There’s a slither of hope, a small shaft on sunlight trying to shine on an otherwise bleak election battleground, that when the dusts settles, the survivors – I won’t call them victors at this stage – might help to build on what we've learned, to build a better future.

It’s only a slither of hope at this stage. The major parties don’t appear to really understand the hole we’re in and the actual task ahead. The risk is, when the battle is over and the armistice terms agreed, our fiscal problems will be taken out with all the wounded and forgotten.

The government’s attitude to our woes has always been a bit too flippant, as was again demonstrated in the Premier’s widely aired interview on ABC’s Stateline on Friday 4th July. He claimed he could very easily bring the budget back into surplus by cutting health spending from $10 million per day to $7 million per day. Basic arithmetic says that would save around $1 billion per year.

Unfortunately, that’s only a fraction of what’s required. Maybe enough to build a stadium but not solve our budget blues. It may have been true a few years ago but a lot has since happened.

If the Premier bothered to read the PEFO Report prepared by Treasury he will find on page 30 the figure needed to bring the budget into surplus “very quickly” as he terms it, is $2.7 billion per year. I am not suggesting he plans to bring the budget back to surplus quickly - he has stated that won’t happen until 2030. But that is only 5 years away and the task is far greater than the Premier admits. The actual task is nearly three times worse than his poorly researched claim on prime TV. That’s not a statistical discrepancy or a rounding error. That’s a serious understatement of our current situation. The Premier needs to check his GPS if he thinks he has a sensible path to surplus. He is not where he thinks he is.

It all reminds me of the Irish joke about the lost tourist:

“How do I get to SurplusTown?”
“If I were you, I wouldn’t be starting from here”.

Unfortunately, we are here.

The PEFO report from Treasury was supposed to set out where we are. The Premier thinks he’s somewhere else. Yet he’s the one who appears to be solely in charge of his party’s election campaign, up against two other parties who don’t appear to have working GPS systems either. They realise we’re lost but aren’t sure where. Let’s hope the sun shines tomorrow so we can find due north and plot a course hoping food doesn’t run out before someone rescues us, is the best way to describe the solutions offered so far.

The first crucial matter which needs non-partisan support post-election is to agree exactly where we are in the wilderness. It shouldn’t be hard. Is the spending gap $1 billion per year as the Premier asserted or is the gap $2.7 billion as PEFO said? It makes a radical difference to any solutions.

Once having determined the gap we need to work out, over a medium term, say five to eight years, what’s needed to close the gap, to put us on a sustainable path. I will avoid the term ‘sensible path’ because it seems to have lost its meaning.

What’s needed to close the gap can then be unbundled into components with hopefully non-partisan agreement. More own source revenue, changes in Federal-State arrangements which may require the Feds to collect more revenue on behalf of States, possible debt relief from the Feds and better budgeting and budget spend monitoring. It may be, for example, we will need to aim for one third of say $2.7 billion, $900 million in other words from better budgeting and spending restraint to slow down expense growth.

The remainder of this update will comment on the budgeting aspect and importance of an understood and agreed starting point.

The Labor Party found $1 billion in future savings covering a four-year period, around $250 million per year with a similarly non-compliant Fiscal Strategy as both other parties. Some were expense savings, others were capex amounts from the Southern Outlet scale back. Given the size of the task, it was a bit tokenistic yet still deserving of a few brownie points. Points however were lost because it trivialised the task ahead.

For instance, $50 million was achieved via a hard cap on departmental travel budgets. Where did this figure come from? The 23/24 actuals in the Treasurer’s Annual Financial Report showed travel spending for the year in the general government was $46.4 million against a budget of $33.7 million, a $12.7 million overspend. So, Labor seized on this figure and assumed it could save $12.7 million each year, for a total just over $50 million over four years, simply by imposing a hard cap. It wasn’t based on future travel budgets because they never appear per se in Budgets Papers. We ever only see actuals vs budgets in hindsight when the Treasurer’s Annual Financial

Reports are prepared. The savings measure was applied without any sound underlying rationale, based instead on a ready acceptance by punters that because bureaucrats live high on the hog at taxpayer expense and nothing shows this more clearly than travel expenses, let’s trim them.

I don’t know what Labor would have done when searching for budget savings to add to its Fresh Start Strategy, if it had stumbled on travel figures for 20/21 when $35 million was spent against a budget of $42 million, an underspend of $7 million. I acknowledge this was during a year of COVID related travel restrictions but highlights that if you keep searching for a figure to achieve a predetermined result, you can find what you need.

Two points here.

Arbitrary hard caps are a fake savings approach in the absence of future budget amounts. To say you’ll have to spend $12.7 million less will inevitably affect the initial budget figure selected. And end up achieving nothing.

And secondly and more significantly there have been times when spending has been much better contained and constrained within the parliamentary approved budget. Over the whole three Covid years from 2019/20 to 2021/22 the amount of expenditure over budget was only $262 million. Yes, more funding was made available but what was actually spent was much closer to the approved budget.

But since then, in the three years to 2024/25, the overall overspend has been $2.3 billion, enough for a couple of stadia at least. Health has been the biggest offender with a $1.2 billion overrun to its name.

Over the last seven years, since the 2018 election, the overspend in the general government sector has totalled $3 billion. Even though some was due to compensation for the survivors of sexual abuse, that’s no excuse for poor budgeting. The costs of the three elections in that time, as PEFO informed us, has been $4.4 billion. Most of the pork barrelling was in the budgets so that’s not an excuse either.

This suggests spending was better controlled during COVID. The Public Accounts Committee and Audit Office both undertook a number of inquiries into the additional spending and what it was used for - some problems were found but overall spending was much more in line with the budget - that is the budget Parliament approved - and that restraint and possibly the opportunity for more thorough scrutiny seems to have gone out the window - two early elections have added to this as all Parliamentary Committee work stops during prorogation and until Parliament resumes and Committees are re-established.

All this highlights again the need for an independent Parliamentary Budget Office. The Public Accounts Committee has been inquiring into an appropriate model for Tasmania, and it is encouraging to see both major parties support the establishment. It will be absolutely critical in the years ahead to ensure all policy announcements and election commitments are fully and independently costed and modelled.

We still see a tendency to blame COVID for revenue shortfalls, but revenue was not as negatively impacted by COVID as first thought - a lot of support was provided by the Feds as well. But what was key it seems, was we appreciated the need for targeted spending, spent pretty much within that agreed budget envelope.

Since, unfortunately, a lack of disciple has made a barnstorming reappearance. There seems to be a bit of a culture issue – the money is just spent knowing full well getting Parliament to appropriate a bit extra is far easier than Oliver Twist fronting for seconds. It appears in a Supplementary Appropriation Bill, usually after the money has been spent or at the very least firmly committed to. Members shrug their collective shoulders and move to the next item on the Notice paper. There is no Estimates like scrutiny thus limiting meaningful questions.

There needs to be a greater focus on and commitment to departmental spending as approved by the Parliament in the annual budget. Budget blowouts cannot continue to be the norm where more money will just be approved after the money has been spent or committed to. The COVID years showed we can do it.