Pre-poll economic report fires Tasmanian election campaign

Tasmania’s Liberal government will fail to deliver all of its much-trumpeted infrastructure spend, but jobs growth is exceeding expectations.

Tasmanian Premier Peter Gutwein. Picture: Zak Simmonds

Tasmania’s Liberal government will fail to deliver all of its much-trumpeted infrastructure spend, but jobs growth is exceeding expectations amid a strong economic recovery, according to a pre-election budget update.

State Treasury’s Pre-Election Financial Outlook report was seized on by both sides of politics less than three weeks from the May 1 poll, and hailed by business as confirming that Tasmania was undergoing a “jobs recovery”.

The politically sensitive PEFO, released on Tuesday as early voting got under way, shows the state is rebounding more quickly than expected from the pandemic recession.

Gross state product for this fin­ancial year is now estimated at 1.5 per cent, up from -1.5 per cent forecast in the state budget.

Jobs growth is up from -1.75 per cent forecast in the budget to 1.75 per cent, while labour force participation has risen and the jobless rate is revised down from 8.5 per cent to 6.5 per cent.

Premier and Treasurer Peter Gutwein said the comeback was further evidence that Tasmania’s economy had “come through COVID better than just about anywhere else because of our management of the pandemic … Today’s report confirms that only a majority Gutwein Liberal government can be trusted to manage Tasmania’s post-COVID recovery.”

However, the PEFO suggests the budget turnaround is due to higher GST receipts and Treasury’s assessment that the government cannot deliver its promised infrastructure spend in full.

It shows infrastructure investment in 2020-21 is likely to be down from $1.07bn to $694m.

The Liberals said much of the shortfall would be made up in subsequent years, leaving an underspend across the forward years of the budget of $116m.

Labor accused Mr Gutwein of an “abject failure” on his state budget centrepiece.

“What that means is that Tasmanians won’t get roofs over their heads, our health and hospitals will still be in crisis and Tasmanians will still be struck the traffic,” Labor Treasury spokesman David O’Byrne said.

“It is unacceptable to fail to deliver on critical infrastructure for the community.”

Treasury’s assessment on the under-delivery on infrastructure is based in part on experience — the government historically underspends 25 per cent in this area — but it also points to “emerging signs of capacity constraint in some sectors of the construction industry”, as private investment and federal projects compete with state budget announcements on public housing and roads.

Treasury says the current election campaign, with big-spending pledges from both major parties on health in particular, will further tax the supply of skilled labour and equipment.

The Tasmanian Chamber of Commerce and Industry hailed the confirmation of the state’s economic improvement.