Published: 04 June 2020

For every dollar received this year, Tasmania will spend $1.29. Spending on health will help, says Ruth Forrest

NEVER waste a crisis.

It’s a hackneyed phrase for sure, but it accurately sums up the sentiment of people I talk to. We need to take advantage of new opportunities as we rebuild and not squander any positives this extraordinary time has presented. We also need to explore which things we can do better.

For starters, we can discuss policy options without the badgering and belittling cries of “where’s the money coming from?”, a cry that suppresses public debate at the outset.

The Government’s recent Economic and Fiscal Update Report revealed that for 2020-2021, its spending is estimated to be $1.7 billion more than receipts. For every $1 received, we will spend $1.29.

Such is the magnitude of the Tasmanian Government’s task over the medium-term that, barring major reform of the federal system, even a renewed program of State Government austerity will still leave a funding gap that will need to be covered with borrowed funds. Therefore, let’s rule out austerity at this time, especially if we want people spending in our local businesses. The answer to the inevitable “where’s the money coming from?” question to those on the other side of the political fence will simply be “the same place as yours”. This means we might be able to finally have a sensible debate about the merits of policies above the noise of politics.

There’s no better place to start discussing policies with merit than with a properly funded health system.

The Premier has been resolute in putting a premium on the lives and health of Tasmanians, for which he deserves unconditional praise, especially with our older and more vulnerable population.

But the crisis has highlighted a few things. The effects from years of underfunding health have become manifestly obvious.

Second, the professionalism and skill of all in the health system has also become manifestly apparent.

And third, a properly funded and functioning health system ticks all the right boxes.

People want it. People need it. It’s a skilled labour-intensive industry.

It creates spill-over effects, in training and education.

Educated skilled workers in other sectors will have fewer misgivings about moving to Tasmania. Talk often turns to what industries we should encourage. Well there’s one staring us in the face — one that too often is dismissed as being too demanding.

If we don’t address the problems they won’t go away. They’ll get worse. A “don’t give them too much it will only encourage them” approach to health policy needs to change.

As a general rule, spending on new infrastructure should exceed the rate at which old infrastructure is wearing out. The government always has great plans for infrastructure spending. But difficulties in getting projects shovel-ready or deferring projects to save cash has been a prominent feature of this government’s fiscal performance.

Infrastructure under-spending is an institutional certainty. Governments tend to get a bit too hung up on infrastructure spending as the only source of enduring benefit to an economy.

There’s a lot of recurrent spending that has similar enduring benefits. We shouldn’t hesitate to spend more on so-called recurrent items which increase social capital rather than waiting for an infrastructure project to make it to the starting grid.

There’s any number of education, training or community care projects or housing grants that fall into this category. In the past, at least 95 per cent of spending in any one year occurred due to the inbuilt momentum of the system. There’s only a very small amount that’s new or flexible funding.

That discretionary amount doesn’t seem to grow much because revenue growth is slower than spending growth, and all parties refuse point blank to do anything about tax reform. Perhaps the $60 billion unallocated Job Keeper money could support transitional support to facilitate this?

However, the pandemic has opened up a huge funding gap. Closing the gap is the challenge. If the funding gap is already likely to be $1.7 billion just for 2020-2021 with present programs, how much extra would be needed to put health on the right path and to do the same for others who have suffered years of neglect because we supposedly couldn’t afford it? Well, maybe we can. It’s time to reassess our priorities.

The Mercury Thursday 4 June, 2020

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