Budget update predicts recession for Tasmania

The state’s economy will slide into the deepest depression it has seen in 30 years, updated budget figures show. WATCH THE PREMIER PETER GUTWEIN’S UPDATE>>

THE state economy will suffer the sharpest decline on record and the government revenues will take a billion dollar hit due the impact of the coronavirus pandemic, state government forecasts show.

The government released its Economic and Fiscal Update Report today — detailing the financial havoc wreaked on the state’s economy by COVID-19.

The economic measures designed to protect public health have resulted in the largest and most sudden economic shock ever seen in Tasmania.

WATCH THE PREMIER’S ECONOMIC AND FISCAL UPDATE:

It has been accompanied by a steep slump in household demand, the cancellation of major projects and a decline in exports including education and tourism.

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Instead of growing at three per cent, the state economy is predicted to decline by 1.75 per cent in the 2019/20 financial year.

Unemployment is predicted to be 12.25 per cent by June, close to the highest level seen since the late 1970s.

The government’s income will take a big hit — $1 billion over two years.

GST receipts will fall by $309 million this financial year and $357 million next year.

State tax revenues will fall by $76 million and $283 million.

As a result, the budget will record a deficit of $716 million this financial year and $1 billion next year — the first budget deficits since 2014/15 — and the first delivered by Peter Gutwein as Treasurer.

Government net debt will rise from $645 million in 2019/20 to $2.3 billion in 2021/22.

The state government has had no net debt since 2003/04.

Treasury officials said there still remained considerable uncertainty around budget predictions.

The government will present further update reports in the months before the 2020/21 state budget — originally due in June — is handed down in November.

Originally published as Budget update predicts recession for Tasmania