Tasmanian Treasurer Michael Ferguson’s third budget sells a message of restraint during an economic storm.
His speech to Parliament was peppered with phrases like “careful decisions”, “resilience”, and “manage prudently for the future”.
The post-election budget — which contains a $1.3 billion cash splash for election commitments — paints a story of debt, and deficits as far as the eye can see, with a return to surplus not projected until 2029–30.
What are the key figures?
The debt is the biggest talking point of this budget.
Tasmania’s debt is going to skyrocket to $5.4 billion in this financial year, and then grow steadily across the next three financial years, peaking at $8.6 billion in 2027–28.
In four years’ time, the cost of servicing that debt will increase to $441 million, or $1.2 million a day.
Revenue was higher than projected last year, with $8.6 billion coming into the coffers; about $170 million more than expected.
But spending has also rocketed.
Michael Ferguson says Tasmania needs to “manage prudently for the future”. (ABC News: Luke Bowden)
The government spent $1.3 billion more than it anticipated last year, recording an operating deficit of $1.5 billion.
The deficit is projected to shrink in this year’s budget to $793 million, then drop in the next three financial years, with deficits of $387 million, $437 million and $63 million being forecast.
But when you remove one-off payments from the federal government for things such as the Bridgewater Bridge, the financial picture looks substantially worse.
A deficit of $1.3 billion is forecast for 2024–25, plus deficits in each of the following three years; the lowest a projected $288 million in 2027–28.
How does the government plan to balance the budget?
Lots of the election spending is frontloaded, meaning it is mostly spent in the 2024–25 financial year.
Spending is forecast to peak this year at $9.7 billion, then drop to $9.5 billion in four years’ time.
One of the main ways the government is hoping to do that is through $450 million of savings that government departments will be required to make over the next four years; $150 million more than previously announced.
The existing $300 million dividend was already being fiercely fought by unions, meaning the government will have a tremendous fight on its hands as it makes departments rein in their spending even further.
In his speech, Mr Ferguson says the efficiency dividend equates to a saving of 50 cents per every $100 of government spending and represents 1.6 per cent of the spending across the forward estimates.
“For every dollar of efficiencies, the government has committed over $3 in new funding. And we can do this without increasing taxes,” he told the state parliament.
Another key part of the plan to balance the books is increasing revenue.
It’s projected to grow from $8.6 billion last year to $9.4 billion in 2027–28.
Where is the money coming from … and where is it going?
The biggest chunk of revenue feeding into Tasmania’s coffers comes from the GST, which is divvied up among the states by the federal government.
Payments from the Commonwealth, including GST, make up 65 per cent of Tasmania’s revenue.
The rest comes from things such as conveyance duty raised from the sale of property, land tax, payroll tax and fines.
Almost a third of budget spending — 32 per cent — goes into the state’s health system, with 24 per cent going into education.
The budget includes a $5.1 billion infrastructure spend; up $800 million on last year’s budget, with about a quarter of the investment to come from the state’s government business enterprises.
Just over 50 per cent of this year’s infrastructure spend will be spent on roads and bridges, with hospitals and health the next highest at 14 per cent.
Loading…
