Crossbench to back Tasmanian Liberals to fix ‘sinking’ state

Tasmania’s Liberal government has secured enough support to govern, but the state’s leading economist warns it must immediately cut spending, privatise assets and reform tax to avoid a ‘horrible hole’.

Tasmanian Premier Jeremy Rockliff has secured the support of the crossbench to form government. Picture: Chris Kidd

Tasmania’s Liberal Party has secured enough support to govern, but the state’s leading economist warns it must immediately cut spending, privatise assets and reform tax to avoid “sinking” into a “horrible” economic “hole”.

The nation’s last Liberal administration is yet to negotiate formal agreements with crossbenchers to guarantee it can govern in minority after suffering a 12 per cent swing at the March 23 state election.

However, with Labor deciding not to try to form government and key crossbenchers, including the Jacqui Lambie Network, offering stability and supply, Premier Jeremy Rockliff can continue 10 years of Liberal rule.

Jacqui Lambie, whose party should win three seats, has promised the Liberals “stability” and budget supply, as has independent Kristie Johnston.

Economist Saul Eslake in Hobart. Picture: Chris Kidd

Fellow independent David O’Byrne, a former Labor leader, told The Weekend Australian he would also provide “stability” and would not support frivolous no-confidence motions.

All the balance-of-power crossbenchers want to secure outcomes on issues including parliamentary reform – pushed by Ms Johnston – and measures to address failing health, housing and transport services.

Mr Rockliff may need to offer such outcomes – and a mechanism to consult the crossbench – to secure formal or written minority support agreements.

With Labor surrendering and crossbencher assurances offered verbally, there appears no necessity, but the Premier suggested he would prefer formal agreements.

“We will ensure that we have surety and security,” he said. “We’ll work towards that in our discussions.”

Ms Johnston told The Weekend Australian she wanted the government, which will hold only 15 of 35 seats, to abolish “Dorothy Dix” questions and more private members time.

“I’m not in the business of blocking supply … but what I will be looking for is a far more accountable parliament … and (a government) that is collaborative and open to considering ideas from all sides,” she said.

Negotiations cannot be seriously progressed until after the preference cut-up that will finalise seats – including which “Lambies” are elected. The process will not start before April 2. The government’s first challenge will be to draft a difficult budget, amid increasing concern the state is heading for a fiscal crisis.

Independent economist Saul Eslake told The Weekend Australian the government must make tough decisions to avoid a debt spiral already rivalling Victoria’s.

“I am very concerned – if this government has any sense of fiscal responsibility; and I put a question mark after that – the 2024-25 budget will have to be a tough one,” Mr Eslake said.

The Liberals – who have taken the state from no net debt to $6.1bn net debt by 2027 and a $1bn fiscal deficit last year – have made an estimated further $1.4bn in election promises.

Even before that largesse, Treasury’s Pre-Election Fiscal Outlook warned of significant risks of a worse outcome and raised a red flag over the state’s burgeoning debt.

Treasury warns that including public service superannuation liabilities, Tasmania has a level of debt – relative to gross state product, and on a per capital basis – second only to Victoria.

Mr Eslake said on some measures the level of debt was worse than Victoria’s. “Everybody thinks they know Victoria is a basket-case but on two metrics commonly used by the rating agencies – the cash deficit and net financial liabilities – Tasmania is worse than Victoria,” he said, adding the Liberals’ $1.4bn in promises were “gobsmackingly irresponsible”.

The only options were to cut spending or increase revenue, but the Liberals promised to do neither, he said. He believed the government should privatise poles-and-wires electricity company TasNetworks via a 99-year-lease and sell power retailer Aurora.