So far the election campaign has offered a few placards, platitudes and hi-vis appearances but little apparent understanding of the issues facing us.

Hopefully PEFO will contribute to the discussion.

When reading government Budget papers (BPs) it is important to remember that they have not been audited by the Auditor General.

Unlike BPs in Victoria for instance.

Nor are Revised Estimates Reports (RERs) which appear in February each year updating the current year budget and forward estimates.

Only the Treasurer’s Annual Financial Report released in October each year covering the year ended four months earlier gets the full audit treatment. But this report doesn’t contain budgets or forward estimates.

Hence any public discussion about budgets and forward estimates is based on unaudited figures. This has never been a problem in the past to my knowledge, but increasingly inconsistencies are starting to creep in resulting from the inclusion and/or exclusion of amounts in budgets and forward estimates between BPs and RERs. Which makes understanding what’s happening even more difficult.

And then there are amounts (planned outlays) which don’t make it into financial statements because they’re too hard to quantify, allegedly. A reader may be alerted to these by carefully combing through the footnotes and explanations. But again, there’s no consistency. What’s in or out seems to be a little subjective.

The intent of this note is to draw attention to some of the inconsistencies, omissions and contingencies that need to be highlighted in Treasury’s PEFO report, the Pre-Election Financial Outlook Report required to be given to electors pursuant to the Charter of Budget Responsibility Act 2007.

The 2024 election was called in February just after the 23/24 RER was issued. Hence there were no updated budgets issued with the 2024 PEFO.

Given the 25/26 Budget was just tabled it is doubtful whether the 2025 PEFO will issue revised budgets. But like 2024 we should expect a revised outlook report identifying what Treasury know about the fiscal outlook. It should be a time for Treasury to tell it as they see it, free from any Minister breathing down their necks.

The big issue not far from electors’ minds are the Spirit ferries and the associated berthing facilities, another instance where the abandonment of Estimates hearings means there’s a lot of unanswered questions.

Cost overruns will occur in TTLine, outside of the government itself, hence the effect on the general government itself is indirect and difficult to pinpoint.

The 25/26 Budget refers to the problems ahead, almost in passing:

“The Company’s overall funding requirements for these projects and alternative options, including additional funding support, may need to be considered by the Government.”

That is a wilfully misleading understatement of the likely problems ahead. What precisely are the intended outlays currently imbedded in the 25/26 Budget (yet to be passed)? What is the level of borrowing needed to pay those outlays? What is the best estimate at this stage of the additional likely cost of outlays needed to get the Spirits operational? Don’t tell me they are unknown because I won’t believe it. The TT Line Board will be watching the costs like hawks because their very survival depends on it. Not only that but their ability to keep trading depends on being able to pay debts as and when they fall due. So, if there is no arrangement in place to pay debts as assessed by the Board, they may have to stop trading. The Corporations Law requires it. There must be plan in place. There must be contingencies. For the purpose of PEFO what exactly are those contingencies? What happens during caretaker mode if the contingencies prove to be inadequate? What happen if the Auditor General who usually signs audit reports for government businesses prior to 15th August is unable to without a letter of comfort from the government, or maybe Tascorp might need similar if it has to make a loan to TTLine outside its normal prudent guidelines?

The PEFO needs to pay particular attention to TTLine.

Then there’s the Macquarie Point stadium.

The 2025/25 Budget Papers make it difficult to discover what’s in the budget for the stadium and what’s not. Amounts have increased from prior years, reclassified and shuffled around as grants, infrastructure spending and equity injections into MPDC P/L the government owned business which will build but not run the stadium, for that will be Stadiums Tasmania.

Then there’s the Kingborough High Performance Centre which will be a general government owned infrastructure build that just almost doubled in price. It is not clear who will run it when built and from where will it get funds to operate.

Also, the government subsidy for the Devils, where’s that in the budget. How much is that?

Forward Estimates in the Budget covers 2028/29 so most of the operating costs for the stadium and performance centre and for the team itself when it starts playing, must be in 2028/29 Forward Estimates, if not in earlier years.

It is incumbent on the PEFO to openly disclose all the amounts for the stadium, the associated works and the AFL Devils side which are currently embedded in the 25/26 Budget and Forward Estimates. And what other related amounts of which Treasury is aware have not been included, whether they fall within the Forward Estimates period or subsequently.

The PEFO is the perfect time to make a clear and transparent statement about the costs of which Treasury is aware in relation to this contentious project particularly especially since the chance to ask questions at Estimates hearings has been denied us in the Legislative Council.

There is another much larger project which dwarfs the stadium by a factor of five, and that is the Marinus project which comprises the Marinus Link (MLPL) and the associated North West Transmission Network (NWTD).

We are a minority owner of MLPL along with the Federal and Victorian governments and a 100 per cent owner of NWTD via TasNetworks (TN).

The NWTD is at least a $1 billion project all from borrowings, some by the government to be used for equity contributions into TN, some by TN itself (from Tascorp). What amounts are currently embedded in the current Budget and Forward Estimates? The Budget papers give some details, but they need to be reiterated in the PEFO.

In the case of Marinus itself the level of borrowings is much less for Tasmania because our equity share is only 17.7 per cent and many of the funds needed will be borrowed from the Clean Energy Finance Corporation.

But the implication of Marinus will be far-reaching. Treasury is in possession of the Whole-of-State Business Case which will be used to decide if Tasmania agrees to proceed with Marinus if MLPL makes its Final Investment Decision (FID) expected during the caretaker period. This should be released as part of PEFO. What better way to pass on what it knows about matters likely to impact us than to release the report?

Back in February 2025 the RER provided stark evidence of our fiscal plight. $345 million was explicitly identified as a new policy decision to address health demand in 2024–25. There were no figures included in the Forward Estimates based on the spurious claim - “This level of expenditure is not factored into health expenditure over the Forward Estimates due the difficulty in quantifying the level of demand risk”. It was a nonsense claim. Had the RER been subject to audit scrutiny that claim would have ended on the cutting room floor and additional amounts included in the Forward Estimates.

Hence in Feb 2025 the deficit over the Forward Estimates period was understated by at least $1 billion.

When the 25/26 budget was tabled in May 2025 what was labelled a policy decision in February has been reclassified. It was still there hidden as just another cost (or parameter) adjustment. Forensic accountants rely on a correct set of budget papers to distinguish between policy and parameter changes when assessing a Budget. Just ask Saul Eslake. As do rating agencies. The latter won’t be impressed at the accounting fiddles which try to disguise what’s happening. No doubt the government has already drafted a media release for when the rating agencies downgrade our credit rating requiring us to pay higher rates on future borrowings, blaming the chaos produced by opposition parties and crossbenchers and no doubt conveniently overlooking the lack of transparency which has crept into their budgets. It’s a serious issue which I will further explain in a subsequent update.

Forward Estimates are notorious for lacking outlays which haven’t been formally approved. But the latest practices have cast even more doubt.

Hopefully the PEFO can offer full explanations of what Treasury knows about future matters that will impact us, and likely outlays which for some reason haven’t been included in the Forward Estimates.