With recent events and the budget delivered by the Liberal Government unlikely to be fully scrutinised there is a need to be aware of the reality of our fiscal position as a State. Regardless of the forward path we take, with whatever Leader the State has we all need to be informed and seek answers from all MPs. By any honest measure, the 2025–26 Tasmanian Budget is not just disappointing — it is delusional. It shrugged off a fiscal crisis a decade in the making, ignored its own warnings, and sought to walk the state deeper into structural debt without even the pretence of a recovery plan. We are in worse shape than the worst-case scenario outlined in Treasury’s own 2021 Fiscal Sustainability Report, and yet the government has remained intent on fiddling with platitudes while the financial house burns.

The Budget as presented was defined by denial. It offers no structural reform, no meaningful new revenue measures, no serious expenditure restraint. It contained only vague gestures and hollow strategies — and that’s not a rhetorical flourish. On paper, we are heading toward a net debt of $10 billion by 2028–29. But the real number may well be worse, because we’re paying the price of ignoring reality for too long.

Three years ago, the 2021 Fiscal Sustainability Report set out a dire warning: “If Net Debt is not addressed, it could grow to $20.4 billion by 2034–35.” It urged urgent action — in 2024–25, for example, revenue would need to be 4.5 per cent higher to balance the budget. Leave it any longer, and the problem would spiral.

It was left longer.

The Budget forecast interest payments on general government sector debt hitting $700 million in 2028–29 — nearly triple the worst-case projection from that same 2021 report. And that’s assuming credit ratings hold and interest rates stay still. They won’t. Ratings agencies don’t reward budgets built on magical thinking.

Of every dollar this government spends, less than 30 cents comes from Tasmanian revenue. The rest provided by the Commonwealth. That’s the lowest ratio in living memory — a stark measure of just how little financial autonomy the state now has.

And yet the Budget contained not one dollar in new own-source revenue. Nothing. No plan for reform. No effort to broaden the revenue base. Just a limp hope that someone in Canberra will bail us out when the inevitable happens.

When that day comes — and it will — what will our answer be to the question, “You’ve known about this for a decade. Why did you do nothing?”

In real terms, core spending on government operations is falling. Spending more on debt servicing and legacy liabilities each year is limiting what’s left for frontline services.

The government’s so-called Fiscal Strategy was supposed to prevent this. Today, all but one or two of those targets are beyond reach. And there is no plan — no roadmap, no timelines, no reforms — to get back on track.

Strategic action nine: develop a cost–benefit framework for infrastructure projects over $50 million. In 2023–24, work on this framework was said to have “commenced.” In 2024–25, it was “continuing.” And in this year’s Budget? It will “commence” again in 2025–26.

This is the framework that should have been used to assess the now-infamous stadium project. But no analysis was ever done — because no framework ever existed. We’ve been sold the illusion of process, not the reality of it. And that’s how a project of questionable benefit now distorts the state’s infrastructure pipeline.

Benefit–cost ratios, when done properly, help governments make rational choices. They allow investment to be targeted where it does the most good — and where benefits can be shared and captured, especially by the public. But without a functioning framework, the loudest voice or most politically convenient project wins. That’s not planning — that’s paternalistic, authoritarian decision-making.

The government touted efficiency dividends, a new Productivity Unit, and a series of modest reforms as signs of progress. But these are tweaks, not transformation. And none of them come close to matching the scale of the challenge.

Consider this: the only fiscal target currently being met is that infrastructure investment exceeds depreciation. That’s it. And even that would be at risk if not for Commonwealth grants.

There are no ten-year projections. No forward plan to return to surplus. No clarity about when — or even whether — corrective action will be taken.

Instead, we’re told a review of the Fiscal Strategy will be undertaken in 2032–33. By then, Tasmania may be in debt so deep we’ll be governing at the mercy of bond markets.

Without new revenue, with rising debt and higher interest, and with no reform strategy worthy of the name, Tasmania’s finances are running on fumes. The state’s fiscal credibility is eroding fast. Its ability to fund essential services is under threat. And its political class is largely in denial.

As we face an uncertain future all MPs need to understand and respond to this reality. It’s no longer enough to call for “responsible management.”

We need a reckoning — with our broken revenue model, our addicted spending patterns, and our avoidance of long-term thinking. Otherwise, we’ll keep drifting until the next generation is handed the bill for our cowardice.

And by then, we won’t be debating whether we need a bailout.

We’ll be in one.

Hon Ruth Forrest MLC
Independent Member for Murchison
7 June 2025