On a wet Tuesday in Kambah, a Canberra public servant checks the Fix My Street app before leaving for work: the pothole two doors down, reported in autumn, is still marked "in progress" months later. Her bus is running to the reduced timetable Transport Canberra brought in when light rail works reshaped the network — the rapid service that once ran every fifteen minutes after 7pm now comes every half hour, so she leaves earlier than she used to. That evening the year's rates notice is in the letterbox: another increase, on a bill that funds not just her street and her bus route but the territory's hospitals, schools, courts and police as well, because in Canberra — uniquely among Australian capitals — there is no separate council rates bill and no separate state land tax bill. There is one bill, for everything. The question she is left with, standing at the letterbox, is not whether Canberra needs the money. It is whether the city she is paying for is the city she is getting.
What the government did
Since self-government began in 1989, the ACT Legislative Assembly has been Australia's only "single-tier" government: it exercises the powers of a state or territory — health, education, police, courts, child protection — and, because Canberra has no separately elected local council, the powers of a municipality as well, from mowing verges and sealing potholes to running libraries and collecting bins (Australian Capital Territory (Self-Government) Act 1988 (Cth)). Every other Australian pays two separate bills for two separate layers of government: a state tax to their state, and a council rates bill, set by an elected council, for local services. Canberrans pay one bill — general rates — to one government that is both at once.
In May 2012, the government commissioned the ACT Taxation Review, chaired by former Treasurer Ted Quinlan, and adopted its central recommendation in the 2012-13 Budget: abolish conveyance duty (stamp duty) and insurance duty over 20 years, to 2032, and replace the lost revenue with steadily rising general rates (ACT Treasury, ACT Taxation Review, May 2012). That program is the reason rates have risen every year since: 3.75 per cent in 2024-25, 3.75 per cent again in 2025-26, and an average 8 per cent in the 2026-27 Budget handed down by Treasurer Chris Steel on 10 June 2026, the steepest single-year rise since the reform began (ACT Budget Papers, 2024-25, 2025-26 and 2026-27). A separate flat "health levy" — $250 a year from 2025-26, cut to $100 after public pushback, then scrapped entirely from 1 July 2026 once a new Commonwealth health funding deal removed the pressure that justified it — rode alongside the rates rise for a year before disappearing (ACT Budget 2025-26 and 2026-27). General residential rates alone brought in $522.5 million in 2024-25, up from $494.4 million the year before, on a path to a forecast $944.2 million within a total ACT tax take of roughly $3.3 billion in 2026-27 (ACT Budget Papers 2024-25; Pegasus Economics analysis reported by The Canberra Times, 3 July 2026) — a base that, against the ACT's own reported $209 million in total rates collected in 2011-12, has grown roughly four-fold in a decade and a half (approx.).
That is the mechanism. What the money is meant to buy — a full bundle of state and municipal services keeping pace with a growing city — is the question this piece is about, not the tax swap itself.
The strongest case
A small, single-tier government funding a full state's worth of services for a fast-growing city has to raise the money somewhere
Put the government's case at its best. Canberra is one of the fastest-growing jurisdictions in the country: the ACT's estimated resident population reached approximately 484,800 at June 2025 and is projected to approach 700,000 by 2050 (ACT Treasury, Estimated Resident Population, June quarter 2025; ACT Population Projections 2025 to 2065, approx.). A growing population needs more of everything general rates fund — more hospital beds, more classrooms, more roads, more buses, more mowed ovals — and unlike the states, the ACT has no second, separately elected layer of government to share that load, and no mining royalty base to draw on. It is also the only government in the country funding a full state-style apparatus — a hospital system, a court system, a prison, a child protection system — for a population smaller than several individual Australian cities, so its per-person cost of simply having a government is structurally higher than a state's, whatever the quality of what it delivers.
Economists across the spectrum, including the Grattan Institute and the authors of the 2010 Henry Tax Review, regard the ACT's underlying rates-for-stamp-duty swap as sound tax design: a broad, stable base is a more reliable way to fund recurrent services such as hospitals and schools than a transaction tax that can collapse in a property downturn just when demand for services is rising. On that logic, a government facing rising demand and a narrower revenue toolkit than any state is entitled to argue that a bigger, broader-based bill is the honest price of the services a growing capital needs — not evidence that the services themselves are failing to keep up.
The evidence
Whether the extra money has bought commensurately better services is a separate question from whether the government needed to raise it, and the ACT's own service-delivery data gives a mixed, often unflattering, answer.
Health is the clearest case. The Productivity Commission's Report on Government Services shows the share of ACT emergency department patients seen within the clinically recommended four hours fell from 73 per cent in 2016-17 to 47.9 per cent in 2022-23 — the worst result of any state or territory for the fourth year running, against a national average of 55.8 per cent (Productivity Commission, Report on Government Services, 2022-23 data). Aboriginal and Torres Strait Islander patients fared worse again, with 48.6 per cent seen within four hours against a national figure of 62.8 per cent, and elective surgery told the same story: 30 per cent of ACT patients were not admitted within their clinically recommended timeframe in 2022-23, the worst result since 2016-17, a period that included a fire that closed operating theatres at the former Calvary Public Hospital (Productivity Commission, Report on Government Services, 2022-23 data). ACT Health's own more recent reporting shows improvement — a median emergency wait of 25 minutes and more than 55 per cent of patients leaving within four hours across July-December, though the government itself cautions this is not directly comparable to earlier figures because of a change in how the data is collected (Canberra Health Services, Emergency Department Performance reporting). Credit markets have rendered a harsher verdict: S&P Global Ratings stripped the ACT of its AAA credit rating on 8 September 2023, citing a tax-supported debt ratio that had risen from 93 per cent of revenue in 2019 to a projected 163 per cent in 2024, then downgraded it again on 5 September 2025, citing rising health costs, deficits forecast to persist until 2027, and total debt heading toward 200 per cent of operating revenue — higher than every rated Australian state except Victoria (S&P Global Ratings, 8 September 2023 and 5 September 2025). Net debt itself is forecast to climb from $12.5 billion in 2026-27 to $14.1 billion by 2029-30, carrying an annual interest bill of roughly $1.2 billion (ACT Treasury, 2026-27 Budget, Medium-Term Projections, approx.).
The municipal side of the bill shows a similar pattern. Transport Canberra cut bus frequency across at least sixteen routes from 30 January 2023, taking most rapid services to a 30-minute frequency after 7pm and local routes to hourly in the off-peak, a change the government attributed to congestion from light rail construction works, with further frequency reductions "to manage congestion" following in 2025 (Transport Canberra, Network 2023 bus timetable changes, and subsequent 2025 service adjustments). Two wet La Niña summers, in 2022-23 and 2023-24, left roads pocked with potholes faster than contractors could keep up: the government paid out roughly $327,000 in vehicle-damage claims in 2022 and $191,000 the following year, while a labour-hire contract dispute separately stalled repair work, street sweeping and line-marking on parts of the network for weeks (ACT Government claims data, reported by The Canberra Times, approx.). Canberrans lodged 51,589 requests through the government's Fix My Street portal in 2023-24 alone, of which 48,957 were recorded as complete as of 12 May 2025 — leaving a residual backlog of roughly 2,600 requests, some more than a year old, still open (Access Canberra, Fix My Street data, reported by The Canberra Times, approx.). And the ACT Audit Office's first report of 2024, an audit of Urban Tree Management, found the government's own target of 30 per cent canopy cover by 2045 was at risk after Transport Canberra and City Services cut annual planting from a targeted 20,000 trees a year to just 5,000 in each of 2024-25 and 2025-26 — a quarter of the required rate — citing workforce, contractor and stock shortages, with a partial recovery to 10,000 planned for 2026-27 (ACT Audit Office, Report No. 1 of 2024, Urban Tree Management).
Canberra pays one bill for a state and a council at once; on the government's own figures, it has not been getting a state-and-council's worth of service in return.
The critique
The growth argument does not, by itself, explain a result like a four-hour emergency wait that has fallen 25 percentage points since 2016-17, in a health system now absorbing a "health levy" and a growing share of the rates rise specifically justified by its own cost pressures. If rising rates were reliably buying rising capacity, the RoGS trend line should bend upward as revenue climbs; instead the two have moved in close to opposite directions across most of the reform decade, and the government's own more recent, differently measured improvement claims have not yet been validated by an independent report compiled on the same basis as the figures that put the ACT last. Two credit rating downgrades in two years are not a direct verdict on service quality, but they are a verdict on whether the extra revenue has bought the fiscal room to match extra demand — and S&P's answer, twice, has been no.
The deeper problem is accountability, and it is specific to the ACT's structure. In every state, a resident unhappy with mowing, potholes or bus timetables can, in principle, punish their council at a local election held separately from the one that decides who runs the hospital system — two governments, two verdicts. In Canberra, the same Legislative Assembly election settles both questions at once, every four years, and a campaign dominated by health, housing and the cost of living rarely turns on whether the nature strip was mowed on schedule. Municipal service failures that would cost an ordinary Australian council its mayor generate a Fix My Street ticket and, at most, a question in Estimates. The rates bill has grown to fund both layers of government at once; the political accountability for the smaller, more visible layer — the one residents see and touch every week — has not grown to match it.
The risk to the future
A rising bill, a shrinking margin for error, and less reason each year for residents to believe the two are connected
The fiscal trajectory narrows the government's room to fix any of this. With the operating budget not forecast to return to surplus until 2028-29, a deficit of $323.4 million still pencilled in for 2026-27, and net debt climbing toward $14.1 billion by 2029-30, further above-inflation rates rises are the path of least resistance for a government that has already used most of its other levers — duty cuts are largely spent, and the short-lived health levy showed how quickly a new charge can become politically unsustainable (ACT Budget 2026-27, June 2026, approx.). Each rise lands on a rates base already documented, since at least 2018, to be leaking at the margin to Queanbeyan and other NSW border towns, where equivalent housing is cheaper and ACT rates and land tax do not apply at all — a dynamic ACT Shelter modelling once put at $52 to $62 million a year in economic activity lost over the border, an estimate now a decade old but describing a pattern local reporting still confirms (The Canberra Times, reporting on Queanbeyan relocation, 2018-2019; ACT Shelter modelling, 2015, approx.). Commuters who leave still use Canberra's hospitals and roads; a rate base thinning at the edges while demand does not shrink is a worse position than the one the reform started from in 2012.
The larger risk is the erosion of the bargain itself. The tax reform was sold, and largely accepted, on the premise that a single, broader bill buys a functioning capital: hospitals that see patients on time, buses that run to a workable timetable, roads and verges that are maintained. Fourteen years in, the government's own evidence — its RoGS results, its Auditor-General, its bond raters — shows a widening gap between what the bill has grown to and what residents can see it buying. A government that keeps raising the one bill that funds everything, while its own reports show emergency care, road maintenance and public transport falling behind, is spending down a reserve of public trust that a single-tier government, uniquely exposed at every election to a verdict on both state and council performance at once, can less afford to lose than most.