Eric Abetz to trim Tasmanian budget largesse amid federal bailout fears
Tasmanian Treasurer Eric Abetz plans to slash some government spending – but it’s a drop in a fiscal ocean of red ink, amid claims a federal bailout may be needed.
Facing the nation’s worst debt and deficits, Tasmanian Treasurer Eric Abetz will on Thursday use his first budget to slash spending on government marketing and communications, as well as office upgrades.
The measures will save millions but are a drop in a huge fiscal ocean of red ink, with the state now having the highest total government deficits and debt as a percentage of GSP of any jurisdiction.
Labor Treasury spokesman Dean Winter on Wednesday suggested the state might need a bailout by federal taxpayers.
Mr Abetz – handing down the minority Liberals’ second 2025-26 budget, after the first in May was aborted by a snap election – told The Australian it would take “meaningful steps” towards budget sustainability.
The former federal minister has labelled it an “interim” budget, signalling more meaningful action to follow in 2026-27.
“We are set to deliver a fiscally responsible budget to deliver services that Tasmanians expect,” Mr Abetz said.
“We are investing in vital services such as health, education, and community safety, while being fiscally responsible.
“In the 2025-26 interim budget, our government has taken meaningful steps to support fiscal sustainability, including new savings initiatives that reduce expenditure on agency marketing and communications, and office and leasing improvements.”
Mr Abetz has refused to consider a public service pay rise above 3 per cent and will use the budget to invite government workers to nominate future budget cuts. “Inconsistencies, duplications, where technology can be better used and more – we want to hear it,” Mr Abetz said.
A Treasury update in October shows the 2024-25 budget deficit blowing out from an estimated $793m to $1.26bn, while general government sector net debt was $5.04bn, a $1.7bn increase from 30 June 2024.
Independent economist Saul Eslake published his own data. It shows that, including government businesses and unfunded superannuation, Tasmania has the biggest cash deficit and highest liabilities as a percentage of GSP of any jurisdiction, including the Northern Territory.
Even so, the government is pushing ahead with a new Hobart AFL stadium estimated by the state’s planning commission to cost taxpayers $1.8bn in further debt over 10 years.
The Labor opposition also supports the stadium but accused the Liberals of years of financial mismanagement.
“Tasmania was one of the only jurisdictions in the country to not have any net debt in 2014 when the Liberals came to office,” Mr Winter said.
“But it’s taken the Liberals 11 years of financial mismanagement to make Tasmania’s budget a source of national embarrassment with the worst set of financials in the nation.
“(Ferry operator) TT-Line needs a bailout from Tasmanian taxpayers and the direction the Liberals are taking Tasmania means they could have their hand out to Australian taxpayers to bail them out before too long.”
In a briefing to MPs after the July 19 early election, Treasury said the state’s spiralling debt – heading towards $13bn – was a “generational burden” that would take “all levers”, including tax hikes and a “decade of discipline”, to repair.
It is understood Treasury chief Gary Swain told MPs the “accelerating” debt crisis – with net debt trebling over three years – was “alarming” and that it was “mathematically impossible” to “grow our way out of this pain”.
The briefing revealed the state was in 2025-26 borrowing $1.178bn for operational expenses, something Mr Swain is understood to have likened to buying groceries on the same credit card used to pay off an interest-only mortgage.
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