Record $4.3b debt flagged as Tasmania looks to infrastructure remedy for coronavirus-hit state Budget
The Tasmanian Government is pinning its hopes on an infrastructure-led recovery from the coronavirus pandemic, with the long-awaited state Budget laying bare the debt and deficit scenario facing the state.
The bottom line is a $1.1 billion deficit for this financial year, reducing to a $281 million deficit next year, and a predicted return to modest surpluses over the forward estimates.
However, once one-off federal funding is removed, the picture reveals an underlying net operating deficit of $1.4 billion this year, with deficits continuing across the four years of forward estimates to $503 million in the red in 2023-24.
Net debt is on the rise — this year it will be $1.8 billion, but will increase steadily to a record $4.38 billion by 2023-24.
Premier and Treasurer Peter Gutwein said he was prepared to “throw the kitchen sink” at the economic coronavirus response.
“This Budget is the most important budget I’ll ever hand down,” Mr Gutwein said.
“Now is not the time to step back, now is the time to step up. This is the budget for our times.”
Mr Gutwein said the support the Government had provided during COVID-19 had “come at a cost”.
“I won’t sugar coat the situation. There is no doubt … unprecedented times call for unprecedented measures,” he said.
“In this budget we are going to throw the kitchen sink at the challenge that we face.”
Despite COVID-19 punching a massive hole in state finances, Mr Gutwein said the looming net debt record would be “manageable” given low interest rates and because it would be spread across generations.
“We will pay it down, there is no need for us to do anything in a knee-jerk way at all,” he said.
“This is debt that is funding intergenerational assets and will be managed in an intergenerational way.”
Infrastructure spend includes previously announced projects
The Budget details a “landmark” $5 billion infrastructure program, which Mr Gutwein claims will be the largest and most significant infrastructure program in the state’s history.
The Government expects that to support 6,000 jobs a year — reaching a total of 25,000.
But, most of the key infrastructure projects have been announced in previous years.
Included in the infrastructure funding is $1 billion over the next two years for roads and bridges, $89.8 million for stage two of the Royal Hobart Hospital redevelopment, $79.8 million for the Launceston General Hospital redevelopment, and $218.1 million in education infrastructure.
The infrastructure program includes previously revealed upgrades to the Sorell and Midway Point causeways, the new Bridgewater Bridge, and upgrades to the Midland, West Tamar and Bass highways.
There’s an extra $31 million to deliver school infrastructure as part of previous election commitments, including an extra $20 million for the new Brighton High School (taking the total expected cost of the project to $50 million), an extra $4 million for the Legana Primary School, and $7 million for new Child and Family learning centres.
Record spends on health, education
There’s also record funding of $9.8 billion for health and $7.5 billion for education over four years.
The Government’s committed an additional $45.5 million over two years to reduce elective surgery waiting lists, which have blown out further as a result of the coronavirus pandemic.
There’s a boost of $55 million over the next four years to meet ongoing demand in out-of-home care, and an extra $6 million to ensure all Tasmanian high schools will be extended to years 11 and 12 by 2022.
Extra support for families has been included in the form of $14 million over four years to help low-income Tasmanians with school levies and charges.
Increasing pressure on the Tasmanian Prison Service due to sustained high prisoner numbers has pushed the Government to commit an extra $3.5 million each year to address staffing costs and costs such as water, food and clothing for inmates.
The Government has sought to address the significant impact of coronavirus on the state’s hospitality industry with a $10 million support fund for businesses with turnover higher than $50,000 a year, and it will waive liquor licensing fees for 2021.
Money for arts, zero-emission buses
Tasmania’s Department of Police, Fire and Emergency Management will receive an extra $2.7 million to assist in the provision of an emergency early warning system.
There will be $2.5 million over two years for a statewide program to support women to participate more broadly across the economy, and to shift perceptions of traditionally male-dominated industries.
Port Arthur Historic Site Management Authority will receive additional funding in 2020-21 to allow it to repay existing and COVID-19 related debt.
There’s a plan to transition the Government’s car fleet to 100 electric vehicles by 2020, and Metro Tasmania will be tasked with trialling zero-emissions buses within the next two years.
The arts sector’s been allocated an additional $4 million, including an arts and cultural support fund and grants to support performers and artists.
New harness and greyhound racing facilities will be developed in Devonport over the next two years at a cost of $8 million.
A series of risks to the Budget have also been laid out.
They include the high degree of uncertainty over future GST receipts, variations in the actual infrastructure expenditure, future investment in the $3.5 billion Marinus Link project, the cost of addressing issues identified with the Royal Hobart Hospital’s K-Block facility after the Government took possession earlier this year.
There is also potential for additional costs incurred through the National Redress Scheme for Institutional Child Sexual Abuse.
Australian Medical Association spokesman John Saul said while the association welcomed the hospital infrastructure upgrades, more funding for the health sector was needed.
“It’s significant bricks and mortar support, but we need people on the ground as well, we need doctors and nurses, allied health, cleaners,” he said.
Dr Saul said he was concerned the $45.5m for elective surgery would not be enough to clear the significant backlog.
Jessica Munday from Unions Tasmania said she had been hoping for “something bold”.
“We knew there was going to be significant support for the construction industry, which we obviously support as a critical industry for Tasmania,” she said.
“What we were also hoping to see was a multi-faceted support plan for jobs that deliver for workers across all industries.”
Tasmanian Chamber of Commerce and Industry boss Michael Bailey said it was a conservative budget.
“It is a good budget … but we believe the opportunities to really restructure and reform were missed today.”
TasCOSS chief executive Adrienne Picone said the budget included short-term solutions for mental health and housing, but long-term strategic investment was needed.
The Budget was labelled “visionless” by the State Opposition, while the Greens said it needed to do more to address climate change.