Tasmania sinks into the red

It’s hardly surprising that Tasmanian Premier Jeremy Rockliff and Treasurer Michael Ferguson were momentarily silenced when Matthew Denholm asked this week when they expected an end to the state’s rapid descent into deepening debt.

Platitudes about not “overcorrecting” too quickly do not cut the mustard when budget papers show net debt – eliminated before the Liberal Party won office a decade ago – more than doubling from $3.5bn in 2023-24 to $8.5bn in 2027-28.

By then, the spiral is expected to be costing Tasmanians $370m a year in interest payments, up from $70m last financial year. The longer-term picture is much worse. Without a major correction, debt will double again by the mid-2030s. The payback, when it comes, will be severe.

As well as dampening the island state’s economic prospects, the ballooning debt poses a risk to taxpayers across the nation who already provide 65 per cent of Tasmanian government revenue.

After decades of propping up the sclerotic Northern Territory economy, another mendicant state is the last thing the nation needs. Because of the state’s narrow economic base, Tasmania’s own revenue sources are limited.

Population growth has slowed and gross state product is expected to fall this financial year. But the grim outlook did not stop the government lifting education and health funding by more than 6 per cent across the forward estimates, well above inflation, and spending $5.1bn on new infrastructure.

Reform, not extra money, is needed across the public sector, starting with the failed school system in which just 53 per cent of Tasmanians have completed year 12.