As I have been contemplating the election outcome and seeking a new and different way of governing Tasmania, I started writing this update which seemed more appropriate to do I the form of a letter to my Independent colleagues. I sent this ‘letter’ to them yesterday and also noted I would publish it as a matter of public interest. You can read it below:
Dear Fellow Independent
Forgive me if I appear presumptuous but I’m writing to you with a few thoughts as to how a fellow independent may be able to help make a meaningful change to the way we do things in Tasmania.
One of the recommendations from Saul Eslake’s Independent Review of the State’s Finances issued in August 2024 was (from page 6) “that the government, and all other political parties, commit to achieving a series of fiscal targets over the next four to ten years”……..(and) …….”Ideally, these objectives should be incorporated into the Charter of Budget Responsibility Act”.
Chapter 6 of the Review gave a little more detail:
“It would be useful – in terms of building confidence in the durability of a fiscal strategy along these lines beyond the normal election cycle – if these targets were to be specifically legislated by the Parliament (for example, by amending the Charter of Budget Responsibility Act 2007) in such a way as to oblige future governments to present Budgets consistent with achieving them, unless circumstances were to change in such a way as to prompt Parliament explicitly to amend or suspend them.
Other political parties represented in the State Parliament should also commit to these targets (whilst reserving the right to seek to achieve them in different ways) so as to provide confidence that the prospect of returning Tasmania’s public finances to a sustainable position is not imperilled by a change of government.”
The government poured cold water on the need for cross party support for fiscal targets and amending the Charter of Budget Responsibility Act 2007 to cater for them, when it responded to the Review in February 2025, essentially implying the current Act as fit for purpose. The government argued it provided a “robust framework…. (with)..….the flexibility, control and responsiveness required to adequately manage the State Finances.” Which basically meant it wanted to be free to do as it wished.
It was further noted the Act “does not create enforceable rights or duties”, which means it can be easily ignored.
Which all parties have done. To the detriment of all Tasmanians.
The Act has been honoured in the breach rather than the observance.
All parties have been non-compliant by failing to specify fiscal targets as required by the Act over an ensuing four-year period. The omission was most egregious in the government’s case given it’s been on the Treasury benches for 11 years and has access to public service support to help it comply with its statutory responsibilities.
But it means Tasmanians are currently held hostage in a cloud of uncertainty. By a government, without any clear idea where we are and to a lesser extent by an opposition, which has at least acknowledged the challenge ahead. If those in government don’t know where we’re at then what hope do the general public have?
This needs to change.
Saul Eslake’s recommendation about all parties committing to a common set of targets is a good starting point. We should be able to agree on our current fiscal position, where we’d like to be in eight to ten years’ time, before we start the much harder task of getting there.
Saul Eslake’s astonishment at the lack ten-year projections of the principal indicators of the State’s financial position wouldn’t have escaped readers. This needs to be corrected, especially to complement and help monitor agreed fiscal targets.
It was embarrassing to discover that Treasury has no medium-term models. There are at least two very large infrastructure projects which either won’t be completed or will have little impact until after the standard period of 4 years covering a budget year and three years of forward estimates, which are currently being considered without any medium-term models for guidance. It is scarcely believable that we are operating in such a vacuum.
We need a separate chapter in the Budget Papers each year with a revised set of 10-year estimates being offered each year, in similar detail to what we now see once every 5 years when the Fiscal Sustainability Report (FSR) is produced. We particularly need to see the breakup of revenue over time as boosting our own source revenue will, I’m sure, be crucial to our future. The next FSR is due in 2026. The key fiscal targets which we need to track are the familiar ones: the net operating balance, the fiscal balance, the cash balance, net debt and net financial liabilities for at least the general government sector and, if possible, other parts of the state public sector given government businesses are such a significant and risky part of the overall picture.
The government in its response to Saul Eslake’s Review also remarked:
“The Government considers that its Fiscal Strategy, together with the pre-existing legislative framework in which the Government’s responsibilities in relation to the State’s finances are prescribed, sufficiently provide the Government with the flexibility, control and responsiveness required to adequately manage the State Finances – including in the context of providing the Government of the day with the appropriate policy settings and legislative mechanisms to respond to emerging issues.”
Events soon proved that to be a most disingenuous claim. The pre-existing framework allowed the government to produce a dodgy Revised Estimates Report (RER) for 2024/25 which was also issued in Feb 2025. It reflected a policy change to increase health spending in the current budget year by $345 million but failed to include any extra over the forward estimates because it couldn’t estimate the likely figures, which is arrant nonsense.
To be clear the $345 million in health spending was a policy decision not a parameter decision (cost over-run for instance). To include it over the forward estimates would have meant at least another $1 billion and would have made the bottom line look awful.
So they left it out.
Which meant the RER was an unsuitable basis to prepare a Pre-Election Outlook Report (PEFO) when the need arose following the call of an early election.
Policy decisions need to be made by governments, not Treasury. With a dodgy RER and a 25/26 Budget and Forward Estimates which didn’t make it past the Second Reading stage making it null and void when the election was called, left Treasury with no alternative but to prepare its own set of projections, with a starting point as the estimated outcomes at 30th June 2025. Projections were based on past trends, as it was beyond Treasury’s remit to second guess what policies governments may decide. This led to an inevitably huge increase in State debt by the end of 28/29. What else could have happened? If projections are based on the trends that have created the current mess, we’re going to find ourselves in an even bigger mess. This has caused such consternation and confusion, hardly the right setting to have a meaningful discussion about our future.
The sole cause of being stranded in a fiscal fog was the government failure to adhere to normal rules and protocols when it prepared the RER.
The pre-existing framework didn’t constrain the government from acting irresponsibly. The framework needs fixing.
There’s no better time to do so than when the major parties come begging for support.
The last couple of months have proved beyond doubt we need revised protocols to ensure greater cross-party support which will span electoral cycles and hopefully even remove one of the reasons that led to the premature election.
We are literally back at the drawing board.
Any changes to the Charter of Budget Responsibility Act 2007 are modest. Getting them passed before the 25/26 Budget in the next couple of months will be difficult but easily achievable before the 26/27 Budget, which also gives enough time to establish a Parliamentary Budget Office to assist all members of parliament help steer the State away from the precipice towards a more sustainable future.
Sincerely
Ruth