Legislative Council, Wednesday 12 November 2025
Ms FORREST (Murchison) – Mr President, when the Treasurer, Mr Eric Abetz, rose to deliver the 2025 26 state Budget on 6 November, his opening line promised brightness and optimism. He said Tasmania’s future continues to be bright, setting a tone of confidence and realistic optimism about the state’s fiscal trajectory. By the time he sat down, he delivered something quite different: a budget built on accounting tricks, unrealistic assumptions about revenue growth, workforce reductions and wage increases, partially funded initiatives that will also certainly require future supplementary appropriations, and the fundamental misrepresentation of Tasmania’s true fiscal position.
This isn’t spin meeting reality; it’s fantasy economics colliding with an inevitable catastrophe. The numbers in this Budget simply don’t add up. They’re carefully constructed not to add up until after either the next election or the next budget, when the bill for today’s magical thinking becomes due and becomes someone else’s priority – or problem – to manage. I will contain my comments here today to the state of the Budget and our fiscal position. I will not comment on specific areas related to matters of health, education, public safety, justice, or all the other critical areas of service delivery specifically, as I will have an opportunity to do that next week. I will focus entirely on the Budget itself and make no apologies for the length of my contribution, such is the seriousness of the situation we are in.
The Treasurer referred to this Budget as an interim Budget, suggesting a compressed timeline meant that little or any real action could be taken. I commend the member for Huon on his contribution yesterday; it was very thorough. He also went back down a little bit of history. I’m going to join him on the path of history.
The election of 29 August 1998 led to a change in government, and David Crean became treasurer. Mr Crean, as a new treasurer in a new government, had exactly the amount of time that was available to this government to repair a budget. He didn’t have the advantages of all the work done previously by Treasury to prepare the May budget. He’s had to start from scratch. If you want to go back and look at history, he delivered a full set of budget papers, a lot of other information as well, and a commitment to real change.
Mr Crean delivered his budget on 5 November, after the 29 August election. Admittedly, there wasn’t a period of uncertainty and extended caretaker period of that time, but when you take out that period when the government was actually installed in this year, the time was 10 weeks: the same. So the government, as I said, has had the benefit of developing the previous May budget and the consultation that went into that. The excuses for a lack of attention to addressing the budget crisis we now face ring very hollow.
This is not a responsible, forward looking Budget as suggested by the Leader on behalf of the government; there is no clear recognition of the problem, and the statement that the government continues to commit to delivering infrastructure denies the reality of what the budget papers actually reveal. Both major credit rating agencies, Moody’s and Standard and Poor’s (S&P), have already downgraded Tasmania’s outlook to negative since the 2024 25 budget. They’re looking at the same numbers the government has and reaching a very different conclusion about the state’s fiscal trajectory.
When independent financial analysts see warning signs, but the Treasurer sees brightness and optimism, someone’s reading the wrong dashboard. Another matter credit agencies would consider is the general government net debt, plus superannuation liability, in nominal terms as a percentage of gross state product. Members who were here when the 2022 23 Budget was delivered will recall there was a chart included in the assets and liabilities section for the first time, which compared the general government sector net debt plus superannuation liability as a percentage of gross state product across jurisdictions.
The same chart, and I’m glad they haven’t pulled it out of this year’s Budget, is on page 180 of budget paper 1. In the first chart in 2022 23, it was estimated that at 30 June 2023, Tasmania’s ratio would be 27.8 per cent. It was emphasised by the government that this was lower than that terrible state, Victoria, at 29.9 per cent. Fast forward just two years, and this year’s budget paper estimates that at 30 June 2026 the Tasmanian ratio would increase to 32 per cent and Victoria will have fallen to 27.8 per cent.
So we have gone from being just a little bit better than Victoria to over 4 per cent worse than Victoria in just three years. For those who want to also rely on the appearance that we may not be as bad as the Australian Capital Territory, this is a comparison that cannot be directly made. As Saul Eslake points out when he’s commented extensively on this matter:
The ACT superannuation liabilities aren’t as large as they appear in government finance statistics, because its employee superannuation arrangements are managed by the Commonwealth Government Superannuation Fund, which precludes the ACT from including capital gains on its superannuation investments in its GFS financial statements, as other states and the Northern Territory do.
So while we’re still below the Australian Capital Territory and Northern Territory, the next worst state after Victoria is South Australia, which is not as bad as us, way down at 19.2 per cent. What we are seeing is the pea and thimble trick or a shell game on full display. Let’s start with how the government manufactured the wafer thin surplus that appears in the final year of the forward Estimates. The Budget shows a net operating balance surplus of just $5.6 million in 2028 29: barely material in a budget of over $10 billion, but politically crucial because it allows the government to claim their return to surplus. This is absolutely illusionary and delusional.
The member for Huon touched on this in his contribution – we can’t overlook the fact that despite its widespread use, the net operating balance is a very incomplete measure of the budget’s bottom line, because as I have often pointed out, it excludes capital expenditures, whilst it includes as revenue grants from the federal government for capital purposes. We can look to the underlying net operating balance, which I’m glad the government continues to include, which excludes one-off grants from the federal government for capital purposes, to get a more accurate picture. This more meaningful measure will be in deficit by a total of $3.8 billion over the next four years. Compared with a total of $4.2 billion projected in the May Budget, that failed to pass the parliament.
That reality aside, if you look at how these delusional claims of an almost surplus in four years, we must consider the numbers and tricks that have fed into this picture. First, the Treasurer’s Reserve has been reduced from $50 million to $25 million in 2025-26, then down to just $20 million in the forward Estimates. For context, the actual expenditure from the Treasurer’s Reserve in 2024-25 was $40 million, they’ve reduced it to $25 million. It was $40 million last year. This reserve exists precisely to cover unforeseen circumstances, urgent needs and the inevitable cost pressures that arise during any financial year. It is the fiscal equivalent of your emergency fund. This action doesn’t reduce government costs. I will let that sink in. This reduction in the appropriation to the Treasurer’s Reserve does not reduce costs. It removes the appropriation of those costs. that are inevitably going to arise. It is like cancelling your home insurance and claiming you’ve reduced household expenditure. Your house doesn’t become less likely to burn down because you’ve saved the premium.
Also largely absent, are many of the government’s election commitments. With commentary suggesting that these will be considered in the next budget. The members for Elwick and Pembroke both spoke about this. I am not sure how many people and organisations who are the expected recipients of these election commitments feel, considering that many of those casting their votes actually did believe the government will deliver on these promises. Shameful.
The government has completely backed away and fundamentally changed their position, a so-called rock-solid guarantee to organisations and others, to see their trust in the government completely shattered. Why would we believe them now when this budget is in such terrible shape? Here’s what will happen next: following the overwhelming pattern of recent history, agencies will face urgent cost pressures. Ministers will make promises of funding later in the year, when circumstances require it. Agencies will spend money they don’t have, which is technically a breach of the Financial Management Act. Before June 2026 arrives, we will see a supplementary appropriation bill that restores much of what was notionally ‘saved’. I say saved in inverted commas there.
Secondly, an even more egregiously, the Budget includes unallocated budget efficiency measures that exist only on paper. The May budget that never passed, had at least the honesty to attract a specific figure to these measures, $150 million in annual savings from the Efficiency and Productivity Unit, but there’s no indication of how much was actually saved in the 2023 24 and the 2024 25 years. That’s a question for Estimates, no doubt.
Details related to this, $150 million in savings is buried now in Finance-General, and it gets a mention on pages 72 and 76 of Budget Paper 2, Vol. 1. There is a bit of commentary in chapter 1, Budget Paper 1, but what is very interesting about the description now for these efficiency measures is that they’ve been allocated to other expenses, rather than employee expenses to try and suggest that they’re not going to cut employees, or any of the other normal expenditure areas. It sits under ‘other’. I suspect this has been done to enable the government to suggest that the savings aren’t about jobs. The comment on page 72 is that: (OK)
These savings will be delivered by investing in technology and adopting better management practices, including via opportunities identified through program and initiative evaluations.
That’s from page 72 on Budget Paper 2, Volume 1. This, obviously, provides zero confidence. It is a well-proven fact that investing in technology is very expensive, takes much longer than ever initially expected and delivers savings of much lower magnitude than originally claimed or expected. You only have to look at some of the IT rollouts we’ve had with government businesses over the years.
If it doesn’t end up actually costing you more in the end, what remains are reduced appropriations, money simply not allocated in the budget, not cost savings, with no identified programs being cut, no specific reforms being implemented and no actual services being reduced.
The budget papers admit these measures are modest in dollar terms and symbolic. When you’re running an underlying operating deficit of $1.4 billion, symbolic savings are about as useless as bailing out the Titanic with a teaspoon.
Both of these measures have been taken from the manual, how to put lipstick on a pig. It’s been a frequent source of budget papers and election pitches.
The savings in the Liberal plan for a ‘brighter future’ in 2013-14, for instance, almost entirely comprised savings from a more efficient public service of $155 million and cutting the Treasurer’s Reserve, $40 million. History repeats itself. First is a tragedy maybe, then, unfortunately, it is an absolute farce.
If the Treasurer would have a closer look at the handbook covering lipstick application, he will notice a strategic action plan which the Labor government used to pretend it set aside money to pay future superannuation, but because there wasn’t enough cash they had to borrow back what wasn’t there to balance the books. And they tend to go back to this often, Mr President, saying look over there.
It looked to some as if it had been borrowed and spent, but in reality, it wasn’t there in the first place. The essential point here is that just because an appropriation bill allows for something, doesn’t mean it will occur.
The Liberals don’t bother setting aside any superannuation for current defined benefits members either so, they’ve they’ve continued the same sin of the terrible Labor party back then, and they don’t even make the mandatory 12 per cent Superannuation Guarantee Levy.
Since 2014, at least a billion dollars in Super Guarantee amounts for defined benefits employees has been spent elsewhere. But someone troubled by future generations having to pay for the sins and omissions of their forebears, this is no doubt keeping the Treasurer awake at night.
These aren’t savings. They’re unfunded liabilities disguised as fiscal discipline. They’re line items showing reduced items without any corresponding reduction in what the government is expecting to do. The ‘surplus’ in 2028¬29 exists only because the government has not appropriated money for things agencies will need to do to deliver the services Tasmanian’s need and deserve. It’s not a surplus; it’s an unfunded liability with a bow on it.
We have seen this movie before. Every year, the government presents forward Estimates showing discipline and restraint. Every year, reality intrudes, and supplementary appropriations follow. The actual outcome bears little resemblance to what was actually budgeted. This pattern is so well established, that building a budget on the assumption that it will somehow work this time is either extraordinary optimism or deliberate deception. The ending doesn’t change just because you’ve renamed the sequel.
Even focusing on the accounting tricks, the general government sector understates the fundamental problem because the reader is being encouraged to only look at part of the picture. The Treasurer focused relentlessly on general government debt, reaching $10.4 billion by June 2029. What he characterised as ‘peak debt’ – I put that in inverted commas because it’s not a term I’m familiar with – the point, apparently, at which debt stops growing and repayment can theoretically begin. This figure dominates the budget speech and the public commentary. It’s designed to.
What the Treasurer conspicuously doesn’t mention is the total public non-financial corporations, the PNFCs, or the government businesses, including Hydro Tasmania, TasNetworks, TasPorts, TT-Line and others. These aren’t separate from the government; they’re wholly owned by it.
Their debts are guaranteed by the state, as we’ve seen very clearly with a recent commitment to underwrite more debt for TT-Line. They’re capital injections to TT-Line and others come from the general government. Their dividends return to general government. The relationship is highly interdependent. Equity injections flow from general government to the PNFCs, while dividends and income tax equivalents flow back. You cannot sensibly assess the state’s fiscal position by looking just at one side of the ledger. An analogy that could be used is like looking at your household financial position, by looking at the mortgage but ignoring credit cards and car loans because they’re technically separate.
When you look at the whole picture – the only honest and prudent way to assess government finances – the numbers become terrifying. The PNFC borrowings increased by $9 billion over the Budget year and forward Estimates. Even in 2028-29, which the Treasurer claims is ‘peak debt’ for the general government, PNFC borrowings increase by a further $2 billion. That’s in the year that we’re supposed to be in peak debt. To read that again, in the year that the Treasurer says the general government reaches peak debt and can start paying it down, the government businesses are still borrowing an additional $2 billion. So, the Treasurer focused on the general government debt hitting $10 billion, while carefully not mentioning the total government debt, the complete picture, is heading toward $20 billion. That’s not peak debt, whatever that is, that’s Mount Everest Base Camp, and we’re still climbing.
You cannot pay down debt while you’re still accumulating it. This is not a controversial economic proposition, it’s basic maths. The government’s own cash flow statement shows net borrowings of $734.8 million in 2028-29, so how does the Treasurer dream about starting to pay down debt in 2028-29 when his own numbers show net borrowing of $734 million that year? How does he reconcile the claim peak debt with a reality that the PNFC borrowing continues growing by $2 billion? The answer is simple. He doesn’t. He’s counting on most people not digging this deep into the numbers and hoping the contradiction won’t become obvious until it’s politically too late to matter.
This assumes that all the Budget’s assumptions about wage growth, FTE reductions, capital expenditure coming in on budget are actually met. Spoiler alert, they won’t be, which means even these alarming numbers are likely optimistic. This is just one very real risk. There are other risks here, too many to outline. On Budget Paper No. 1 pages 74 to 77 and I’m sure members would have read the risks and sensitivities chapter there. These risks are a big part of the Treasurer’s analysis. Once again, their potential impact on budget Estimates is overwhelmingly negative and massively exceeding any $5 million estimated surplus which is a deception none of us believe. But don’t just believe me. Believe the numbers. The numbers are there for all to see and show the problem was not spending during COVID. It was the spending like drunken sailors by this government since 2021-22. The numbers tell us a different story and tell us the truth.
If we delve into the $5.6 million surplus in 2028-29, this is obviously completely contrived to be able to point to the surplus to justify the glide path suggested by the Treasurer. When comparing the net operating balance forward Estimates that have been in each budget and revised estimates since 2020-21, I went back that far because that’s when COVID impact started, and I think the member for Huon also did address some of these points as well. I started at 2020-21 to take out the immediate impact of COVID there. It’s crystal clear when you do that, that the forward Estimates for each year changed in each of these documents. That’s looking at the Budget and the revised Estimates report. If we compare those various figures with what was the actual result for the year, one interesting thing becomes apparent. Between 2020 and 2021 and between 2024 and 2025, the government has produced Estimates on 13 occasions that 13 net operating balance surpluses will be achieved. That’s what they predicted, but not one has actually been achieved, not one surplus.
The government has also estimated over that period the achievement of a net operating balance services on four occasions, for either 2025 26 like this year we’re looking at with the Budget now, or 2026 27. That’s in those previous estimates, that’s what they were saying was going to be the year of surplus. So, this year’s budget and next year, but this year’s Budget is now estimating massive deficits each year. We’ve gone from a prediction of surpluses to massive deficit. Their track record would suggest that a surplus doesn’t even noticeably show in these numbers has any chance of being achieved if you go on the recent history.
Budgets were passed by Parliament repeatedly with those assumptions, all of which proved to be a fallacy. Why would we believe the Treasurer this time, when so many committed projects have been delayed or reprofiled, disappear completely or deferred, and we have a proposed stadium in the mix that we don’t have any surety of full costings for the stadium and the related infrastructure? How can we believe that that’s likely to be the case. when every other year since 2021 22 has shown different?
Ms Webb – It is the definition of insanity, isn’t it?
Ms FORREST – I’ve been saying this for a while, I might say.
What is also interesting and a matter I’ve raised a number of times, more recently, is that over the major COVID years, 2020 21 and 2021 22, the actual deficits ended up being a lot lower than were expected, which effectively means during those years we actually spent within our Budget pretty much. Yes, there was a top-up. There was additional appropriation made because we knew that there were additional costs that need to be met. But if you look at the figures, it shows some level of fiscal constraint despite the challenges by being funded appropriately to deliver the services that were needed. Even in 2022 23, while the outcome wasn’t the surplus originally expected to be achieved, it wasn’t as bad as what had been expected at the beginning of the year.
To use the excuse that this is COVID, is a fallacy. This position of restraint and almost meeting your targets or your expected net operating balance results, completely changes in 2023 24 and 2024 25. As late as the 2022 23 Revised Estimates Report, decent surplus for these years were being expected, presumed on the basis of the view that COVID support would be wound back or hadn’t been as dramatic as expected. But no, what we saw was the refusal of the government to act. Two early elections, at least two of them, including the 2024 election, adding $1.4 billion to the tab, increased spending and thus a dramatic deterioration in the net operating balance deficit, estimates that occurred from 2023 24 Budget onwards.
It’s the government who failed to listen to take into account the need to pull things in. ‘Just keep spending, it’ll be fine’. The stark reality from the government’s own numbers surely put paid to the whole argument the Treasurer has tried to resuscitate around blaming COVID. It is action taken by the government in 2023 24 onwards that has driven the recent dramatic deterioration. Let’s also not overlook the fact that less than half a year ago Treasury released a document required once an election is called, to consider the need for a pre election financial outlook. It’s not automatic, it doesn’t doesn’t automatically get released. It’s a matter for Treasury.
This year Treasury deemed it was necessary, and they actually needed to go back to the 2024 25 Budget to do the work, and it does contain historical trends, as a revised Estimates report of February 2025 – and I was very annoyed by this as well – had omitted a large portion of the required health expenditure in the forward Estimates. So the revised Estimates report is a Treasurer’s document. The Pre election Financial Outlook (PFO) is a Treasury document. There’s an important distinction here because in the Revised Estimates Report the claim was by the then Treasurer not the Treasurer now, probably for obvious reasons – that he decided he couldn’t quantify the amount of extra health funding that would be needed, despite the fact that they had to put it in for that year, because it had to be found.
Ms Thomas – We’ve had three treasurers in three years, haven’t we?
Ms FORREST – Yes, we have. That was treasurer Barnett, at least I believe it was.
Mr Gaffney – Yes.
Ms FORREST – One of the previous treasurers: there’s been a bit of a turnover.
As I said, the PEFO is a Treasury document that provides Treasury with the opportunity to prepare its figures without the interference of the treasurer or the government. The PEFO was estimating that in 2027 28 the net operating balance would be a deficit of $2.209 billion. Now, in this Budget with the Treasurer’s name on it, the 2027 28 forward Estimates is ‘only’ a net operating deficit of $293 million: a magical improvement of over $1.9 billion.
Not only that, in 2028 29, the year after Treasury estimated the net operating balance deficit of $2.209 billion in their PEFO, the Treasurer is estimating that they will achieve a net operating balance surplus of around $5 million. You can see why I’m sceptical. The difference in the budget Estimates being prepared by Treasury and the Treasurer would be laughable, if it was not so serious for Tasmania as a whole and the Tasmanian community. In addition, Tasmania’s economic growth for 2024 25, the year we’ve just completed, had been revised down to 0 per cent. Not slow growth: no growth, zero.
International exports, which the Treasurer celebrates as a cornerstone of Tasmania’s prosperity, declined by 4.4 per cent in 2024-25. The forecast for 2025 26 is just 1 per cent growth, well below our historic average and below the national rate. That’s all in Budget Paper 1. The strongest growing state economy that we once were, has stalled on this government’s watch. Yet, the budget speech devotes barely a paragraph to acknowledging this fundamental shift, before pivoting back to celebrating past achievements and trumpeting the unemployment rate, which is commendable but not the full picture, and blaming everyone else.
In this environment of stalled growth and declining exports, you would expect a reasonable government to examine every available lever to improve the fiscal position. That means looking harder both sides of the ledger, cutting wasteful expenditure – actual cuts, not appropriation tricks – and examining revenue options. You would be wrong, however; this Budget contains no policy changes to increase revenue. None. Not one.
Despite the fact that the Commonwealth Grants Commission assessments of Tasmania’s revenue base suggest that we’re not raising the revenue we should be from our available tax bases, this government has made a political decision that touching revenue is completely off limits. How can we expect the federal government to help, if we’re not helping ourselves? The Treasurer devotes significant time in his budget speech to blaming Canberra for a $673 million health funding shortfall, demanding that the Commonwealth increase its contribution to 45 per cent, as agreed by the National Cabinet. Of course they should and that is a legitimate grievance.
However, when the Commonwealth Grants Commission, the independent umpire of fiscal capacity, indicates through its assessment that Tasmania isn’t fully utilising its revenue raising capacity, the ‘blame Canberra’ strategy becomes a little bit harder to sustain. Are we raising the revenue we should, according to the Commonwealth Grants Commission assessment of our revenue base? If not, complaints about neglect by the Australian Government in Canberra ring hollow.
The growth in own source revenue which underpins the Budget’s optimistic forward estimates projection is highly dependent on presumed, strong growth and returns from Hydro Tasmania and TasNetworks, who have always been quite reliable in providing money to the state, I might add. This dependency is not just problematic; it’s fantasy economics. Consider Hydro Tasmania: I’ve documented extensively the utility’s 96 per cent profit collapse. Is this just one bad year? Maybe. I doubt it. On top of that, we now learn that the fundamental business case that justified massive investments seems to have been turned on its head. As bad as the 2024 25 results were for Hydro Tasmania, it would have been much worse without Basslink operating as an unregulated asset, because the plan is to regulate it.
The dam levels were higher because there were higher imports; Hydro were preserving their water. That’s not a bad decision to make, I’m just saying that’s how it happens, but because Hydro Tasmania had a contractual arrangement with Basslink’s owner, APA, they paid a fee for the return of interregional revenues. That’s how the system works at the moment until it’s regulated: because of the very high imports this year, Hydro Tasmania made money.
They made money from the interregional revenues, but next time when there’s a drought and the rainfall patterns don’t live up to expectations, which is highly likely because the process is on foot now, Basslink will be a regulated asset, and consumers will be footing the bill and Hydro Tasmania won’t be receiving the interregional revenues, so it will be worse off. In addition, just last week Hydro Tasmania’s CEO was speaking at a conference about Marinus Link and told Renew Energy, as reported by Renew Energy, ‘Forget making money off it. It will be there to provide energy security.’
Let that sink in, because the $3.5 billion project Marinus Link project, central to the government’s energy and economic strategy, is now apparently described by the Hydro CEO as not being about making money, when previously this was to be all about making super profits with which Hydro could then offset the large increases in transmission costs for consumers. While there’s an opportunity in a couple of weeks to ask this more fully to see if it was reported somewhat out of context, this comment represents a complete turnaround from what we were told when the project was being sold to Tasmanians, and how the whole of state business case was reliant on these significant returns from Hydro Tasmania.
Then Marinus was going to generate revenues, support dividends, underwrite Tasmania’s fiscal position; now we’re told it’s a drought mitigation strategy, not a revenue raising plan. We should all be concerned about that. If Hydro can’t generate the dividend income the Budget assumes, and if TasNetworks faces similar constraints on its revenue generating capacity, then the revenue projections underpinning the forward Estimates collapse like a house of cards.
The government knows this. Treasury knows this. They’re banking on it not becoming that obvious to the broader public, possibly until sometime later, at which point revised forward Estimates will quietly acknowledge that that mathematical inevitability occurred. The Budget’s expenditure projections assume a reduction in state service employees of around 2800 full time equivalent positions over the forward Estimates through vacancy control and natural attrition.
This is presented as achievable through the hiring freeze announced on 2 March 2025, which restricted recruitment of non-essential positions. I still find it incredible that we’re employing non-essential people. Anyway, anyone with experience in public sector workforce management knows this number is not achievable through attrition alone: not in the timeframes contemplated in the Budget, not without fundamental scaling back of service delivery in ways the government isn’t acknowledging, and not without significant redundancy cost. You just can’t do it in the timeframe they’re suggesting.
Natural attrition in the Tasmanian State Service typically runs around 5 per cent to 7 per cent annually, depending on the agency and age profile of the workforce. Even at the higher end, achieving a reduction of 2800 FTE through attrition alone would require years, not the timeframe in the forward Estimates, and that assumes you can leave every departed position unfilled, which is feasible only if you’re simultaneously cutting service levels something the Budget explicitly claims it isn’t doing.
Getting anywhere near the 2800 FT reductions in the Budget’s timeframe will require compulsory redundancies on a scale not seen in Tasmania for decades. Where’s the funding for the redundancies? It’s not in the Budget. Redundancies cost money, often significant money when you factor in accumulated leaving entitlements, notice periods, redundancy payments themselves. These payments can create havoc and a massive impact on the cash flow statement. You can’t cut 2800 positions through attrition when there’s no funding for redundancies.
Then you when you factor in the significant underfunding of wage increases, the problem becomes even more acute. The Budget assumes wage growth of 2.5 per cent across the forward Estimates. Current wage pressures, inflation dynamics and the outcomes of wage negotiations and other jurisdictions, and in Tasmania, where most of the workers have been offered a 3 per cent increase, which blows the figure right out of the water immediately, suggests this figure is unrealistically low. If actual wage outcomes a 0.5 per cent higher at 3 per cent rather than 2.5 per cent, the gap in expenditure projections widens further and adds up to millions of dollars.
To accommodate higher than budgeted wage outcomes within the expenditure envelope, even more positions would need to go. The real number of FTEs required to hit the expenditure targets could be as high as 3500 to 4000 or more, and still, there’s no funding for redundancies. This is another unfunded liability waiting to explode. The cost of redundancies also includes an increase in the cost of general government unfunded superannuation contributions for redundant employees who commence their defined benefits pensions and there would be a number of those.
If such employees are replaced by other employees in slightly different roles perhaps for whom the government has to set aside contributions every month, as they do for all but the defined benefits employees, then the general government cash flows will be worse rather than show any improvement.
Either the government will fail to achieve the workforce reductions, blowing the expenditure targets and requiring supplementary appropriations, or they’ll have to find hundreds of millions for redundancy costs that aren’t budgeted. This will also blow the expenditure targets and requiring supplementary appropriations, or they’ll have to cut services in a way that haven’t been acknowledged, generating political backlash and likely supplementary appropriations to restore them. There’s no way through this particular thicket that doesn’t end in a supplementary appropriation bill and a revised forward Estimate, admitting the original projections were never realistic.
We dig into the policy and parameters statement, which is one of my first parts of the Budget paper I go to. The detailed breakdown of new initiatives and their funding profiles, you’ll discover further concerns. Some initiatives, the one we will presume will be required as an ongoing cost, some are only funded for two years of a four year forward Estimates period. This creates a risk of program continuity. One example is police worn body cameras. They provide bit of an instructive example. This is a law-and-order initiative. The government will certainly tout us as evidence of being tough on crime and supporting our police. Rightly so, they should support our police. The funding runs for two years then stops halfway through the forward Estimates. Won’t the new recruits come into service need their own body worn cameras? We are going to have to share them. Won’t some in service, currently require replacing? We know that police unfortunately don’t always have simple interactions with people.
What happens in year 3? Does the program end? It would be politically unacceptable not to equip our new police officers with body worn cameras, surely the funding will have to continue, which means one of two things. Either program costs aren’t included in the out years of the forward Estimates, making the Estimates understated, or the funding will magically appear later. I am not making it up. It is all in there.
Either way, the forward Estimates presented as they are, are fiction. They show expenditure restraint that cannot and will not be sustained. When the rubber meets the road of actual service delivery and political reality, we’re going to see a very different picture. The pattern repeats across multiple initiatives with programs announced with fanfare and initial funding, but with ongoing costs carefully excluded from the later years of the forward Estimates to make the fiscal position look more sustainable. It’s a trick as old as budgeting itself but rarely executed with quite this much pizazz across quite so many line items.
The exclusion of additional equity injections that will be required to keep TT Line afloat, no pun intended, and able to meet to meet the going concern requirements of the auditor, are likely to be around $70 million is a case in point. Not there. Yes, they’re looking at their projection or how they can fix their financial position, but it’s pretty clear to everyone, except perhaps a small number in the government, who think this is not going to be needed.
There is no real visibility or even a footnote in Finance-General to indicate that this equity injection of $74.5 million bailout to TT Line, surely an increase of $210 million in support for government businesses would require a footnote and not just look at Budget Paper 1 to find out more, which is exactly what it said. Then you had to go hunting through Budget Paper 1 to find the relevant information about that. But when reading Budget Paper 1, it clearly states: (tbc 11.51)
The review that is being undertaken by TT Line in their longer-term strategy will consider the need for further funding support that might be needed from the government.
This would be as close as a sure thing as you’d find they’ll need further assistance.
Similarly, comparing capital expenditure tables and agency level between the 2024 25 Budget and this 2025 26 Budget reveals numerous projects deferred in the forward Estimates.
Major infrastructure investments that appeared in outer in the out years of last year’s. forward Estimates have quietly been pushed beyond the current planning horizon, and they go to the member for Huon’s horizon situation. That’s where they’ve gone. So yes, that’s why you can’t see them, they’re over the horizon.
It appears most if not all capital expenditure that has been promised but not commenced has been deferred at least by a year. You can easily see that by looking at last year’s budget papers and then looking at this year’s budget papers.
This is very evident CapEx for schools in particular with one- or two-year delays on builds already committed to. If you want to look in the education area, that’s where you’ll see the biggest shifts pushing it out, most of them by one, some of them by two years before commencement.
Others appear to reveal significant cost blowouts, but it’s a bit hard to tell as the estimated total budget costs had gone missing until I discovered they’re all over in Budget Paper 2 in the relevance section there.
I mean, it doesn’t mean they’re not there, it just means you’ve got to know where else to go looking to find them.
Mr President, other capital investment commitments that appeared in last year’s budget paper seemed to have gone missing entirely, albeit quietly, perhaps been canned. These projects allegedly aren’t cancelled; they simply move off the visible books.
When they inevitably return, which I mean the government does bring them back, resuscitate them because the infrastructure needs, they were meant to address actually haven’t disappeared, they’ll come with a construction cost escalations. As we know, Mr President, delaying capital projects during an inflationary period always increases their ultimate cost, renewed borrowing requirements and the same fiscal pressures we face today, probably worse.
The government calls this ‘reprofiling’ infrastructure to align with delivery capacity. The budget papers are more honest about the motivation and say it’s to reduce short term debt pressures. At least the budget papers are honest about that.
In plain English, we’re cutting and deferring capital works because we can’t afford them. But according to the Treasurer, we can absolutely afford the $1.3 billion stadium with a cost benefit ratio of 0.5 if we’re optimistic.
I’m not saying this is about the Budget, not about the stadium. That’s the arguments being put.
This creates a false economy in multiple ways.
(1) Tasmania needs productive infrastructure investment to drive economic growth, particularly in a period of weak private sector investment. Cutting public capital works when private investment is flat puts even more downward pressure on economic activity.
(2) Deferring infrastructure doesn’t eliminate need for them, it just defers the cost, typically returning at a higher cost. A bridge that needs replacing in 2027 doesn’t stop deteriorating just because you’ve pushed the project to 2030. By the time you get to it, the scope may have expanded, the cost will have escalated and the economic disruption from the delayed work could be greater.
(3) Most fundamentally, cutting
(4) Most fundamentally, cutting infrastructure investment to manage debt in the short term compromises our ability to generate the economic growth needed to sustainably service the debt over the longer term. It’s like eating the corn seeds to avoid hunger today, while ensuring famine tomorrow.
The government’s own 2021 Fiscal Sustainability Report required by the Charter of Budget Responsibility Act states clearly and unambiguously:
incurring debt to fund recurrent expenditure is not considered beneficial, or sustainable in the long-term. Servicing this type of debt can negatively impact the broader economy as it diverts revenue to a non-productive use. (TBC)
This isn’t my opinion and it’s not a political attack. This is what appears in the Treasury documents. This is the government’s own policy framework for sound fiscal management, put on the public record less than six months ago by Treasury, free from the interference from the Treasurer of the day. Yet, the fiscal balance which counts both operating and capital spending shows a deficit of $1.35 billion in 2025. When you strip out the Commonwealth capital grants for specific infrastructure projects like the Bridgewater Bridge, Macquarie Point and road projects, the underlying net operating balance shows a deficit of $1.4 billion.
Tasmania is borrowing not only to build infrastructure for future generations, but to pay for today’s public sector wages, today’s health systems operations, today’s education costs – the ‘groceries’, in other words. By the government’s own analysis, published in its own fiscal sustainability report, this is unsustainable and economically harmful. The government’s fiscal sustainability report says borrowing for the recurrent expenditure is not beneficial or sustainable, but then the government borrows $1.4 billion for recurrent expenditure. Apparently, those policy frameworks may be for other people. Borrowing for infrastructure builds the future. Borrowing to pay today’s bills mortgages it. Tasmania’s doing both in accelerating amounts and calling it a plan.
Here’s perhaps the cruellest irony in this entire fiscal mess: this government will now be forced to make the hard decisions they’ve deferred for a decade and they will have to make them during a period of broader economic weakness, which makes every choice harder and every outcome worse. With zero growth in 2024-25, and below-trend growth forecast in 2025 26 and 2026 27, any significant cuts to government expenditure will exacerbate the economic slowdown. Government spending through public sector wages, infrastructure investment and service delivery is one of the few things currently holding the Tasmanian economy up. Cut it sharply and you risk turning slow growth into stagnation or recession.
The government has comprehensively stuffed up, by delaying fiscal adjustment for so long. They could have made gradual, managed reforms when the economy was growing strongly in 2016 to 2019, they were in power then. They had the opportunity when they were in government to do that. The responsibility is theirs, are not someone else’s. They could have used the post-COVID bounce in 2021-2022 to implement structural changes. Instead, they continue to spend aggressively, hire extensively and defer every hard decision. The government can’t continue to blame COVID for this challenge, and I fully acknowledge the budgetary challenge that period presented. I also know the state actually spent within the appropriated budget over those relevant years, there were high overspends, but nothing like we’re seeing now.
Why I say the government should stop blaming everyone but themselves, is that the problems were also clearly evident before COVID, not just since. The warnings were issued. I will go back to the 2019 Fiscal Sustainability Report. This report was required under the Charter of Budget Responsibility Act, prepared by Treasury, not the Treasurer. This is prepared every five years and this was an additional one, because the Public Accounts Committee had a look at the 2016 Fiscal Sustainability Report and identified an error in it, so Treasury redid it in 2019. It’s an extra one, out of cycle. That’s why there was one in that year.
In that 2019 report there was a warning in the conclusion to the executive summary. I will read from the 2019 Fiscal Sustainability Report from Treasury:
Therefore, efforts should continue to be made to identify and achieve efficiencies in the provision of health and other government services. This should include consideration of existing expenditures in the context of accessing whether programs have been effective in achieving their intended objectives, intended program outcomes are still required by the Tasmanian community and if so, what the current priority of these outcomes are relative to other health and non-health related programs, and there are efficiencies available in the delivery of current programs. However, the underlying drivers of growth in health expenditure are likely to continue. This will make it increasingly challenging to maintain fiscal sustainability in the future with expenditure constraint alone. It is recognised that constraining expenditure will present challenges and difficult choices. In addition, maintaining long-term fiscal sustainability for Tasmania and other Australian jurisdictions will require not just ongoing management of expenditure but also consideration of sources of revenue. In particular, long-term fiscal sustainability will require growth in expenditure to be matched with the sources of revenue that grow at the same rate. The rates of revenue growth required to maintain long-term fiscal sustainability are unlikely to be delivered through the expected growth in current revenue sources or major changes to existing taxation arrangements. While noting the challenges involved, it is likely that reform of the existing taxation system will be required, identifying new sources of revenue. (TBC)
That’s from that report, Mr President.
We’ve not had a change of government since 2014. This report was in 2019. This was the responsibility of the government and the work of the current government to ignore that and not react or respond, despite Treasury doing everything they could to warn them. The Premier has been there the whole time. He’s overseen all of these decisions as a member of Cabinet. The Treasurer is a relative newcomer in this picture but now must work with the Premier and the rest of Cabinet and stop blaming everyone else but themselves.
The reality is now that the government has run out of road, ignoring all the warnings at precisely the wrong time in the economic cycle. Any cuts made now will hurt more because they’re cutting into an economy that’s already weak and achieve less because the economic multiplier effects work in reverse when you’re contracting government spending during a downturn. The fiscal adjustment will be both painful and less effective because it’s happening at the bottom of the cycle rather than at the top when they had the opportunity to do so. This is textbook bad fiscal management – stimulating when you should be consolidating and then being forced to consolidate when you should be supporting the economy because of a failure to act.
Delaying fiscal reform until the economy slows is like trying to fix a roof during a cyclone. It’ll cost more, hurt more and work less. The government’s had 11 years to do this when conditions were favourable. Not all of the conditions up until COVID were favourable. Now they’ll have to do it when conditions are far less favourable and every option is worse than it needs to be. Meanwhile, we’re told the government’s Multi-Partisan Budget Consultation Panel is developing a new fiscal strategy behind closed doors with no public oversight or vision.
This panel – established with much fanfare as evidence of the government’s commitment to collaboration and transparency – is supposedly bringing crossbench members into the tent to develop long-term fiscal reform. But here’s the catch, and a significant one that should concern any crossbench member considering genuine participation: unlike deliberations in parliamentary committees, the Budget Consultation Panel operates without parliamentary power, privilege or protection. Everything said in those meetings can potentially be used against participants later. If the panel recommends tough measures that prove politically unpopular or economically damaging, crossbenchers who participate run the risk of being blamed for supporting policies that were doomed from the start. They’ll be complicit in the government’s fiscal choices without gaining any actual power to implement alternative approaches. It’s a political trap and it’s not genuine partnership and when there is no public oversight of this at all, it’s the (Treasurer’s? 12.05.24) word against theirs.
The government can claim it consulted broadly, involved the crossbenchers in developing recommendations, then cherry picked which recommendations to implement, while leaving crossbenchers exposed to political fallout when things go badly. They have no way to defend themselves because it’s all behind closed doors. The fiscal strategy remains formally unchanged in this budget. Sorry, I have to move back to our budget now. This current fiscal strategy remains pretty much unchanged. There are a few minor changes to it, but there are no credible means to achieve the stated targets. ‘Peak debt’, keeps receding into the distance like a mirage in the desert. I did like, what was the word you used?
Mr Harriss – Jindalee.
Ms FORREST – Jindalee, that’s right. Surplus keeps being promised for the year after next. Every year an endless cycle of deferred outcomes. The targets themselves don’t change, only the timeline for missing them extends indefinitely. A new fiscal strategy and we’ll have to wait to see what that is apparently in the next May budget, will be developed through this process with the cross benches, may normally change the targets, it may change the whole strategy. There’s nothing particularly wrong with the strategies. It’s the fact that we’re not getting anywhere near achieving them that’s a problem. Perhaps they’ll make the targets more realistic by lowering their ambition or extending timeframes, but without genuine structural reform it’ll be no more achievable than the current one. Different numbers, same trajectory, inevitable failure.
Meanwhile, fiscal strategy 11 – the public sector efficiency, productivity and financial transparency – will be improved in the preliminary outcome result which is insulting. We don’t have the actuals through this Budget but no it’s the strategic actions as continuation of savings measures from previous budgets and responding to review and inquiry recommendations and the establishment of the efficiency and productivity unit.
I think the member for Huon also mentioned this. The target for this is a review will be taken in 2032-33, to assess the impact of the action taken. Well, could be a bit late by then. That is eight years away and we will be long gone over the fiscal cliff without real and meaningful actions. Not such insulting motherhood statements which insult mothers. The reality is both major credit ratings Moody’s and Standard and Poors, have downgraded, as I’ve mentioned earlier, Tasmania’s outlook in 2024-25 from stable to negative this year.
This is not a minor technical adjustment. This is not political commentary. This is the independent financial analysts concluding that Tasmania’s fiscal trajectory presents increased risk. When both credit agencies put you on negative watch, which is what happened during the year, that’s not a political opinion, it’s a financial fire alarm. The government’s been hitting the snooze button while the smoke fills the room.
The credit riding agencies look at the same budget papers available to all of us and other financial reports. They see the structural deficits, the accumulating debt, the optimistic assumptions of workforce reductions and revenue growth and appropriation tricks disguised as savings. They see all of it and they reach a conclusion. Tasmania physical position is deteriorating and there’s no credible plan to reverse it. There is no credible plan here to reverse that in these budget papers.
The government’s own fiscal strategy sets a target of maintaining Aa(2) AA+ credit rating with a stable outlook by 2032 33. We’re not progressing toward that target. We’re moving rapidly in the opposite direction. As I said, the outlook is now negative. A negative outlook is typically a precursor to a natural downgrade in our rating, which is exactly what happened. We’re going backwards while the government claims we’re going forwards. A credit rating downgrade has had and will have, if there’s future ones, real and immediate and cascading consequences. It means higher borrowing costs. Every new bond issue, every refinancing of existing debt will cost more.
High borrowing costs mean that more of every budget dollar must go to servicing debt rather than delivering services, which means deeper cuts or bigger deficits; which means more borrowings but even higher rates. This is how the fiscal death spiral begins.
The government can spin the Budget however it likes in press releases and media appearances; credit rating agents aren’t impressed by rhetoric. They look at the cash flows, the debt trajectory, the revenue assumptions, the expenditure discipline, or lack thereof. When they see risk, they say so. And right now, they’re seeing plenty of risk.
The Treasurer says Tasmania’s future is bright. Both credit rating agencies just turned the lights to amber, and as I said, one of them is looking at the wrong dashboard.
We are headed into a fiscal chasm. How close to the point of no return, the event horizon, the boundary that surrounds a black hole beyond which nothing, not even light, can escape are we? The real question for the Treasurer is, are we nearing the budget event horizon or have we already crossed it?
We’re at zero economic growth with $1.4 billion underlying profit deficit doubling to $10 billion in the general government sector and heading toward $20 billion overall; credit rating on negative watch or will downgrade to negative during that period; infrastructure being cut to manage debt pressures; and the government proposes to commit $609 million in equity funding to the Macquarie Point Development Corporation.
The Treasurer devotes more of his time in the budget speech to spruiking the stadium and explaining how we’re going to achieve the workforce reduction the budget assumes. He waxes lyrical about economic benefits during construction, $269 million over five years, and ongoing operational benefits – $30 million annually. These are projections based on modelling, on assumptions. They’re not certainties.
What’s conspicuously missing from the budget speech and the budget papers is any discussion of the stadium’s ongoing operational costs. The opportunity costs of tying up $609 million in equity when the state is borrowing for operating expenses, or the risks if projected revenues don’t materialise. Experts around the world have many research papers that show that stadium economics are notoriously optimistic in the ex-ante projections and disappointing in the ex-post reality. Cities and states around the world have discovered this the hard way. The evidence clearly shows new stadiums rarely generate the transformational economic benefits their proponents promise. They frequently require ongoing operational subsidies long after ribbon cutting ceremonies frayed from the memory.
Tasmania will definitely benefit from an AFL team and new stadium. I’m not suggesting otherwise. Is it this stadium or another one? I don’t know.
The social and cultural value of major sporting facilities shouldn’t be dismissed, but committing over $600 million when you’re borrowing to pay for nurses’ salaries while cutting productive infrastructure elsewhere when you’re heading toward unprecedented debt levels and both credit rating agencies have put us on negative watch, downgraded us to negative, is not prudent financial management.
It’s more like a Hail Mary pass from a government that’s run out of options and is hoping the stadium will somehow generate the economic growth they’ve failed to achieve through actual economic policy. You can have both, but you can’t ignore one. When you’re maxing out the credit card to pay for the groceries, buying a boat is not a prudent financial management decision, even if you really want to go fishing.
Strip away the rhetoric, ignore the spin, and look what the Budget actually does rather than what it says. If I’m doing the same calculation as anyone else, this is just in relation to that, and from what I’m aware nothing has been included in the budget Estimates themselves that reflects an actual reduction.
As I said before, the major savings that they have put in haven’t been allocated to employee costs at all. I go back to that point, the appropriation is an authority to spend money, it’s not actual money and changing the numbers on the Treasurer’s Reserve do nothing. Nothing, except make it more like we’re going need a big supplementary appropriation bill.
The pattern is clear. The government will find $609 million for the stadium, some from the federal government and some from the AFL – not much, I might add. However, it hasn’t found funding for redundancies that would be required to meet the revised fiscal strategy 10, that includes the NFTE target that implies a reduction of about 2800 jobs. That’s what the Budget assumes. They haven’t found funding for redundancies to cover any of that.
They will maintain funding for marketing and communications, despite claiming to reduce it, and reduce the Treasurer’s Reserve by 60 per cent: a mere illusion. They defer productive infrastructure which would support economic growth, but they will commit to a discretionary sports facility. They will borrow to fund for operating deficits, but they will rule out examination of revenue options. These are choices; they reflect priorities. The government has every right to determine its own priorities, and the parliament needs to decide if they agree with those priorities: that’s in all matters covered in the Budget.
The priorities revealed in this budget are fundamentally and unfortunately at odds with what sound fiscal management requires. The interim Budget is government speak for, ‘We will make the hard decisions later.’ Later has actually arrived; you can’t keep kicking the can any further down the road. The debt is accumulating, the structural deficit is widening, and the government’s response is to present a budget with appropriation tricks, unallocated savings, optimistic assumptions, and deferred decisions and expenditure. The trajectory from here is depressingly predictable, because we’ve seen this pattern repeated multiple times over the past decade.
This is my prediction: within three to six months we will see supplementary appropriations to cover the cost pressures that the reduced Treasurer’s Reserve and unallocated efficiency measures were never going to accommodate. Agencies will have spent beyond their appropriations, ministers will have made necessary funding commitments and a supplementary appropriation bill will be brought to the parliament to restore much of what was notionally saved. Last year’s supplementary appropriation dollars from memory was about $450 million: no small number.
Within a year, the 2026 27 Budget will present revised forward Estimates that push peak debt out another year, and revise the timeline for returning to surplus. The Revised Estimates Report may provide some other enlightenment on that in February. The actual 2025 26 outcome will show a large deficit than budgeted, workforce reduction smaller than targeted, capital expenditure underspend, confirming infrastructure cuts, or overspend, confirming that lack of expenditure discipline.
Within two years, either the economic assumptions will fail, evidenced by growth undershoots, revenue disappointments and/or exports decline, or the savings won’t materialise, evidenced by workforce reductions that prove unachievable, efficiency measures that deliver less than projected or cost more than expected, or face a genuine crisis that makes today’s problems look manageable by comparison.
The Treasurer might hope that Tasmanians won’t notice the accumulating evidence that none of this adds up. The credit rating agencies notice; financial markets notice. Every six months, when new data comes out showing the actual trajectory diverging from the budgeted one, the gap between the rhetoric and reality becomes more obvious. You can’t spin zero economic growth into prosperity, and you can’t suggest symbolic savings create a way out of a $1.4 billion structural deficit. Eventually maths wins. The numbers always win.
The only question is how much damage gets done while we pretend otherwise? Some of these so-called savings measures, such as the three new measures, office and leasing improvements, procurement process enhancements, expenditure improvements, also relate to matters raised by the Tasmanian Audit Office through some of their excellent performance audits. These are some of the savings measures that they talk about in the budget papers.
One report that doesn’t seem to have been picked up is one of the audit office’s reports, the new savings measures relating to the Department of Health’s administration of funding to community service organisations, which the Auditor-General referred to as ‘ineffective’. The Auditor-General stated from his report when he tabled it that:[tbc]
Health management of funding arrangements was fundamentally flawed. Health had not established effective frameworks, arrangements or monitoring activities.
He went on to say that he assessed how well Health administered funding to community service organisations, noting these organisations are critical to the Tasmanian health system and they rely on government funding.
He also said:[tbc]
The Department of Health had known about the issues with the funding administration for a long time. Recommendations to fix community service organisation funding were made to either Health or the state government as a whole in 2009, 2016 and 2021.
And here’s a performance audit tabled this year that told us it hasn’t been addressed. Health’s failing approach to grants management and quality and safety was identified by management back in 2019. Systemic issues with procurement and contract management were known since at least early 2024, yet these issues have not been fixed. Maybe they’re working on it now since the Auditor-General did his most recent report. It doesn’t get much more damning than that, so I expect nothing less than to see these recommendations adopted, and I challenge the notion these are new savings measures.
Improvements such as these, along with other recommendations made by the audit office across a range of areas, need to be done regardless, and should be done when they’re recommended and not considered new ideas or new savings measures. If they save money, good. They should. That’s the audit office’s job, to point out where there are inefficiencies. These are desperate claims by an inept government that they are doing something, the savings measures I mentioned, but these actions are a government following sensible recommendations made by the Auditor-General following a governance and government failure.
Tasmania doesn’t need an interim Budget with symbolic and sham savings, appropriation shell games with partially funded initiatives designed to look fiscally responsible until the next election or whenever we see the next budget appear that maybe does something. We don’t need a budget that focuses on general government debt while ignoring the full $20 billion picture. We don’t need optimistic assumptions about workforce reductions with no funding for redundancies, or revenue projections dependent on government businesses that can’t deliver returns, or infrastructure cuts disguised as reprofiling.
We need honest numbers that acknowledge the true scale of the challenge. We need structural reform that addresses the root causes of unsustainable spending growth, not symbolic efficiency measures and hiring freezes. We need a comprehensive revenue review that examines whether we’re raising what we should from our revenue base, not a political taboo on any discussion around our revenues. We need a realistic workforce strategy that either funds redundancies or acknowledges services reduction, not fairytale assumptions about attrition.
Most fundamentally, we need a government willing to level with Tasmanians about the choices ahead and the trade-offs required, not a political document designed to get you through the next six months without difficult decisions. This Budget delivers none of that. It’s political theatre performed with public money, a carefully constructed illusion of fiscal responsibility that collapses under even moderate scrutiny. The Treasurer promises peak debt in 2028 29, when his own cashflow statement shows net borrowings of $734 million that year.
He promises surpluses while relying on unallocated savings that won’t materialise and reduced reserves that won’t cover actual needs. He promises reform when delivering an interim Budget, defers every hard choice to some future date when presumably political conditions will be more favourable, or perhaps it’s no longer his problem. When the reckoning comes, and it will, because maths is not subject to political spin, we should not forget that we were warned.
I and others have been warning of this for years now, and I really appreciate the contribution of other members who clearly have their head around this fact that we have real problems. The numbers are there in the budget papers in black and white. Anyone willing to read past the press statement and dig into the tables will see that. The credit rating agencies are explicit in their concerns: the pattern of supplementary appropriations, blown forecasts, and deferred reforms are clearly established over a decade of fiscal management – or mismanagement.
The question is whether anyone in government is willing to do something about it before it’s too late, and based on this budget, the answer appears to be no. Tasmania deserves better than the government that treats the state budget as a political document to be managed through the election cycle, rather than a fiscal plan to secure an economic future. We deserve better than accounting illusions disguised as reform. We deserve better than spin that contradicts the numbers on the very same pages.
The government can keep claiming the future is bright, but when both credit agencies have turned the lights to amber and debt is heading toward $20 billion and we’re borrowing for operating expenses, the government’s own policy says it’s unsustainable. When government economic growth reveals a decade of the strongest growing economy, that rhetoric has hit a brick wall. Brightness is not the word that comes to mind.
To conclude, for years I’ve documented the warning signs across every corner of Tasmania’s public finances. This year we see Hydro Tasmania’s 99 per cent profit collapse, TasNetworks achieving just one of its six performance targets with net profit falling 75 per cent short, TT Line solvency concerns with $894 million in debt, and a complete failure of governments and oversight by government with vessels sitting idle and government bailouts required, just to name a few. These aren’t isolated failures, they’re symptoms of the same disease. A decade of deferred decisions, political cowardice masquerading as fiscal management, and systemic refusal to face hard truths until avoiding them becomes impossible.
Now the bills arrived and it’s coming to a precisely the wrong moment, when economic growth is stalled to zero, when climate change is fundamentally changing business models we took for granted and with every option becoming harder and every outcome worse because of what is too long, despite warnings issued by Treasury since 2016.
The credit rating agencies aren’t fooled by accounting tricks. They see what I see. A government counting on Hydro dividends that have evaporated, TasNetworks returns that have collapsed and revenue projections built on a foundation of sand. They see debt heading toward $2 billion, while the Treasurer points to half the picture and calls it peak debt. They see symbolic savings, vanishing reserves and unfunded workforce redundancies. They are warning us we’re heading possibly toward another downgrade that will make every problem more expensive and every solution more painful.
I am almost certain we’ll see supplementary appropriation within months and that will then give us the true picture of how much this was underfunded. On Health, for example, from memory $48 million less than what is being budgeted and what was spent last year. You can’t claim we continue to increase health spending if that’s the reality, unless you’re going to cut some services? Tell us.
Tasmania doesn’t just need better budgeting; we need structural transformation. We need honest assessment of whether our central business models can survive in a climate change world. I particularly focus on those because we have important government businesses who rely on the weather and climate. The climate’s changed and we don’t didn’t see any mention of that.
We need comprehensive review that the Commonwealth Grants Commission says we’re not raising what we should. We need workforce strategies that either fund redundancies or acknowledged service cuts, not fairy tale stories about attrition. We need infrastructure investment decision based on economic merit, not political symbolism or bullying demands.
Most fundamentally, we need a government willing to tell Tasmanians the truth. That decades of the strongest growing economy rhetoric have hit a brick wall, and that money from our government businesses dried up just when we need it most. That we’re borrowing to pay for today’s groceries in ways the government’s own policy framework says is unsustainable, and that every month we pretend otherwise makes eventual reckoning more catastrophic.
The Budget and Accounting and Oversight Committee Bill that I championed would have provided transparent, continuous scrutiny that Tasmania desperately needs. This House rejected it with the exception of the members for Launceston and Elwick. The multi-partisan budget consultation panel operates behind closed doors with no parliamentary privilege or public accountability. The patterns that got us here, the supplementary appropriations, the blown forecasts, the optimistic assumptions, the deferred reforms continue unabated.
Let me be absolutely clear about what’s coming. Within months, the savings of this budget will prove illusory and the supplementary appropriations will follow. Within a year, peak debt will have receded further into the distance. Within two years, we’ll face a fiscal crisis that makes the $1.4 billion today look manageable. We risk another credit downgrade. Borrowing costs will rise. Net service cuts will possibly deepen. The economic pain will spread.
When Tasmania is asked how we got there, the answer will be simple: we had the numbers, we had the warnings, we had the choice to act, and the government chose spin over substance, symbolism over structure, and political survival over Tasmania’s future. The event horizon the point of no return may already be behind us, but whether we’ve crossed it or are merely approaching it, one thing is certain: hitting the snooze button while the building burns is not a strategy, it’s a betrayal.
I made the comment in my reply to the budget in May this year when I stated that I’ve always held the view that a government has a right and duty to bring down a budget to deliver for Tasmanian services, infrastructure and a vision for the future. I reiterate my position that in the absence of illegal borrowings or gross malfeasance, I’ve always held that it is up to the government to provide services, infrastructure and a vision for the future even if I would prefer to see other priorities at the margins.
I’ve sought to scrutinise the Budget and hold the government the day to account, including through my work on the Public Accounts Committee, to ensure we know how public money is being spent, on what, and for what outcome., I sought to establish the budget accountability and oversight committee, because there is an absolute need for this sort of oversight.
This is the second time in my 20-plus years here, within a matter of months, where I’ve had to ask myself, again: can I, in all good conscience, support this budget? The budget that defers the reckoning, that comprehensively fails to provide an honest assessment of the fiscal situation we are in.
It doesn’t include additional equity TT-Line is inevitably going to need in the out-years, unless other drastic action occurs, such as seeing the new vessels to lease them back. That may be the plan they come back with, I don’t know. Either that, or significant amounts of millions of dollars every year being put into it from the state government, which means more borrowings to deliver operational services the things that every Tasmanian relies on.
This Budget doesn’t seriously contemplate the reduction in the big returns we have become reliant on from our own revenues, from a number of previously well-performing government businesses which have had a serious impact this year and likely next year and beyond when dividends from their poor performance this year flow through. That’s not necessarily their fault; there’s good reasons why some of that’s occurred. However, we can’t rely on it, especially in businesses whose operations and profitability are subject to the very real impacts of climate change and weather conditions in ways that seem to have not been fully factored in. Add to this the delayed and reduced or canned infrastructure spending that many communities have fought hard to find the support of the government for, right around the state, and the inevitable need to top up health for the budget.
The budget operating expense is $48 million less this year than what was actually spent in the 2024-25 financial year. This Budget delays the repair and it denies the depth of the challenge. It is a government with its head in the sand and/or lacking the financial literacy or wherewithal to face reality.
Those comments I made about whether or not to support the budget were related to that last budget, but the same situation applies now only, it’s worse. This is not a better budget. All the tricks and pushing out of expenditure, that’s what makes it look better. It’s not better.
Ms O’Connor – That’s right, it’s so obvious.
Ms Webb – Exactly, empty forward Estimates.
Ms FORREST – Yes. They are just more misleading tricks and delays to expenditure spending to make it look better. The cynic in me would say that it’s all been done and pushed up ‘push, push push, let’s just take a few million off the Treasurer’s Reserve,’ those sorts of tricks to make the budget look less bad ahead of a crucial vote in a couple of weeks.
The first step in any recovery is to stem the bleeding. I don’t believe this Budget will do this for the reasons I’ve stated. There are risks everywhere, from budget efficiency measures that won’t work and reprofiling infrastructure which exacerbates rather than solves problems, to pretending that Health won’t require supplementary appropriation and pretending that the $75 million equity injection with the $25 million capital, is all that TT Line will need, when the boats are still at least a year off in terms of getting into service, there are risks everywhere. You won’t be able to stem the bleeding and keep the patient alive unless you raise more revenue.
Looking further ahead, the government was banking on Marinus to provide an extra boost of $400 million per annum, but now it seems that the focus may be more energy security than making money. When the place is burning to the ground, I don’t believe we in this House should be doing nothing, suggesting is the role of the executive and we shouldn’t be upsetting the sacred system, the very system that allowed this mess to occur. We can accept Public Accounts Committee positions, but only as pathologists and coroners, but I don’t accept that if I agree to be pathologist or a coroner, that precludes me from actually trying to douse the flames.
It’s only when the patient is stable and we can look at debt reduction or at least a reduction in the life-threatening debt servicing costs, the way I see it and possibly the only way this will occur, is when the federal government takes over some of the state’s debt. They already own $56 billion worth of states’ debts via the Reserve Bank of Australia – that’s the bank we all own – including $1 billion of TASCORP bonds. When the time comes to pay interest on those bonds, states will negotiate a deal with the federal government seeking interest relief or even forgiveness. This can extend to when the bonds mature and need to be redeemed. It’s just like the state’s housing debt that was forgiven a few years ago and members may remember that, and so too will state debts. It’s the only way out of the fiscal mire the states are actually facing.
But first, we need to stabilise the patient. That’s a job for all of us, not just the executive branch. Quite frankly, I think the task is beyond the current executive from what we’ve seen here. Nothing in this Budget gives me confidence. Tasmania deserves leaders who will face these challenges with the honesty and courage that they demand. Until we get them, I’ll be sounding the alarm, documenting the evidence and demanding accountability that Tasmanians here have every right to expect from those entrusted with their future. Mr President, the lights are flashing red, the smoke is filling the room and there’s no one else coming to put out the fire.