Tasmanian Budget: Economy entering ‘golden age’, but no new money to address homelessness
Tasmania’s state budget paints a picture of a “golden age” in Tasmania’s economy, with the Treasurer boasting of plenty of money in the bank to protect the island state from unforeseen cost blowouts.
- Projected surplus of $161m next financial year
- Cumulative surpluses of $620m over next four years
- Record $2.6b infrastructure spend
- Confirms election promises on health
While today was the first Hodgman Liberal Government budget since being re-elected in March, it was a mostly a case of no surprises apart from the sell-off of a key state-owned heritage-listed building in Hobart and a plan to locate a new medical centre on an existing hospital site.
It is a typical post-election budget which cements the campaign promises, particularly health, education and infrastructure.
The budget promises to create 9,300 jobs over the next four years.
What are the stakeholders saying:
“I think we are on the cusp of a golden age,” Treasurer Peter Gutwein said.
Premier Will Hodgman described it as a “superb” budget.
“This is a budget that will literally build Tasmania’s future,” he said.
Surpluses bigger than predicted
The centrepiece is a surplus of $161 million, and cumulative surpluses of $620 million over the forward estimates.
In February, a surplus of $34 million for next year was predicted, with Mr Gutwein today heralding a $127 million increase on that.
But, the surplus represents only 2 to 3 per cent of total revenue, which is a conservative buffer.
State Government revenue hit a record $6.2 billion, up from $5.8 billion.
Despite the extra cash, there was no new money for homeless services, a key issue that the state has been grappling with this year.
The Government defended its record, saying money had been brought forward for affordable housing.
The net underlying operating balance, which does not take into account several grant payments, is a deficit of $4.5 million, jumping to $82 million in the red in 2019-20.
Mr Gutwein warned that while the books look good, Tasmania must be prepared for unexpected events, such as natural disasters.
“Whilst Tasmania is in a very strong position, it would be reckless to do what others call for and spend every dollar that is earned,” Mr Gutwein said.
There is looming uncertainty about Tasmania’s GST share, with the Productivity Commission review on GST carve-up due to be made public this month.
GST is the single largest source of revenue, making up 40 per cent.
However, during a visit to the state today, Prime Minister Malcolm Turnbull assured those in attendance that Tasmania “will be happy”.
While the budget papers contained few new announcements, the Government confirmed the intention to sell the historic Treasury building on Murray Street, with the building valued in 2015 at $18 million.
The Treasurer would not say how much the sale of the Treasury building would bring. (ABC News: Drew Hill)
That figure is considered conservative given Hobart’s property boom.
Mr Gutwein would not reveal the figure he expects to receive from its sale.
“I think it’s worth much more than that,” he said.
The Government also plans to co-locate a new private hospital at the Launceston General Hospital.
Mr Gutwein said Calvary Health Care last year lodged an unsolicited proposal for the development, adding he had formally notified Calvary the Government would progress the proposal to the second phase.
The investment by Calvary is expected to be worth $100 million, but because it is a private development it does not appear in the budget papers.
Tasmania’s energy businesses continue to act as cash cows, predicted to deliver almost half a billion dollars in dividends to the state’s coffers over the forward estimates.
Sustainable Timber Tasmania, formerly Forestry Tasmania, will pay a special dividend of $15 million next financial year, due to the sale of its hardwood plantations.
What the political parties are saying
Tasmanian Greens leader Cassy O’Connor said the proposed sale of the Treasury building would come as a shock to many Tasmanians.
“We believe the sale of the Treasury building is a betrayal of the Tasmanian people who own the Treasury building, and they have not been consulted by this Government or the Liberals who seem intent on selling off the farm,” she said.
“I’m concerned about the fact that this budget spent more time talking about the robust housing market than it did talking about the Tasmanians who are sleeping rough in tents and sleeping at the showgrounds.”
Shadow Treasurer Scott Bacon said the budget’s underlying operating deficit showed the Government was driving the state into net debt.
“Peter Gutwein might crow about this budget investing records into infrastructure, but what it’s failed to do is invest in people,” he said.
“We know that around half the money that was promised for health and education by the Liberals in the lead-up to the election hasn’t been delivered in this budget, and there’s no new money in this to address the housing crisis here in Tasmania.”
What stakeholders are saying
Scott Gadd who has helped manage emergency tents for homeless people at the Royal Hobart Showgrounds said there was already “a big lick of money” on the table for housing support, but more could have been done.
Scott Gadd has been the face of Hobart’s homeless crisis helping people at the Royal Showgrounds. (ABC News: David Hudspeth)
[“It’s a] bit disappointing though that we haven’t got something at the emergency end of the spectrum, which is what we’re dealing with here,” he said.
Patti Chugg says its time for the Commonwealth to forgive the public housing debt. (ABC News: Scott Ross)
“It would have been good to see a bit more urgent funding and we could extend some of these temporary arrangements that people are into.”
Patti Chugg from Shelter Tasmania described the budget as “predictable” but said it was pleasing to see the Government bring forward $25 million for its Affordable Housing Strategy.
“But we would’ve liked to have a nice surprise and see some new initiatives,” she said.
“We would really like to see that public housing debt [to the Commonwealth] gone and this is a perfect opportunity with a strong economy to alleviate that debt.
“We’re just wondering when that’s ever going to happen.”
Kym Goodes from the Tasmanian Council of Social Service said the Government had fulfilled its commitments to affordable housing and the redesign of the child protection system.
But she said there was a significant missed opportunity.
“We think this is a budget where we could’ve turned a corner and started to rebalance Tasmania in terms of investing more in universal services and in preventative services,” she said.
“So this budget sees a huge amount of money go into hospitals for example, but the lowest ever investment we’ve seen in preventative health.”
Tom Lynch from the Community and Public Sector Union does not support the decision to sell the heritage-listed Treasury building.
Unions are disappointed there was not more money for parks staff. (Supplied: threecapestrack.com.au)
“I’m concerned about the sale of any public assets, and I don’t see why that community asset should be handed over to the private sector to make a profit out of,” he said.
Mr Lynch is also concerned that resourcing of the public sector will not keep pace with investments in tourism and national parks.
“Parks and Wildlife have received an extra 15 rangers in this budget, they need three times that,” he said.
Unions Tasmania secretary Jessica Munday said the budget was full of corporate welfare and tax handouts which would not necessarily deliver the promised number of jobs.
“Any investment in big infrastructure projects that are going to create jobs is welcome but what we need to be asking about our jobs is are they full time, are they permanent and are they going to go to Tasmanians who really need them?”
The Australian Nursing and Midwifery Federation’s Tasmania’s Branch Secretary Emily Shepherd has doubts about how the Government will staff the 76 public hospitals beds it has promised to open.
“We’re very concerned specifically about recruitment and retention,” she said.
“And how the vacancies that total over 200 currently of both permanent and fixed term will be addressed.”
Health and Community Services Union state secretary Tim Jacobson said he was extremely disappointed with the Government’s 2 per cent wages policy.
“We’re going to see more jobs over the next three to four years come into health but …it’s a real concern that we’re not going to have wages that are going to keep pace with inflation … to recruit specialist staff into the future,” he said.
Luke Martin from the Tourism Industry Council of Tasmania said it was an “extraordinary” budget with an unprecedented level of investment in visitor infrastructure.
“Whether it’s roads, our national parks, or indeed the single largest investment by an Australian and Tasmanian governments ever in a national park at Cradle Mountain, it’s quite a remarkable list of commitments,” he said.
“What’s particularly pleasing is that a lot of that investment will flow in the next two years when it’s most needed.”
Robert Mallett from the Tasmanian Small Business Council believes the overall strategy outlined in the budget will give confidence to many in his sector and their employees.
“Specific initiatives such as the Small Business Advocate, initiatives to limit energy costs, ongoing incentives for employers employing apprentices and lowering of the tax ceiling for small businesses transitioning to medium businesses through payroll tax reform, payroll tax relief for new businesses entering the state will all provide direct benefit to the sector,” he said.
“The even better news is that the Government’s intent to continue working on large infrastructure projects, maintaining the first home owners grant, and continuing to support the education and emergency management sectors will ensure that the small business sector will be very busy supporting this activity in the coming years.”