Published: 31 March 2016

THE regrettable trend in modern politics, whereby winning elections is far more important than governing, is evident wherever parliamentary government is practised.


When a fortuitous change in Tasmania’s share of the GST pool led to a windfall of $600 million in last year’s State Budget, the Hodgman Government was able to declare victory in the battle to clean up the alleged Labor-Green mess. 

Since the triumphant election result two years ago, the Government has shuffled 3 per cent of government outlays, with no action on the revenue side, not even to address the glaring inequities which leave many people, who have the capacity to do so, paying little or no state tax. 

Flushed with success, the Government opted to steer a steady course to the next election, however, with Basslink’s breakdown the New Year has seen the cruise trip become a voyage into the unknown. 

It has certainly highlighted the state’s vulnerabilities. It’s obvious we are vulnerable on the GST front. He who giveth can easily taketh away just as quickly. With mining royalties falling, the Commonwealth Grants Commission’s formula will soon lead to increased GST to the mining states, inevitably resulting in less for Tasmania. 

A predicted early return to surplus is presented by the Treasurer as a triumph for sound fiscal management. While he is to be commended for producing a budget update with remarkably few variations from the original budget, the major reason for any underlying improvement is the GST windfall. 

Another vulnerability is the Government’s dependence on revenue from government businesses, which has halved in recent years with little prospect of upside and is 80 per cent reliant on electricity businesses which increasingly have their own problems. 

TasNetworks has $1.6 billion of debt which it can service at this stage. Yet it is vulnerable because it requires a favourable determination from the Australian Energy Regulator every five years as to what prices it can charge customers in the ensuing period. It is also vulnerable to the loss of a major customers. Such a loss may ease pressure on Hydro’s dams, but it would create even more problems for TasNetworks’ cash flow. 

Basslink has highlighted Hydro Tasmania’s fragility. It has $1.7 billion of borrowings and long-term Basslink liabilities which require $150 million to service each year. The Basslink facility fee may be waived while the fault is fixed, but an ongoing monthly finance fee plus standby generation costs are far greater than the fee saved. Even with compensation, which is unknown at this stage, the risk assessment was clearly inadequate. 

Prior to the Basslink outage, revenue from government businesses has been crucial to the Hodgman Government. 

As for the future, we really have no idea how electricity businesses, which currently provide 80 per cent of all returns from government businesses, will fare given their debt burden, changing demand patterns and changing technology across the electricity supply industry. 

The reality of our situation has been glossed over by the Treasurer’s triumphalism in single-handedly fixing the Labor-Green mess. 

People don’t want to hear any more about the problems inherited by the Government. They are sick of blame-shifting and scapegoating. They just want an honest view of where we are heading.


Any message from the confidence fairy that house prices are rising and retail sales booming needs to be tempered with a reminder of the specific challenges ahead for the Government and the accompanying risks, unfortunately highlighted by the Basslink debacle.


Governments tend to conflate the economic health of the state with the government’s fiscal wellbeing, making it harder for people to be critical of the Government lest they stand accused of undermining the prospects for Tasmania generally. The two are interlinked yet separate. We should be able to have a robust discussion about government finances without being Fifth Columnists.


One major result from the way we timetable budget tabling and subsequent reporting is we hear very little about government businesses.


The budget contains estimated outcomes, in other words this year’s budget due to be handed down in May 2016 will contain estimated outcomes for 2015-2016, but for the government sector only. No estimated outcomes will be available for the all important government business sector. We won’t see any outcomes until the end of October. We have to wait eight months to find out the impact of Basslink on state finances. It’s not good enough.


Back in December at scrutiny hearings for government businesses we in the Legislative Council only had half a day to ask questions about two electricity businesses at the cornerstone of the state sector. We won’t get another chance for two years. Annual business plans lodged and given the tick of approval by shareholder ministers never see the light of day. They should be tabled in Parliament so we can see them.


Preliminary financial results for government businesses should be made public by the end of August and full annual reports by the end of September at the latest, the same as applies to listed companies.


Most government business boards have signed off on their annual financials and have received an audit report by mid-August, yet the earliest release date at present is the end of October. It’s not good enough. We need more regular information sooner.


The Basslink breakdown may be a unique catastrophe, but it brings home the reality we are beholden to a system no one fully understands.


The Government needs not only to reassess all the risks that lurk within the state sector, but it should throw timidity out the window and reform the way government businesses report. After all, they contain half the government’s overall assets, most of the borrowings and provide returns to government without which the government will never reach that elusive surplus.


The separate roles of business boards, chief executives and shareholder ministers need to be more clearly established in the public’s mind. The current situation is a dog’s breakfast.


Government should be about governing not about the next election.


MLC Ruth Forrest is the Independent Member for Murchison.


Main image: Tourists stroll on the shore of Lake Pedder. Picture: PETER MATHEW. Source: The Mercury Newspaper March 1, 2016

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