Few have taken any issue with the prognosis laid out by Saul Eslake in his landmark report into the State’s finances.

Even fewer have modified their policy positions to reflect the harsh reality of our predicament.

The major parties have tacitly agreed not to discuss the increasing amounts that will be spent servicing debts and paying past liabilities that will mean amounts devoted to current services, in real terms, will continue to decline, with no respite in sight.

The Liberals are hoping their misnamed mantra of a Strong Plan for 2030 will help maintain their credibility, whilst the Labor Party are praying someone rings the bell before the last lap so Leader Steven Bradbury gets to complete the course and thus claim victory without having to tell anyone what he proposes to do about his, and our, alarming situation.

Occasionally another issue will surface and the combatants will welcome it as a diversion from having to talk about our seemingly intractable fiscal problems. Sadly these diversions are also likely to add the our financial woes not relieve them. The ever-growing costs of the new TTLine vessels a case in point.

The most recent diversion is the governance of government businesses.

This is not to say it’s a trivial issue. It’s not. But it needs to be seen in the correct light, in the wider context beyond the obvious governance issues and failures. This governance review is part and parcel of the same problem where not only government departments and agencies are having to devote an increasing portion of their current resources to servicing debts and past liabilities, so too are government businesses. And so are other public institutions like UTAS and TasWater.

Much of TasNetwork and Hydro’s debt has resulted from having to pay dividends to the government so it can keep operating. TasWater is now repeating the pattern.

This was brought home to me at the recent estimates hearing with TasWater. Since 2018 the State Government has contributed $200 million as equity into TasWater to assist fund, and progress more promptly, the backlog of vital capital works. Despite this, borrowings increased by $300 million to their current level of $866 million.

More alarming is that in the next 5 years borrowing will more than double, increasing by $1 billion to almost $1.9 billion. Owner Councils insist on receiving dividends each year which partially explains the reason for some of increase to Tas Water borrowings. The rest is needed because insufficient capex was spent in the past. The day of reckoning eventually arrives.

The infrastructure companies are always loath to admit to borrowing to pay dividends. But without exception all are extremely capital intensive businesses, which for greater financial sustainability arguably require a much higher level of retained earnings than owners ever allow.

Banks, supermarket chains, telecommunication and tech companies, plus all the regulated service providers get first slice of the pie leaving the rest of us to split the leftovers. What may be reasonable and perfectly valid at an individual level, may, when added to others doing similar things, means too much of the Magic Pudding, which is not growing as fast as in the past, is lost before the community get a chance to share. The Pudding Thieves are lurking. Albert’s days are numbered. It’s labelled a cost-of-living crisis. The reality is it’s a system crisis.

Baby boomers may think if people would do as they themselves had done, refrain from lattes and avo on toast and stop bingeing on Netflix, then all problems would be solved. But that’s a misreading of the situation. The global financial crisis 16 years ago saw the beginnings of State government financial difficulties, stuck with a tax base that was not responsive to its needs as a service deliverer. The State government found itself with no immunity to its revenue shortfall problem. The hope was that the good times will return. But they didn’t. And they won’t.

What is now afflicting consumers, let’s call it the coliv (cost of living) virus is a strain of the virus which started affecting the State government over 10 years ago. Nothing was done. Unfortunately the patient now has a serious case of long coliv. The major parties are ignoring the diagnosis, even as the virus spreads to the rest of the population who are starting to struggle to find the revenue they require to keep paying for the things they need.

For goodness sake. Can’t we recognise what’s happening out there and be willing to discuss, debate and ideally deliver meaningful ideas that could lead us to real solutions.

The Mercury, Saturday 28 December 2024