross state product has sat above the all-states-and-territories average since the 2015-16 financial year.

Eslake said some extra spending was unavoidable, but many of the decisions taken in the past three years were not. He said the ACT government had also moved away from general principles of sound public finance by effectively leaving the cost of long-lived public assets to future generations, rather than paying for them as they were built. The report says that approach has left the territory increasingly exposed if it ever needs outside financial help in a crisis.

That assessment sits uneasily alongside Chief Minister Andrew Barr’s defence of the territory’s finances in March, when he blamed the fiscal crunch on COVID-19 losses. Eslake accepted that the 2025-26 budget included tight control over operations spending and infrastructure investment, but said he remained worried that the forward estimates could be knocked off course by conditions less favourable than expected. He also said the ACT was not in as bad a position as the Northern Territory, Tasmania or Victoria, but was clearly worse off than New South Wales, Queensland and Western Australia.

The final report leaves the government with a narrow path. It says the recent budget restraint is real, but not yet enough to undo a decade of choices that pushed debt from hundreds of millions into the billions. The question now is whether those choices are about to be reversed quickly enough to change the territory’s direction before the next shock arrives.