On the day the House of Assembly was dissolved to precipitate the March 23rd election, over a year ahead of the next election date committed to by the Premier, the Government released a Revised Estimates Report (RER) updating the 2023/24 Budget.

That the Premier has chosen to ask the people of Tasmania over a year earlier than planned, for a vote of confidence in his government, when all indicators in the RER confirm a dire situation for the State, suggests worse is to come.

The Government, to its credit, has a comprehensive fiscal strategy comprising ten targets and/or strategic actions plus an over-arching commitment to improve public service efficiency, productivity, and transparency. The RER includes a progress report on achieving the 2032/33 targets. Unfortunately, it reads like being ten goals down at quarter-time after kicking with the wind.

Government debt can be benign because often it is rolled over rather than repaid at maturity. The problem is servicing the debt. The government set a target that no more than six per cent of outlays should be devoted to paying interest on debt and meeting unfunded superannuation liabilities. This year 2023/24 will be the last year where the target will be achieved. The general government, which doesn’t include government businesses, needs to borrow an extra $1.4 billion this year and $1.1 billion in 2024/25. Which means an increasing portion of government spending will be required to service debt.

Looking at debt from another perspective the government has a target for net debt relative to the size of the Tasmanian economy. Net debt is to be no more than ten per cent of our Gross State Product, that is, what we as a State produce each year. This year 2023/24 the percentage will double to 8.6 per cent. Next year the ceiling of ten per cent will be breached. As far as the eye can see government debt will grow faster than the size of the Tasmanian economy. How will those vying for our vote address this reality?

We as a State have become lazy when it comes to raising our own revenue. We have become increasingly reliant on the Federal government. The RER indicates that in 2023/24 only 33 per cent of government expenditure will be from our own sources. The government’s target is 37 per cent which means in current dollar terms we need to raise another $400 million each year to make our fiscal position sustainable. How are we going to do that? Will services need to be cut even further?

The government’s targets no longer include a figure for a surplus/deficit. Instead, the chosen measure is the fiscal balance which includes capital and infrastructure as well as operating outlays. It gives a more realistic picture and highlights the problems we face. The fiscal balance for the general government will be negative $1 billion for 2023/24. The target is break even. How will we this be achieved in the future? Failure to do so will add to the perilous level of debt servicing costs.

The Premier has foreshadowed a 2030 Strong Plan for Tasmania’s Future. At this stage the plan won’t come anywhere close to achieving the government chosen targets.

The government has laid down a template for a sustainable fiscal strategy. By the end of February both Labour and Greens will need to do the same. It’s a statutory requirement as we head towards an election. To be credible, election promises should explain how they will help achieve a party’s fiscal strategy.

The election costing period has now started. Treasury is now available to cost election promises and assess the effects on budget outcomes and net debt. First cab off the rank should be Labor’s plan to raid Hydro Tasmania’s profits to pay $400 to households to offset sky-rocketing electricity bills. Almost all Hydro’s profits are now paid into government coffers, hence it is not clear what Labor plans to change.

The deteriorating fiscal position would look even worse if the Budget’s $300 million efficiency dividend was removed. Expenditure cuts of $300 million need to be found , yet none have been identified. Frontline services will be maintained and critical funding to support the Commission of Inquiry recommendations provided, so how will parties find savings? Will they tell us before we vote?

There’s always well-founded scepticism about expenditure figures in the Budget forward estimates as expiring commitments are often overlooked because replacement arrangements are yet to be finalised.

Achieving a responsible 2024/25 Budget will be a herculean task with or without a majority government given a tsunami of election promises is guaranteed. Knowing how policy outcomes will affect our precarious fiscal position is essential information for electors. Political slogans won’t cut it.

That’s why this election campaign is so crucial.