Just when you think things can’t get worse, they do. Treasurer Barnett released the 2024-25 Revised Estimates Report setting out the State government current position.

The release was accompanied by an assurance that “Tasmania’s net debt is manageable “. There is not a skerrick of evidence to suggest this is true. All three targets covering debt management are flashing red warning signs.

The Treasurer reiterated his determination to “maintain a steel like resolve to deliver a budget surplus by 2029-30”. Maybe he should apply some of the steel like resolve to understand what a surplus means. Spending needs to be less than receipts, not just spending on current operations, but total spending including capital outlays and paying past liabilities. Otherwise, debt keeps rising and becomes unmanageable. Ipso facto.

In order to make his bottom line appear better, the Treasurer has brazenly, some may call it deceivingly, pioneered a new budget approach. If it can’t be easily quantified leave it out. Don’t bother with an estimate and a footnote (which forward estimates aren’t actually estimates?). Just leave it out. The increased health expenditure of $345 million for this year 2024-25, due to continued high levels of demand for hospital services and largely responsible for the budget blow-out, is not budgeted to continue for the next three years which does beg the question of whether the additional health workers will all need to be sacked next year?

This new approach in the case of health expenditure lowers debt at the end of the forward estimates by at least $1 billion. Which would have made a cash surplus even more remote. It’s a disingenuous approach completely lacking integrity. At least we now know how the Treasurer plans to manage our debt, by fudging the figures.

The current government has done Tasmanians a huge disservice by banging on how an operating surplus is just around the corner. Firstly it’s not, and secondly even if it was it’s a red herring, a deliberate misdirection to Tasmanians that we don’t need major reform. Which is what the government essentially offered in its response to Saul Eslake Review of the State’s finances issued with the Revised Estimates Report.

The government has completely avoided the thrust of Saul Eslake’s Review.

Take this sentence early in the opening summary: “In many ways, the recommendations in the Independent Review are consistent with the Government’s Fiscal Strategy, which has been commended by rating agencies.”

The issue is not whether the Government’s Fiscal Strategy is ok (it is) but whether it is being met (it isn’t), and if not, what is the Government doing or planning to do to fix it. Nothing it seems except fudge a few figures and hope the problem will disappear.

To blithely state Mr Eslake and the rating ratings agencies approve of the Fiscal Strategy therefore makes everything ok is avoiding the issue and placing one’s head in the sand. The Government seems to have forgotten there is little point having a strategy if you’re not actively trying to achieve it.

Two of the debt management targets are under water. A third target relating to gross debt per capita will become so in 2025-26 even with the Treasurer’s liberal interpretation of debt.

Two of the targets relating to fiscal sustainability will never be achieved with current policy. One of these targets relates to achieving a break-even fiscal balance which essentially means overall spending has to equal revenue over a rolling four-year period. The other blue sky aspirational target is that Tasmania needs to raise 37 per cent of what it spends (the rest comes from the Feds). Currently the figure is 30 per cent. That means an extra 7 per cent. That’s an extra $650 million on current figures. What’s the government plan to do this. It doesn’t have one. The mis-named 2030 Strong Plan is a smokescreen. Remember this (37%) is the Government’s target. They chose it. Everyone has agreed it’s a good idea. But the Government has not told us how it plans to do it. It’s refused to even have an adult conversation about tax reform. It talks about how a growing economy will increase the amount of taxes raised. But that won’t even cover the cost of paying interest on the extra debt, which is likely to rise even faster when our credit ratings suffer and older maturing debt at lower rates is replaced by new increased debt at higher rates.

The growing-economy-will-fix-things old chestnut is produced almost as regularly as the productivity chestnut. Teachers, nurses and police officers aren’t assembly line worker producing goods. It’s not as if members of a string quartet can dispense with one of their number and still produce the same output; or perhaps are directed to henceforth play everything in allegro style to get the job done faster. Most public service tasks aren’t like that. The point is being reached where output will decline if workers are expected to do too much.

The Revised Estimates Reports and the Government’s response to Saul Eslake’s review have clearly brought into focus the major issues facing us. The Government’s blinkered view of the way ahead is delusional. We continue to head in the wrong direction getting further from where we need to be.

The Mercury, Thursday 13 February 2025