The scale of the crisis facing Tasmania is frightening.
Here’s state Treasury, freed from their political masters in the PEFO (pre-election financial outlook) last month:
“The state budget has a structure problem. Expenses, significantly driven by health demand and costs, are growing at a faster rate than the state’s current sources of revenue.”
If that wasn’t simple enough, the boffins spelled it out in terms even the dimmest of politicians should understand: “As a state, we are spending more than we earn and the gap is growing.”
So much so that net debt – which did not exist in 2013-14, prior to the Liberals coming to power – is projected to grow from $4.2bn in 2024-25 to $13bn by 2027-28.
This will increase annual interest costs from $231m to $670m. As Treasury points out, “this will reduce the state’s ability to manage economic shocks and to provide services to the community in the future”.
Premier Jeremy Rockliff, however, continues to suggest there is no problem, and nothing to see.
The Premier who took a state to its second election in 16 months rather than resign claims there is a “sensible pathway” to surplus and debt reduction in his budget.
There are no surpluses and no indication of when the increase in debt will begin to end, let alone start to be paid down.
As PEFO put it: “The rate of growth in debt is not sustainable and the size of the problem will only increase if not addressed.
“Immediate and sustained action is needed.”
To stop the increase in debt and begin to pay down borrowings, the state must achieve significant surpluses.
Shockingly, Treasury equates the size of this challenge to cutting spending by 25 per cent, or increasing tax by 250 per cent, or slashing 20,700 of the state’s 33,200 public servants.
Yes, those figures are correct.
Treasury is not suggesting these things occur but is using them to illustrate the scale of the crisis their political masters have created.
So what have the major parties done in response to this during the campaign?
Labor has identified $1bn in savings, although these have been called into question by the Liberals. Labor leader Dean Winter won praise from the business community by suggesting a round table including business and union leaders to seek consensus on a way forward.
The Liberal budget, which was never passed in full due to the no confidence motion in Rockliff, included modest cuts to public service numbers.
In addition, the Liberals were promising to consider asset sales – but then dropped these when the election was called.
Since then, Labor has pledged to create and somehow staff 10 new free GP clinics, while the Liberals have transformed overnight from privatisers to nationalisers, vowing to create a state-owned insurance company.
So good for “immediate and sustained action” to stop the state sinking into a fiscal quagmire from which it may never recover.
Whoever forms government may wish they hadn’t. Taking the action required to save Tasmania from fiscal disaster will not be pretty; failing to do so will be uglier still.
Colour, courage and a sharp tongue – the Stone Age is a bygone era
John Stone was a formidable secretary of Treasury. He offered unvarnished assessments of treasurers he worked with, from Billy Snedden, Frank Crean and Jim Cairns to Bill Hayden, John Howard and Paul Keating.
Why does the left wage war against the poor?
There is really a left-wing assault against the poor, evident in a thousand policy areas and big ideas that are bad ideas. Winning one election well does not remotely guarantee policy success.