Legislative Council, Thursday 19 March 2026
Ms FORREST (Murchison) – Mr President, I welcome the opportunity to respond to the Premier’s Address, and I do so with a measure of genuine goodwill towards the aspirations he has expressed for our island home. Tasmania is indeed a remarkable place. The people of Murchison, my electorate, and the Tasmanians across the state deserve no less than passionate and ambitious leadership, but they also deserve honesty.
On the question of honesty, fiscal honesty in particular, that I must respectfully and firmly part ways with the Premier today. The Premier spoke of excitement. He spoke of opportunity. He spoke of the state entering a new era. He spoke of building a strong economy and a caring community. He catalogued an impressive list of major projects, the stadium, the Antarctic Gateway, Marinus Link, TT-Line’s new vessels, Launceston’s Convention Centre, and the Wilkinsons Point redevelopment.
It was, in many ways, an inspiring vision, but what I was struck by was what was missing. Not a single word about the 2026 fiscal sustainability report released by the Premier’s own Treasury less than two weeks before his address. Not a single acknowledgement of what the report actually says. Not a clear-eyed reckoning with a fiscal inheritance that all of these projects, however noteworthy, must be built on.
You cannot build a strong economy on a foundation of denial, and his denial, careful, optimistic, politically calculated denial, continues to divine this government’s approach to our state’s finances. Today, I intend to do what the Premier’s Address did not, to tell Tasmania the truth about where we stand financially, to acknowledge the structural causes of the of that position, to apply a reality check to each of the Premier’s new commitments, and critically to offer a constructive path forward.
This is not simply a speech of opposition. I’m not in the opposition. It is the speech of accountability and ultimately it is speech of hope because I genuinely believe this state can work through these challenges if we have the courage to confront them honestly.
Let me begin with the Fiscal Sustainability Report (FSR), released 27 February 2026. This is a document prepared by Treasury, not by the Treasurer, not by me, not by the opposition, not by any political party. There’s a report that is required by law every five years under the Charter of Budget Responsibility Act 2007.
The Treasurer’s media release described the report as evidence that the economy and Budget is manageable. He spoke of a glide path to sustainability; he said a number of findings were already underway.
Whilst I will have other points to make about this report – including what I see, perhaps at a later time, some of its failings – I invite members to compare the Treasurer’s characterisation with what the report actually says.
The first thing: Tasmania’s public finances are projected to rapidly deteriorate. That’s what it said. Treasury’s own words, not mine. The report confirms Tasmania’s financial position is unsustainable, and that if unaddressed the budget’s structural problems will rapidly deteriorate.
Secondly, doing nothing is not a responsible option. Without action, the annual growth in debt-servicing costs is projected to exceed the growth in state revenue within 10 years. Beyond that point, budget repair would be – again, in Treasury’s words – exceedingly difficult.
Third, immediate action is required. Treasury does not say ‘a glide path will emerge’; it says ‘immediate and sustained action is needed’.
Fourth, is what it says about the numbers if we do nothing. In the absence of corrective action, the GFS net debt for the general government sector alone would grow from $4 billion in 2024-25 to $129.5 billion by 2039-40. Add government business sector debt – and I will return at length to the GBE’s a bit later – the total non-financial public sector net debt is projected to reach $146.3 billion. Let that sink in. People can’t contemplate that amount of money.
The next finding was that growing the economy will not fix this. We cannot grow our way out of this. This is critical because it’s precisely the argument the government has deployed consistently. However, Treasury’s own report is unambiguous in this: government revenues correlate poorly with economic growth, and Tasmania’s major revenue sources, the GST and Commonwealth grants, are largely outside of the state’s control. I’ll come to that a bit more later.
The report is equally explicit that improvements to productivity, while beneficial, are not sufficient on their own, and will take time to have an have an effect. The repair task needs greater and more urgent action. The figures I’ve given assume no action is taken, and every government says, ‘Well, of course we’re going to take action’, but they’ve said that with the other fiscal sustainability reports, too, and look where we are.
Treasury has modelled what is required to reach ‘peak debt’, the point where we stop borrowing to fund operations, under five-, ten- and fifteen-year scenarios. To reach peak debt within five years requires a cumulative correction to the budget of $3.3 billion – that’s a ‘correction’ of $3 billion – with general government debt capped at $7.6 billion and debt-servicing costs rising to around $600 million per year. That’s the task if we’re doing it in five years.
To achieve it within 10 years requires a cumulative correction of $6.5 billion, with debt reaching $12.1 billion. Delay it to 15 years, and the correction required is $11.3 billion, equivalent to 43 per cent of projected expenditure on government services, and the debt reaches $16.1 billion.
The message is stark. Every year of inaction makes the eventual reckoning larger and more damaging to service delivery. Treasury is explicit that all of these scenarios require a mix of reduced operating expenditure, lower capital expenditure, and I note this carefully, increased state taxation revenue. I will come back to that.
This is Treasury’s call as part of the solution, and to rule out any consideration that disrespects the work Treasury has done I repeat: Treasury’s own fiscal sustainability report says that budget-repair is best achieved through a mix of all three: Less spending on operations; less spending on capital expenditure; and more revenue.
It is the first time Treasury have been quite so direct in recommending revenue measures, and it deserves to be clearly heard in this whole place, not just this House, both Houses.
These figures are not abstract modelling. They describe the real-world scale of the choices before us. A five‑year repair path requires savings of around $2 billion in the first year alone. Not over a decade, not spread across election cycles, but immediately. That’s $2 billion immediately. Every 10‑year scenario also requires around $800 million every year in sustained correction. These are not the kind of adjustments that can be achieved through vacancy control, travel bans, or trimming agency budgets at the margins – efficiency dividends. They represent a fundamental reshaping of what government does and how it does it. The longer we delay, the more brutal the eventual adjustment becomes.
Perhaps most importantly, the report warns that Tasmania has a four‑year window to act decisively before the trajectory of debt servicing costs becomes self-sustaining and the problem moves beyond the reach of any reasonable policy measure. We are not yet in that situation of crisis, but we are fast approaching a point of no return. People say I’ve catastrophised about this in the past, but here we are.
It would be wrong to suggest that this report caught anyone by surprise. The 2026 fiscal sustainability report is the latest in a long line of warnings that have gone consistently unheeded. I’ve often felt like a lone voice in the wilderness over the last 10 years when speaking about these risks on budget replies and replies to the ‘state of the state,’ as well as many other debates and opinion pieces and many opportunities I’ve taken. Are we now ready to listen? More importantly, are we ready to act?
When I spoke on the 2016 fiscal sustainability report, particularly about the report that the Public Accounts Committee tabled, I noted that the report warned of the risks to sustainability. There was an additional out-of-sequence 2019 fiscal sustainability report, which was done early because when the Public Accounts Committee scrutinised the 2016 report they found some errors. Treasury addressed those and put out a new 2021 fiscal sustainability report. It was only two years after the 2019 fiscal sustainability report, but the 2021 report went further. It explicitly stated that maintaining fiscal sustainability would require consideration of sources of revenue. So, in 2021 we were told this, quite clearly, if members who were here then remember or who have gone back and looked at it will know. The 2021 fiscal sustainability report warned us that if net debt was not addressed, it would grow to $20.4 billion by 2034‑35. That was the worst‑case scenario, and here we are, looking worse than that.
I remember quite clearly being told by the then treasurer and others in the government at the time that, ‘We won’t get to that worst‑case scenario; that’s just fanciful. That presumes no action will be taken to correct the trajectory.’ And similar comments to that – ‘Of course, we won’t let it get to that.’ Well, not only did the government do nothing to correct the trajectory, this government’s own policy decisions have seen the situation deteriorate beyond the worst‑case scenario. To be clear, we are now tracking worse than the worst-case scenario from the 2021 report. So, it should be no surprise to people because nothing’s been done and government policy decisions have made the situation worse. It’s not parameter changes, things outside our control ‑ in fact, some of those have actually helped a bit – it’s government policy decisions.
In 2024 our own economist, Saul Eslake, completed his independent review of the Tasmanian state finances. His review was equally clear: net debt rising to over $16 billion by the end of 2034‑35, interest payments tripling from $250 million to $730 million, and almost certain credit rating downgrades if the trajectory was not corrected. Some may call him a prophet. He isn’t one; he just saw exactly what the numbers were telling him. He tried to warn the state; I tried to warn, as did others, but no, no action has been taken. Mr Eslake recommended a cross-party commitment to a series of fiscal targets and underlying net operating surplus within 4 years and, again, serious engagement with revenue reform. Has he been listened to?
The government response to that review in early 2025 was essentially to dismiss it. They argued that the existing fiscal framework was adequate, there was sufficient flexibility, and that the situation was under control. It was not under control then, and it’s certainly not under control now.
When I introduced the Budget Accountability and Oversight Committee bill, in September 2025 – a bill that would have established permanent parliamentary scrutiny of these exact fiscal measures, with the ability to commission independent analysis and hold a government accountable – it was defeated, sadly. Some who have expressed deep concern about the state’s finance did not support the very mechanism that would have given those concerns institutional weight.
The Pre-Election Financial Outlook (PEFO) report June 2025 prepared by Treasury – harm again for the election campaign – said with unusual bluntness that, ‘Recent State Budget and Forward Estimates have been defined by increasing deficits and debt. As a State, we are spending more than we earn, and the gap is growing.’ It also said, and I emphasise, ‘Economic growth correlates weakly with GGS revenue growth in Tasmania.'[OK] They said it then and they’ve said it again just recently. This is a structural problem that will not be resolved through future economic growth and to keep saying we can do it that way is not being truthful. These are not partisan claims; these are the words of the Treasury, published at election time and repeated in the fiscal sustainability report.
Both documents, particularly the PEFO, are supposed to give voters accurate information about the state’s finances, but here we are with a ‘state of the state’ address that makes no mention of the fiscal sustainability report released less than 2 weeks before it was delivered. It’s a remarkable omission. All of us can update our speeches within a few minutes before we turn up in the Chamber if we need to. They knew it was coming. They knew when it was going to be delivered. This was not an oversight, it was a choice. It was absolutely a choice not to mention it.
Let me now be precise about what the budget numbers actually show, because the government has become quite skilled at presenting one set of figures, while a different, and more important, one goes largely unreported. The 2025‑26 November budget presented a net operating balance surplus of just $5.6 million in 2028‑29, and we know that forward Estimates are just that, estimates and very rarely realised, if ever. The $5.6 million in a budget exceeding $10 billion is a surplus of approximately 0.05 per cent of total expenditure. It is not a measure of fiscal health. It was more a political fig leaf.
More importantly, that headline figure is achieved only by including large one-off Commonwealth capital grants as revenue – grants that are intended to be passed through to government businesses and infrastructure projects and which have no bearing on the state’s recurrent financial position.
The underlying net operating balance, which strips out those one-off Commonwealth transfers and reveals a more truthful structural position, shows deficits totalling $3.8 billion over the forward Estimates period. In 2025‑26 alone, the underlying deficit is $1.4 billion. So, let’s be honest about the numbers. Let’s use the numbers that actually make sense in terms of how we actually are performing this state.
To be clear about what this means, Tasmania is borrowing $1.4 billion this year, not to build infrastructure for future generations, but to pay for today’s public service wages, today’s health system operations, today’s school staff and educating our young people. We are effectively mortgaging the future to pay the grocery bill.
The government’s own 2021 fiscal sustainability report stated unambiguously:
Incurring debt to fund recurrent expenditure is not considered beneficial or sustainable.
That principle is being violated everyday under the current budget settings. We are absolutely borrowing to fund recurrent expenditure. The budget relies on three structural accounting allusions to present even its thin veneer of fiscal responsibility.
First, the Premier’s Reserve has been cut from $50 million, this is the last budget, to just $20 million in the forward estimate. This is paper money; it appears in the budget papers. The reserve exists to cover unforeseen circumstances. Actual expenditure from the reserve in 2024‑25, was $40 million. We’ve cut it from 50 to 20, acknowledging that last year we needed $40 million out of it.
Reducing the reserve doesn’t reduce the cost, it simply guarantees that the genuine costs will flow over into the supplementary appropriation bills. That may be a good thing that we actually have more visibility of them then and they have to go through this parliament for approval.
But the supplementary appropriation bill in 2024-25, does anyone remember how much that was for – $467 million. Even if we left it at $50 million in the Treasury Reserve, we still would have had a rather large supplementary appropriation bill. At least it’s visible. I commend them for doing it that way. It’s much more transparent, but don’t say that this is going to fix the budget by taking $30 million out of it to make the numbers look a bit better.
Before the 2024-25 supplementary appropriation bill, the one before that was $489 million, a bit less this year, but not much. These are not exceptional events, they are predictable consequences of budgets that underestimate expenditure pressure, predominantly in health.
Second, the budget includes what it calls unallocated efficiency measures. Again, paper measures with no identified programs cut, no specific reforms and no actual services reduced. Have we seen them applied? We wouldn’t really know. You certainly can’t track it. These are phantom savings. They exist as lines in spreadsheets. They will not materialise as reductions in the expenditure without decisions that have been made and not been funded.
The third thing is the workforce reduction assumption. The fiscal strategy assumes a reduction of 2800 full-time equivalent state service positions through vacancy control natural attrition; this was in the budget. We’ve since heard we’re going to lose 250 staff from State Growth.
Anyone in the public sector workforce management experience knows this is not achievable through natural attrition within the time frame assumed. I made that point in my budget reply because natural attrition runs at about 5-7 per cent annually. Achieving 2800 FTA reductions without compulsory redundancy requires years beyond the forward estimates period and assumes every departing position will not be refilled, which is only possible if service levels are simultaneously reduced. Also, there was no redundancy funding in the budget. There never is – another gap.
General government net debt is projected to reach $7.1 billion by 30 June 2026, rising to $10.9 billion by 2029. The Treasurer describes this as peak debt. It is not peak debt; it is the peak of what the budget papers include in its visible figures. This year we will get a budget that will go out one more year, let’s see if it was peak debt.
What the Treasurer does not volunteer is that the government business enterprises and state-owned companies are simultaneously borrowing an additional $9 billion over the same period in the forward estimates of last year’s budget. You really need to add that on top if you’re looking at the total state sector, which we should.
In 2028-29, the year of supposed peak debt, those government businesses increase their borrowings by another $2 billion. Total government debt, general government plus GBEs is not peaking at $10 billion, it’s heading towards $20 billion and beyond.
Including GBEs and adjusting for debt to GSP ratios, Tasmania’s fiscal position has deteriorated from being roughly comparable to Victoria three years ago ‑ it’s always good to say that Victoria’s worse than us – to be simultaneously worse now. We’re worse than Victoria now. We can’t make that claim more, thank God for Victoria, they’re worse than us, well, no they’re not. Four percentage points worse on a debt to GSP, including superannuation, than Victoria. In three years, Tasmania has moved from the fiscal midfield to become a fiscal laggard. Three years ago, Tasmania had an AA+ credit rating. As we know, both S&P and Moody’s have now downgraded Tasmania’s outlook to negative. The 2026 Fiscal Sustainability Report confirms that without financial improvement, further downgrades are probable. A credit rating downgrade is not an abstract concern. It directly increases the cost of every dollar the government borrows, compounding the debt servicing problem it is supposedly trying to address.
Interest payments on general government debt are forecast to reach $700 million in 2028‑29. This is nearly triple the worst-case scenario projection from the 2021 Fiscal Sustainability Report for the same year. Triple. They were saying that we wouldn’t get there, we will stop, we will do things to prevent that. Well, it’s three times as bad. In a period of four years the interest bill has ballooned to levels that Treasury itself did not anticipate in its most pessimistic scenario.
Now I’d like to turn my attention to the government business enterprise and state owned companies, which I will refer to as GBEs for simplicity, because any honest account of Tasmania’s fiscal position must address and include these entities. They represent one of the most significant and I’d suggest, least publicly understood risks to the state’s finances. The Premier spoke glowingly of TT‑Line’s new Spirits entering service. He praised the new team at TT‑Line celebrating the completion of the new berths at Devonport. He will be celebrating that shortly, hopefully, in August. I, as much as anyone would welcome the completion of this enormous logistical undertaking.
But let’s put it in its fiscal context. The Auditor‑General made the considered finding at the time of reporting last year that TT‑Line was insolvent. We know that TT‑Line disputes this and both the government and TT‑Line have been saying the government will provide funds they need to avoid insolvent trading and that solvency is a matter for the board. That may be true, but it comes with an additional cost to the budget. It’s not like there’s some other special bucket of money over here we can pop in that won’t affect the money available for service delivery.
TT‑Line’s covenant obligations under its borrowing arrangements required emergency government guarantees. Guarantees are issued during the caretaker period before last year’s election, at a time when that decision received little attention because it was caretaker period. It’s since been looked at by the Public Accounts Committee. The company’s balance sheet has been rebuilt through equity injections from government, which is money no longer available for other purposes the government are required to deliver, not through commercial performance. The new vessels are funded by debt that is now embedded in TT‑Line’s balance sheet, and in the total sector debt figures that the Treasurer prefers not to lead with. That’s why we do need to look at this as a total picture.
Terminal 3, the new berth at Devonport, will now cost approximately $493 million. If members have been watching the public hearings of Public Accounts Committee, it seems likely that will come in on budget, which is a good outcome, but let’s not forget how much it was expected to cost at the outset. That is money that ties up capital that could otherwise be deployed to address the structural deficit.
Turning to Hydro Tasmania which presents even more complex risks. As I’ve documented extensively on my website and in this place, Hydro’s operating profit collapsed by 96 per cent in the recent year, driven by low inflows, high wholesale price volatility and the cost of maintaining its contracted obligations. Much of this was outside of their control. This is not a Hydro‑bashing exercise at all. Let me be really clear about that. Hydro is a really important business for our state. As I said, most of these things were outside of their control. Hydro suggests that if we look at the 10‑year average that it’s not so bad. That’s true but the climate is changing, as is the regulatory environment in the National Electricity Market (NEM), and it impacts Hydro and the transition away from coal- and gas-fired power stations, and creates risks and opportunities that are incredibly difficult to quantify.
They’ve had a significant change in the regulatory environment in relation to Basslink; these have presented real financial challenges to Hydro that have not been fully explained or reflected on in any commentary by government or Hydro. The Premier spoke of Marinus Link as ‘Hydro on steroids’ a new chapter of our hydro-industrialisation story’. I want to be fair to the vision: If Marinus Link is built, commissioned and operates as promised, it does present a genuine opportunity for Tasmania to leverage its renewable-energy storage advantage. I’ve said as much publicly and I’ve said it again, but the fiscal risks are real and I don’t believe that they’ve been honestly accounted for.
Tasmania owns a diminishing percentage of Marinus Link Proprietary Limited, along with the Victorian government and the federal government, but it will shoulder a disproportionate percentage of the costs. The interconnector is 50 per cent larger than Basslink and it costs five times more. With every further call for capital our percentage of ownership diminishes. Some might say that it’s a good thing. When you look at the decision by AER, as to how they’re going to apportion the transmission costs, Tasmania is paying far more than its per capita share when you compare to the population base between Victoria and Tasmania.
The Deloitte/Treasury modelling on the whole-of-state business case showed potential wholesale price increases in Tasmania of up to 59 per cent under some scenarios, information that was obscured initially, although there is a report published on Treasury website under the whole-of-state business case information.
However, from July 2026, Basslink transitions, all things being equal, to a regulated interconnector. This changes the revenue from Hydro’s export operations fundamentally. The interregional revenues that have until July 2025 flowed to Hydro. In this financial year, the one we’re currently in, those interregional revenues flow entirely to the owners of Basslink, APA Group. However, coming to 1 July this year, assuming it is regulated, it’ll be governed by a new regulatory framework. As I understand the information on the Australian Energy Market Operator (AEMO) website, the waterfall costs that they describe and revenues associated with this regulated asset, will create new obligations for TasNetworks and for customers. I’ve asked extensive questions in this place and in committees about these arrangements, and the answers have not been fully explained in how these arrangements actually work. Admittedly, it is a very complex area; trying to get your head around how the National Electricity Market works is pretty tough. I don’t believe the risks are fully understood, let alone fully discussed or disclosed, and the argument of ‘complexity’ shouldn’t be used as a shield.
The Premier says Marinus will ensure Tasmanians continue to have the lowest power prices in the nation. Well, I hope he’s right, but hope is not a fiscal strategy. While we might be paying the lowest prices in the nation, this is not a great comfort to many Tasmanians who already live in energy poverty. Lower than what?
I have spent a lot of time recently combing through Hydro Tasmania annual reports trying to understand how the NEM works, how interconnection will work under regulation, of both Basslink and Marinus Link, and I’ve been writing about what I’ve found, and I’ve had meetings with Hydro executives for some more in depth discussions. But I still have grave doubts that hardly any of the benefits from the high Victorian prices, when coal-fired stations withdraw, will flow into Hydro’s coffers, and hence won’t flow indirectly into state coffers as dividends and income‑tax equivalent payments. I’m concerned that the flow-on effects under regulation have been inadequately described and quantified.
As I said, complexity should not be used as smokescreen for a series of claims about our Battery of the Nation project and the lack of a clear public reporting on the changing regulatory environment and the impacts these have on Hydro Tasmania’s revenues during this transition. The transition’s particularly challenging because Basslink is constrained by its size and they just haven’t been transparently explained or reported.
When I met with Hydro, I did make the point that they’ve had significant financial challenges in the regulatory environment. First, when the agreement with Basslink ended at the end of 24-25 when they were getting inter-regional revenues, to then this current financial year we’re in when the APA, the owners of Basslink, effectively get all those inter-regional revenues. To next year – or the year we’re about to head into, the 26-27 year – when it’ll be under a regulated environment in which we’ve never operated before because it’s always been a merchant link, not a regular link. These things challenges and this reality were not even mentioned in the annual report, in the Chair’s report or the CEO’s report at all.
Wouldn’t you think a major challenge to your business would be included in the CEO and/or the Chair’s report? Hopefully we’ll see that improve in this year’s annual report.
I want to speak about what the real challenge is that we face in this state, and this is the challenge that’s revealed when we look at the government businesses in aggregate or looking at them together. Taken together, Tasmania has a disproportionately high number of government-owned businesses compared to other states. These businesses are not consistently profitable. Several have required emergency capital in recent years.
Their combined borrowings are projected to grow significantly over the forward Estimates, yet when this government talks about peak debt and fiscal responsibility, it focuses almost exclusively on the general government sector conveniently leaving the GBE debt mountain largely out of frame. It’s not transparent, it does not serve Tasmanians as well.
I can’t respond to the Premier’s address without addressing the Macquarie Point stadium because the Treasurer spoke about at considerable length and with great passion. Let me be direct: I have long supported bringing AFL to and having our own AFL team in Tasmania. I am a fully paid-up member of the team. I have not argued that sport and events have no economic benefit.
What I have argued consistently is that committing hundreds of millions of dollars of public money to a stadium in the midst of a structural financial crisis without a credible independent cost-benefit analysis represents a profound failure of fiscal governance. That’s what it does.
The cost-benefit framework for government business capital investment that should have been used to assess this project, has been promised since 2023 by this government according to budget papers from that year and the subsequent years.
In the 2023-24 budget papers, it said work on this cost-benefit framework for government business capital investment had commenced in 2023-24. In 2024-25 it said it was continuing, but in the Budget we dealt with in November last year, that said it would commence again. Had it started or not? I’d say not, if you have to start it again.
There is not a framework. We need a sound proposal because this has become a bureaucratic fiction designed to give the appearance of a process where none exists. I believe it’s a good fiscal strategy, but the fact is good fiscal strategies only work if you put them into place and then you put the projects through them.
Hundreds of millions of dollars committed to the stadium, plus $22 million per year to operate Macquarie Point Development Corporation and service the interest, is being made at the same time the government is asking agencies to find unidentified savings. They cut the Treasurer’s reserve and project a surplus of $5.6 million in the out years, barely enough to cover a rounding error.
What we are hearing in the Public Accounts Committee public hearings and our scrutiny of the progress of the stadium, is that much of the stadium-related costs will not fall in the stadium construction bucket. I remember there’s certain commitments were made to certain members in this place, price caps and things like that on it. What we’re hearing is the way that could be achieved is it will put all these costs over here, so it won’t be directly attributed to the building of the stadium. You have to look in other places to see where the money’s actually gone to make that claim that they’re going to build it within a certain budget. Just watch that, see how much the Mac Point Development Corporation needs next year in the budget to employ the people they need to construct the stadium. They’ve already told us that. It’s a public hearing. I’m not saying anything that’s not been said publicly by them when questioned on that, although staff will be employed by MPDC and not the stadium.
I don’t know how you are going to build without them.
Mr President, it looks like that’s a bit of a cover up of the full cost or attempted.
Mr President, this is a massive expense for the state, and I have made this comparison before, and I will make it again – when a household is maxing out its credit card to cover grocery bills buying a boat is not prudent financial management, even if you think you can catch a fish to eat.
The stadium may well be a wonderful asset for Tasmania one day. We see it’s already been pushed out, delayed, costs will increase. It’s timing, costs governance and impact on our fiscal trajectory deserved honest scrutiny, not the triumphalism of the State of the State address that makes no mention of a fiscal stability report released two weeks before. No mention of the impact the stadium would have on our fiscal position. That is irresponsible.
Mr President, the Premier committed in his address to no new or increased taxes. That’s not surprising. It was a foundational commitment of this government and indeed the Liberal governments generally.
I hear some commentators on this matter say the government is merely keeping an election promise. Good on them for keeping their promises.
Does that mean, Mr President, that if we find ourselves in the midst of a crisis, all election commitments or promises must be kept, regardless of the reality we face? Is that what that means?
To me, that is not a mature approach, it is not good leadership. It is weak political game playing for power’s sake. Surely, we can do better. The commitment to no new taxes apparently, though, doesn’t include new levies, it seems.
A short stay levy is on the table.
Perhaps we need to look at levies instead of taxes. Maybe we can call taxes ‘levies’. It may be more comfortable then.
Ms O’Connor – The states can’t tax but we can levy.
Ms FORREST – Yes.
We can impose land tax, payroll tax, consumption tax, gambling tax. Blessings.
This commitment of no new taxes must be honestly assessed in the context of the 2026 Fiscal Sustainability Report which the Premier conveniently didn’t mention, which explicitly states that: [tbc11.48]
Budget repair is best achieved through a mix of increased revenue, reduced operating expenditure and lower capital expenditure.
No class of intervention is sufficient on its own. Treasury has said so. Saul Eslake’s independent review said so. The 2029 Fiscal Sustainability Report said so. The Pre-Election Financial Outlook Report said so. I and many others have been saying so. We can’t all be wrong, surely?
I want to be equally clear that no party can claim to have a credible fiscal strategy at the present.
Labor in their pre-election fiscal plan identified $1 billion in savings over four years. That’s roughly $250 million per year. Remember what I said about the repair that was needed for this year, $3 billion this year, not over four years. This is one eighth of what the five-year repair scenario requires in the first year alone.
Some of those savings are overstated in my view and none approach the scale Treasury has now confirmed is necessary. I say this not to score political points at all, but because Tasmanians deserve honesty from all of us.
If the Liberals continue to insist the problem is manageable and Labor continues to insist its pre-election plan is sufficient, then we’ll further drift into crisis with both major parties complicit in the denial.
The Commonwealth Grants Commission has assessed that Tasmania is not fully utilising its revenue raising capacity relative to other states.
Tasmania’s own source revenue as a share of total expenditure is at historic lows. Less than 30 cents of every dollar come from Tasmanian taxes. The rest is from the Commonwealth. That dependency is a measure of fiscal fragility, not of strength.
To elaborate a little further on the state’s reliance on the GST and other Commonwealth financial support, it is safe to say that the current GST arrangements are as a result of an incredibly poor decision of the Commonwealth government in 2018 in an effort to shore up electoral support in Western Australia. The 2018 GST deal, brokered by the then federal Morrison‑Turnbull Liberal government to appease and get votes from Western Australia is now widely regarded as one of the most costly and inequitable fiscal decisions in Australian history. When it was struck, the arrangement was projected to cost federal taxpayers $9 billion over eight years. Our independent economist, Saul Eslake, now estimates that the true cost will exceed $60 billion over eleven years. That’s from 9 to 60 in different time frames. The biggest blowout is the cost of any single policy decision in Australia’s history. This deal is outside of the NDIS deal.
I’m sure we’ve all heard Mr Eslake say that without qualification, it’s Australia’s worst public policy decision of the 21 century thus far. The deal guarantees Western Australia minimum per capita GST share; regardless how much revenue it’s on or royalties and other royalties’ generation. This year that floor will rise again to match the relativity of New South Wales, costing federal taxpayers what I understand to be a further $6.6 billion dollars in top up payments in 2026‑27 from $6.1 billion the previous year. States like Tasmania, with genuine fiscal need and limited capacity to raise their own revenue, pay the price of a system design not around need but around political expediency.
Our own, now Treasurer, Treasurer Abetz, was a Liberal senator for Tasmania in 2018. When this deal was made, he sat in the Liberal Party room that supported it. He did not resign in protest. He did not put Tasmania’s interest ahead of his party. He’s now our Treasurer. I don’t know if he wrote to all members, he certainly wrote to me, at the end of January asking us to stand up for Tasmania and fight against this terrible deal to get back to full horizontal fiscal equalisation. I found that quite interesting. He failed to mention he was part of the problem at the outset. Anyway, he said we had an obligation to fight for what really mattered. The Treasurer kindly wrote to us, and he told us that we all need to stand up for Tasmania to receive our fair share of the GST revenue. I’m just going to paraphrase parts of his letter. He goes on to suggest that he’s writing to ‘convey the importance of a united Tasmanian approach to engage to an advocacy in the Productivity Commission’s inquiry in this matter.’
I agree. He also noted that when the GST was first introduced in 2000, the Australian government at the time and all states and territories agreed it will be distributed based on the long standing egalitarian principle of horizontal fiscal equalisation, which binds the federation by seeking to ensure that all Tasmanians, no matter where they live, can access a similar standard of services and infrastructure. Tasmanians are entitled to and encouraged to take up the call, in fact. We should. But they’re also entitled to ask, what standard does Mr Abetz have now, or Treasurer Abetz, to lead this when there was no visible pushback in 2018 when that dastardly deed was done? The Treasurer also noted that the combined impact of the changes made in 2018 provides Western Australia with a disproportionately high share of GST, irrespective of its substantial mineral royalty income. As a result, Western Australia has greater fiscal capacity to deliver more service and infrastructure, potentially to a higher standard, and to minimise its tax burden relative to other states. If anyone’s been to Western Australia, you can see it everywhere. The amount of money they have.
He reminded me in the letter the 2018 changes effectively created a two tier federation by embedding a significant fiscal disparity between Western Australia and all other states. Sure did. He didn’t speak up against them. He may have in the party room, I don’t know for sure. This was such a significantly bad deal for Tasmania, one would have hoped he would have been a bit more vocal. It’s pretty clear to me that this was evident at the time the decision was made because our own Treasury and the then treasurer argued strongly against this; as did many other treasurers and treasuries – in South Australia, Victoria, New South Wales and Queensland. Yes, now the Treasurer has become an advocate, as he should. Our other previous treasurers did their best, but they were overridden by political expediency.
What I also found interesting was that in today’s Age, the newspaper, there’s a piece written by Shane Wright[OK] – I didn’t go to the Productivity Commission site to check this, I’m taking Shane Wright’s word for it here. He informs us that the architect of some of this decision‑making, Mathias Cormann, who was finance minister under Tony Abbott, Malcolm Turnbull and Scott Morrison and is now the head of the OECD, stated he thought this was a great outcome and great deal and should continue. Good for him. Members might like to reflect on the fact that former minister Mr Cormann is from Western Australia. How dare he? Mr Wright’s article goes on to say that in the 2019‑20 budget, his last as finance minister, Mathias Cormann and then treasurer Josh Frydenberg forecast the cost of the deal would be $2.3 billion by mid-2023. Instead, it was almost $12 billion. That’s how much the government underestimated the cost of this deal.
Let’s hope the deal is reversed or that the Productivity Commission releases a recommendation that it is; they can’t make the decision. I’m a bit concerned they’re limited by their terms of reference, but that’s another story. Let’s hope they recommend a return to full horizontal fiscal equalisation where every state can be treated with a degree of fairness. I’m sure that both federal parties, desperately want to hold onto Western Australian seats. It’s going to be a challenge for them, isn’t it? But what about the rest of us?
To return to the matter of our state revenues, because a lot of that is from the Commonwealth. To be really clear, I’m not arguing about state tax increases for their own sake because that’s a silly argument. I understand the cost-of-living pressures are real and that Tasmanians, especially in rural communities like those in Murchison are really stretched, but a mature fiscal conversation must include an honest examination of whether Tasmania’s revenue base is appropriate for the services it is trying to fund.
There are revenue options that don’t simply add burden to working Tasmanians. Not all of the burden falls on Tasmanians when you do proper tax reform. A proper review of land tax and conveyancing arrangements could improve equity while raising revenue. Examining the structures of government fees and charges that have eroded in real terms could make a modest contribution. Every bit helps across the whole picture. Over the longer term, productivity dividends from better services and a better functioning economy do contribute to revenue, but only if the service and infrastructure investment that drive that productivity is funded, not deferred.
I believe this is a critically important community conversation that we need to have. I would like to see serious consideration given to a process such as a properly constructed and professionally run citizen jury or citizens’ assembly to look at options that can take the Tasmanian people with us on this journey. It’s the only way we’re going to get collective decision-making on this and proper buy-in. It would cost money to run, but I think that would be money well spent. I’ll come back to that.
The pre-COVID 2019 fiscal sustainability report was explicit: sustainability requires consideration of revenue sources. The 2026 fiscal sustainability report said the same. The government’s position that revenue is completely off the table is not a fiscal strategy. It’s a political constraint masquerading as an economic principle. It’s also not facing reality. I do not expect the government to change course on this before the May budget, but I call on the Treasurer to at least be honest with Tasmanians about what the fiscal sustainability report says – all of it – rather than selectively describing the evidence as an economy and budget that is manageable. It isn’t.
I’ve spent considerable time on the diagnosis of the problem here, now I want to turn the prescription or possible solutions. Some people in the big people land out there say I never come up with a solution or option – I’ve done a few already here, but I’ll continue. These are options to improve because the purpose of scrutiny is not simply to identify province but also identify a path forward. I want to be clear, the challenge facing Tasmania is large but not insurmountable, and I’m adopting Treasury’s own language here deliberately. It is achievable, but only if we act, and only if we act now.
The first thing I would like to see, and the single most important institutional reform Tasmania can make in the short term, is the establishment of independent parliamentary budget office (PBO). Members will be aware that the Public Accounts Committees have been inquiring into this and hopefully will report when we can have enough meetings to do so with all the other things we’re looking at. I’ve personally raised the need for a Tasmanian parliamentary budget office for many years, since 2014 in fact, like 10 years now. Well before the Eslake report and the government policy commitments in this area because I saw the benefit the Commonwealth PBO brought when it was established in 2012. A PBO would give every member this parliament tools to ask the right questions to get meaningful answers. It’d provide all of us, the government, the opposition, independents, all crossbenchers and the public with independent and rigorous costing, a budget proposals and policy options. It would lead to better policy development and better decision-making.
Second, we need annual reporting of 10-year fiscal projections. The fiscal sustainability report is produced every 5 years and that is not frequent enough. I’ve argued for annual 10-year projections to be incorporated into our budget papers, updated each year with the same rigour that the FSR applies every 5 years. I’m not saying about a whole FSO, I’m just talking about the figures being updated and projected for 10 years. We should not have to wait for 2031 for Treasury to tell us again that the trajectory is unsustainable or that we’ve fallen off the cliff. Annual long‑term projections could create accountability, would allow parliament and the public to check if the repair work is on track and the repair task is being addressed, and will provide the kind of surprise deterioration that has characterised this gap between the successive fiscal sustainability reports. I hope that the government might consider that.
The third thing I’d like to consider, and this has been raised by others too, is the need for cross-party commitment to meaningful fiscal targets. Saul Eslake recommended that the government and all political parties commit to a series of fiscal targets over 4‑10 years, a return to an underlying debt operating surface within 4 years, achievement of overall fiscal surplus over the following 5‑10 years, no reduction in the debt to GSP ratios to below the average of all states.
These cross-party commitments matter because fiscal repair that might be achieved under one government can be undone by the next if there is no shared framework. Business investment decisions, financial market assessments and long‑term service planning all benefit from the confidence that fiscal discipline will survive changes of government. Again, I make the point that these are the sorts of things that the budget oversight academy and oversight committee would have looked at.
Fourth, we need honest expenditure reform, particularly in health. Health expenditure is the dominant driver of the budget’s structural problem. It now constitutes one in every three dollars of total state expenditure and is growing faster than any other category. This is not a new problem. The Premier acknowledged this directly in his address when he said meeting every growing demand in a is an ongoing challenge. It is more than a challenge. It’s a structural mismatch between demand driven by demographic, social disadvantage, chronic disease prevalence and a reliance on Commonwealth primary care funding and the state’s fiscal ability to respond. I strongly support investment in health, but investment without reform is not sustainable and we need to know the money we’re spending is doing what it was intended to do. We don’t know that. Investment without outcomes being reported and evidence that the money that is provided is spent in the most efficient and effective manner is actually irresponsible.
Primary care, as we know, is fundamentally a Commonwealth responsibility and the Premier’s right to fight for better funding through the National Health Agreement. The additional $700 million secured is welcome, but the gap between health demand and state fiscal capacity will not be closed through inter-governmental negotiation alone. We need serious engagement with how our health services are delivered, where, by whom and using what models of care. Virtual care, nurse-led clinics, allied health integration, prevention, investment and community-based mental health alternatives are not just good clinical policy, they are fiscal necessities. A dollar invested in keeping someone healthy and out of emergency departments saves millions of dollars in acute care.
The announcement of four new bulk billing GP clinics is genuinely welcome. It is precisely the kind of primary care investment that reduces downstream demand pressure on hospitals, but four clinics is not a system, it’s an experiment. We need this approach systematically resourced and evaluated, and we need the Commonwealth to fund it at a scale that evidence justifies.
On another point: We need further reform and transparency around our government owned businesses. The government’s GBE sector needs a root-and-branch reform and I understand the government are doing some of this, of its governance, accountability and performance management frameworks. The Auditor-General has made findings about executive termination payments, inadequate board disclosures, asset revaluations to flatter balance sheets, and dividend practices that borrow to return cash to the government. These are not isolated problems; they’re systemic.
I welcome the Premier’s direction to government business to identify savings, but a direction without a mechanism, without independent scrutiny and without published performance benchmarks, is insufficient. I call for GBE performance statements to be tabled and made subject to more thorough scrutiny and the dividend policy to be reviewed. I do note the recent changes we made to GBEs, where they have to publish their half-yearly financial reports, are variable in their usefulness.
We need far better infrastructure project governance and transparency. As I mentioned earlier, the cost-benefit framework for infrastructure projects, over $50 million, has been promised since 2023 and has not been delivered. It’s needed urgently. Every major project commitment, the stadium, the Marinus Link, the Antarctic Gateway, the TT-Line replacement, the Convention Centre, should all have been, or be subject to, independent cost-benefit analysis that is published before final commitment, not after construction begins. This is absolutely not anti-development; it is pro-accountability. Good projects can withstand scrutiny. Projects that cannot withstand scrutiny should not be proceeding.
We need a mature conversation about our state revenue. As I have already argued, the revenue side of the fiscal equation must be part of an honest national and state conversation. I do not call for austerity. I do not call for a slash-and-burn approach to public services, but I do call for a willingness to examine whether Tasmania’s own source revenue base is appropriate, equitable and adequate for the commitments we are making. This means consideration of commissioning an independent tax review, something the government has resisted, perhaps because they don’t want to hear the truth. It means examining the Commonwealth Grants Commission assessment that Tasmania has underutilised revenue capacity. It means engaging seriously with property tax reform that could raise revenue while improving housing market efficiency. It means being honest with Tasmanians that there is no path to fiscal sustainability that runs entirely through expenditure reduction.
I must also address a quiet but growing assumption in parts of our community, that if things become too difficult in this space the Commonwealth will simply step in and rescue us. This belief is deeply dangerous. It breeds complacency, it undermines the political will to act, and it would, if realised, come at the cost of Tasmania’s fiscal sovereignty for a generation. A bailout is not a plan; it is surrender. The greatest threat we face is not insolvency itself, but the creeping resignation that we are incapable of fixing our own financial position. We are capable of fixing it, but only if we act before the choice is taken out of our hands.
None of this will succeed unless all parties in parliament accept the scale of the task and commit to a shared framework for repair. Treasury have been explicit. The solution requires a mix of reduced operating expenditure, reduced capital expenditure and increased revenue. No party’s current policy platform meets the test. The public debate will not move forward until we acknowledge the reality together. Fiscal sustainability is not a partisan project. It requires a shared commitment across the parliament and one that can be informed, as I said, through a citizens’ assembly or citizens’ jury because that will get buy‑in from everyone. It has to be a Tasmanian project.
I just want to comment on good governance and our future. The Premier spoke about the state’s future. He spoke about the young people of Tasmania, about wanting them to stay, to work, to build their lives here. I share that aspiration profoundly, but young Tasmanians will not build their futures on a fiscal foundation that’s crumbling beneath them. They’re smarter than we think. The debt we are accumulating today is being accumulated on their behalf; they know that. The interest bill of $700 million per year projected for the 2028‑29 financial year is money that cannot be spent on schools, hospitals or the infrastructure those young people will need. It is a transfer of burden from our generation to theirs.
Intergenerational equity is a principle embedded in our Charter of Budget Responsibility Act 2007. It means we should not make decisions today that impose unreasonable burdens on future Tasmanians. That’s what the act requires us to do. By that standard, the trajectory described in the 2026 Fiscal Sustainability Report is a profound breach of our obligations to the next generation.
The Premier spoke of Tasmania as a beacon of economic opportunity. I want it to be that, but beacons have to be built on solid ground. A state that has been downgraded by both major credit agencies, whose underlying deficit is $1.4 billion in a single year, whose GBEs are set to carry hundreds of billions of dollars in debt, and whose structural fiscal position cannot be resolved through economic growth alone. What we need is a state, not just this so-called strong plan. We need a plan that is honest about the problem it’s solving.
In the interest of balance, I want to acknowledge that I welcome the Premier’s address because there are things I welcome genuinely. I welcome, as I’ve referred to, the commitment to bulk billing GP practices and clinics. Primary care access is a genuine need in Tasmania, particularly in the regional communities. This initiative, if properly resourced and evaluated, could make a real difference to health outcomes and to downstream fiscal pressures on our public hospitals.
I welcome the government’s engagement with the AI revolution for service delivery improvement, including in planning and development. Used thoughtfully these tools, can genuinely improve productivity and reduce backlogs. We do need to do it thoughtfully and carefully.
I welcome the commitment to literacy and numeracy improvement in schools. The evidence-based structured literacy approach is strong and investment in early years education has among the highest returns of any public expenditure. I absolutely support that.
I welcome and acknowledge that the budget must be returned to sustainability, even if I believe that believe the plan for doing so is inadequate. The acknowledgement that isn’t necessary is better than outright denial.
I welcome the Premier’s commitment to addressing cost-of-living pressures. However controversial the policy design questions around TasInsure are, and I believe they are real, this is another example of an urgent need for a PBO to cost such a policy, I might add. I do agree that Tasmanians are paying too much for insurance in many cases, picking up the tab for other parts of Australia and the world. This is a real problem that deserves a real response. I’m just not quite sure that TasInsure is it.
I also acknowledge that some of the Premier’s major projects, properly designed, independently assessed and honestly costed, could contribute positively to the state’s economic future. The Antarctic Gateway builds on a genuine comparative advantage. Launceston’s convention centre, if the business case stacks up, could genuinely transform the visitor economy in the north.
Mr President, you may have noticed that ‘could’ has been doing a great deal of work in these comments. All of these opportunities require proper and transparent process. It seems to me that some of the projects the governor is spruiking here have been opaque, have had poor governance, poor process and murky decision-making. The absence of rigorous independent published cost-benefit analysis for these projects means that we’re taking them on in faith, and faith is not an adequate substitute for fiscal discipline.
We have a choice, as I said at the outset – this is ultimately a speech of hope. I know it’s quite a long speech. I do mean that, it is a speech of hope. I’m not a pessimist about Tasmania. I’ve spent 20 years in this place, more than 20 now, because I believe in this state and its people. I wouldn’t have agreed to take on the critical role of treasurer of this wonderful state if I didn’t believe in it and what I could do to make a difference. It didn’t happen, but that’s why I agreed to consider it, because I believed this is much bigger than me. It was about Tasmania, the future, our future, our kid’s future.
The hope we see in the Premier’s state of the state address is not grounded in reality. Hope not ground in reality is not actually hope at all. It’s just wishful thinking. Wishful thinking, when applied to public finances, produces the trajectory that the 2026 Fiscal Sustainability Report has just described.
The report, released less than two weeks before the state of the state address, says the challenge is large but not insurmountable. It says the budget repair is achievable if action is taken and taken now. It says that the sooner peak debt is reached, the lower ongoing impact and the faster the state becomes resilient to future shocks.
Well, we are facing another massive shock. The war in the Middle East will throw a whole heap of those projections out the window in all sorts of areas. In our government businesses, in our general government sector. This report was before that really became apparent. We have no capacity at the moment to really respond to current, let alone future shocks.
I do agree that we can address this, we can work on it, but the challenge is becoming harder by the day. An achievement is not the same as being automatic. You’ve actually got to do something. Achievable change requires choices. It requires honesty about the nature of the problem. It requires willingness to put all options, including revenue options, on the table. It requires institutional mechanisms like a parliamentary budget office, enhanced parliamentary scrutiny, cross‑party fiscal commitments that make it harder for any government to ignore Treasury’s warnings again.
The Premier spoke of Tasmania as entering a new era of opportunity. I hope he’s right, but a new era, requires real honesty. A new era requires transparency. It requires a government that reads its own fiscal sustainability report, acknowledges what it says and builds on its so‑called strong plan on actual foundations of the state’s finances rather than a carefully curated selection of good news.
Tasmania’s people deserve that honesty. The young Tasmanians the Premier hopes to keep here deserve it. The generations that will inherit the debt we are accumulating today deserve it most of all.
There is a path forward. It’s not easy. It will require decisions that are politically uncomfortable, but it is there and I will continue to advocate it and scrutinise the government’s progress against it, or towards it hopefully, and to hold this in any future government to the standard of honesty and fiscal responsibility that Tasmanians deserve.
I note the report.