One question and one question alone will dominate Tasmania’s budget day.
Having pledged to tackle the state’s spiralling debt, how will the government do it?
This question has dominated Tasmania’s politics for the past two years, intertwined with the billion-dollar stadium to be built on Hobart’s waterfront.
Last May, the picture of deficit and debt – which hit $5 billion in 2025 and was forecast to double by 2029 – was so alarming, the parliament voted to have no confidence in Premier Jeremy Rockliff.
Having won the snap election off the back of that vote, Mr Rockliff’s government has regrouped and with a new treasurer at the wheel – Eric Abetz – will reveal its pathway to sustainability.
It’s likely to be a long, hard road.
Economic research institute e61 considers Tasmania as “on the fiscal precipice”, requiring both tax increases and savings booked from current spending levels.
Last year’s deficit, at $1.1 billion, alarmed economists given total revenue was $9.5 billion.
“Remedial action will have to be taken at some point, one way or another. The hope is that it starts in earnest on Thursday,” e61 chief executive Michael Brennan said.
Announcements in May paint the picture of a government preparing to grasp the nettle.
Usually, ministers spend the weeks before a budget making “pre-announcements” of what’s in the otherwise secretive books, hoping the public will be wowed by its spending plans.
This year, there have been precious few good news stories.
A $10 million Creative Industries fund, a $20,000 First Home Owner Grant and a $2000 rebate for women undergoing IVF treatment are among the few measures to be spruiked by the government – suggesting the budget will not be a spend-a-thon.
The government is also cutting its public sector by 1800 jobs over the next six years.
Other pre-budget announcements have been criticised as creative accounting which mask spending downgrades to be confirmed on Thursday.
The Labor opposition believes the announcement of $777 million in ambulance funding over four years is actually a cut, given $186 million was spent on the system last year.
Mr Rockliff has also used this week to walk back his key election promise to create a state-owned insurance company, instead creating a regulatory authority.
The most significant announcement landed last Friday: a $506 million “equity injection” to TT-Line, the operators of the crucial Spirit of Tasmania ferry service.
In other words, a fresh half-billion dollar bailout to the state-owned company which has overseen cost and timeline blowouts on replacement ferries and port infrastructure.
It’s cost overruns like these that has seen Tasmania, net debt free as recently as 2019, borrow more per person than any state bar Victoria.
Mr Brennan said it was unfortunate debt was being racked up at the same time as global events were making it more costly to borrow.
“The now familiar story of rising debt, combined with borrowings being refinanced at higher interest rates (see Victoria),” he said.
“This leaves Tasmania having to face its long-term structural economic challenges.
“Tasmania’s predicament is a result of past choices, and the remedy is to make some different ones.”
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