Call her Meagan. She works part-time reception shifts at a Gungahlin medical practice, rents a one-bedroom unit with her son a short drive away, and each year the rent-review letter from her real estate agent arrives a little heavier than the last. Meagan is a composite, standing in for a documented pattern rather than one named tenant, but the pattern itself is measurable: Canberra's median unit rent hit a record $580 a week in the most recent quarter, the territory's rental vacancy rate has fallen to its tightest level since 2022, and the ACT's own community-sector peak body reports that half of low-income Canberra households now spend more than 30% of their income on rent, with more than a quarter spending over half. Meagan does not draw the average-weekly-earnings premium that makes the Australian Capital Territory statistically the highest-income jurisdiction in the country. She lives in the same small city as the nation's best-paid public servants and some of its tightest rental stress, and the distance between those two facts is what this piece sets out to measure.
What the government did
Canberra's cost-of-living story begins with a tax reform rather than a cost-of-living policy. In its 2012-13 Budget, the ACT Labor government — Andrew Barr has held the Treasury portfolio continuously since 2011 and added the Chief Minister's office in December 2014 — announced a 20-year program to abolish conveyance duty (the stamp duty paid on buying property) and insurance duty, replacing the forgone revenue with a broad-based tax on unimproved land value collected through general rates (ACT Treasury, Tax Reform — General Rates fact sheet, Budget 2016-17). The logic follows mainstream public-finance thinking: stamp duty discourages people from moving house or downsizing, while a land-value tax is regarded by economists, including the 2010 Henry Tax Review, as one of the most efficient taxes available to any government, because land cannot be relocated or hidden in response to it. The ACT is the only Australian jurisdiction to have attempted a full, scheduled phase-out rather than a partial first-home-buyer concession.
Delivered as designed, the trade was real in its early years: conveyance duty on a median $500,000 property fell from $20,500 in 2011-12 to $13,460 by 2016-17, a $7,040 saving (ACT Treasury, Tax Reform — General Rates fact sheet, Budget 2016-17). The rates side of the ledger has kept climbing since — Stage Two of the program, running 2017-18 to 2021-22, locked in average annual residential rate rises of around 7% (ACT Treasury, Tax Reform — General Rates fact sheet, Budget 2016-17) — and increases have continued past that stage: an average 3.75% residential rise for 2025-26 with a new $250-a-year territory health levy added to the same bill, followed by a further average increase for 2026-27 after that levy was dropped (ACT Government, 2025-26 Budget Papers; The Canberra Times, 10-Jun-2026). Alongside the reform, the government has layered targeted relief on top of the bills it sets: a Pensioner General Rates Rebate worth 50% of rates up to $750 a year, an Electricity, Gas and Water Rebate permanently lifted to $800 a year for more than 40,000 low-income households in the 2025-26 Budget, and administration of the Commonwealth's Energy Bill Relief Fund, worth a further $150 per household from July 2025 (ACT Revenue Office, Rates Assistance — Pensioners, accessed 2026; ACT Government, Budget 2025-26 — Targeted Cost of Living Support for Canberrans, media release, Jun-2025).
The strongest case
An orthodox, efficient tax reform, targeted relief, and an income base no ACT government built
On the numbers, the government has a genuine case. The high average incomes and historically low unemployment that make Canberra one of the country's most resilient labour markets are substantially inherited, not manufactured: 26.9% of all ACT jobs sit in the public administration and safety industry, against 6.6% nationally (Jobs and Skills Australia, Industry Profile — Public Administration and Safety, using ABS Labour Force data, Nov-2025). That concentration reflects decisions about where the national capital and its bureaucracy sit, made long before Andrew Barr's treasurership, not ACT budget settings — no ACT government can claim credit for it, and none should be blamed if a future federal government moves jobs elsewhere.
Where the ACT government does have discretion — the shape of its own tax base — the case is also stronger than critics often allow. Replacing a transaction tax with a broad land tax is close to a consensus recommendation among public-finance economists, and no other Australian state or territory has attempted a full, scheduled phase-out of stamp duty rather than a partial concession. The relief layered alongside the reform is not token, either: a permanent $800-a-year utilities rebate reaching over 40,000 low-income households, a 50%-of-rates pensioner rebate, and administration of a federal energy credit together represent a real and growing transfer to the Canberrans least able to absorb rising bills. A government running an economically orthodox tax reform while also expanding targeted concessions is doing more than the minimum on affordability — it is doing close to what mainstream tax and welfare economics most consistently recommends.
The evidence
The reform's own figures show a rates base still climbing steeply well over a decade after Stage One began. Territory-wide general rates revenue — across all property types — was budgeted at $813.5 million for 2024-25, rising to $910.3 million in 2025-26 and a forward estimate of $1,093.9 million by 2028-29, growth of roughly a third in four years (ACT Government, 2025-26 Budget Papers). What that means for an individual household varies enormously with land value, because a land-value tax is, by construction, blind to the cash income of the household paying it: in the 2026-27 Budget, Forrest recorded the largest average suburb increase for the second year running, up $2,101 (13%), while Macnamara's average general rate fell $23 to $2,767, one of only a handful of suburbs to see a fall (The Canberra Times, 10-Jun-2026).
Set against that rates trajectory, the ACT's income and employment position remains genuinely exceptional. Average weekly ordinary time earnings for full-time adults in the ACT reached $2,249 in November 2025 — the highest of any state or territory, ahead of Western Australia ($2,189) and New South Wales ($2,087), and up 3.3% over the year (ABS, Average Weekly Earnings, Australia, November 2025). On the most recent full household comparison available, the ABS recorded average ACT disposable household income at $1,406 a week in 2019-20, against a national average of $1,124 — again the highest of any jurisdiction; the ABS has not published a full state-by-state update since, with the next comprehensive release not expected until 2027 (ABS, Household Income and Wealth, Australia, 2019-20 financial year).
Rents have moved in the same direction as rates. Canberra's median unit rent reached a record $580 a week and its median house rent $700 a week in the most recent Domain data, up 3.6% and 1.4% respectively over the year, with the ACT's rental vacancy rate falling to 0.8% — its tightest since June 2022 — and Canberra house rents now the second-highest of any Australian capital, behind only Sydney (Domain, Rental Report, December 2025 quarter). ACTCOSS's own 2025 Cost of Living Report shows what that combination does to low-income households specifically: between 2020 and 2025, automotive fuel costs rose 48.6%, education 34.7%, medical and hospital services 25.6%, utilities 23.5% and food and beverages 22.2% — all faster than headline inflation over the same period — while 50.3% of low-income ACT households were paying more than 30% of their income on rent and 26.9% were paying more than half (ACTCOSS, 2025 Cost of Living Report). The same report records a shortfall of more than 5,000 social and affordable homes territory-wide and public housing waits of up to five years.
The critique
Put the reform's two sides next to each other and the trade looks less balanced than its architecture suggests. Dr Khalid Ahmed, a former senior ACT Treasury policy director, has publicly disputed the government's own claim that the reform is revenue-neutral: his analysis found ACT own-source tax revenue grew at an average 8.2% a year between 2012-13 and 2016-17, against economic (state final demand) growth of just 1.1% over the same period, and that own-source taxation rose by roughly $400 million over the three years to 2017-18 (The Canberra Times, reporting Dr Khalid Ahmed's analysis, 24-Jul-2018). Chief Minister Barr's own language has shifted in response, from an early claim that the reform's revenue-neutral pledge "still held true" to a later description of it as only "broadly revenue-neutral in aggregate" (The Canberra Times, 24-Jul-2018) — a materially weaker standard than the one Canberrans were sold in 2012, even as the rate rises that fund the reform have continued on schedule for more than a decade since.
Because general rates are calculated from land value rather than income, the burden falls heaviest on households whose land has appreciated fastest, regardless of what they earn. A pensioner in an inner-suburb home built decades before Canberra's land boom faces a rates bill driven by asset appreciation they cannot spend and often cannot easily realise. The main offsetting concession, the Pensioner General Rates Rebate, is capped at $750 a year and pegged to 2015-16 levels (ACT Revenue Office, Rates Assistance — Pensioners, accessed 2026) — a fixed ceiling against a rates base that has grown by roughly a third in the four years to 2028-29 alone, meaning the real value of that rebate has been eroding even as the bill it offsets keeps rising.
Rates are also not confined to the households that pay them directly. Landlords typically pass rate increases through in rent, and Canberra's record unit and house rents sit on top of that same land-value base — meaning part of the reform's cost flows through to exactly the renters ACTCOSS identifies as least able to absorb it. The territory's headline numbers — highest average earnings, highest average household income, historically low unemployment — describe a real Canberra, but not the only one. ACTCOSS's finding that half of low-income households pay more than 30% of income on rent, and that people on income support are fourteen times more likely to skip meals than the general population, describes a second Canberra sitting underneath the average (ACTCOSS, 2025 Cost of Living Report).
A land tax cannot see a bank balance; it only sees a valuation. That is precisely what makes it efficient, and precisely what makes it blind to who is actually struggling to pay it.
The risk to the future
Two structural pillars — a concentrated APS and a tight labour market — are both loosening at once
The ACT's affordability model rests on two things the territory government does not control: a Commonwealth workforce concentrated in Canberra, and a labour market tight enough to keep local unemployment low. Both are now showing signs of loosening. The Australian Public Service Commission's own data show the ACT's share of the national APS workforce fell from 38% in 2023 to 37% in 2024 and 35% in 2025 — even as the ACT's own APS headcount hit a record 70,221, meaning federal jobs growth is increasingly happening outside Canberra under successive governments' regionalisation policies (Australian Public Service Commission, State of the Service Report 2024-25, Nov-2025). At the same time, the ACT unemployment rate rose across 2025, from around 3% at the start of the year to over 4% by its end (ABS, Labour Force, Australia, December 2025). Neither trend is dramatic on its own, and neither is something a Barr ACT government can reverse by itself. But general rates revenue is budgeted to keep climbing regardless — to roughly $1,094 million by 2028-29 on current forward estimates — on the assumption that a growing, well-paid, Canberra-based workforce keeps footing that bill. If Commonwealth employment continues diffusing to the regions faster than the ACT's own economy can replace it, the households ACTCOSS already documents as being in severe housing stress will not be the only Canberrans finding the arithmetic no longer works.