Tasmanian budget: Gutwein gambles on delivering promises over pretty balance sheet

Tasmanian Premier Peter Gutwein, ahead of delivering his eighth state budget. Picture: Chris Kidd

Peter Gutwein is gambling that Tasmanians place a higher value on fixing the health system and delivering election promises than they do on a pretty balance sheet.

Fresh from securing a record third consecutive term of majority government, on the back of keeping Covid at bay, it’s probably a safe bet.

It’s no small thing to double the debt of a state once proudly net debt-free, but it is partly the legacy of an economy-saving $1 billion economic and social Covid rescue package.

The state’s resulting economic bounce-back exceeded expectations and arguably some of the remaining stimulus could now be scaled back to reduce debt and deficit.

Instead, Gutwein’s eighth budget (he was Treasurer before taking the premier’s reins from Will Hodgman early in 2020) continues the infrastructure spend, delivers election promises and tops up health.

Politically, it is smart. The Liberals know, or ought to, that the May state election could have been very different had Labor not imploded with infighting and scandal in its first two weeks.

Public frustration at a failing health system is palpable and the budget responds with a $900m boost over four years.

One of the reasons for the Liberals’ success is their determination to deliver election promises, and this post-poll budget continues the trend.

Further, the spending is steady, and revenues are up – from both state and GST sources, thanks to the stronger than expected economic bounce-back.

True too that the debt outlook is not as drastic as forecast, and at least a good chunk of it is devoted to infrastructure that will help underpin future growth.

Even so, this is a budget built on a wing and prayer; namely that Delta does not cross Bass Strait, at least before Tasmania’s nation-leading vaccination rates have reached 70 per cent or more.

Even with the state Covid-free, Treasury notes that recent high levels of private investment will drop in 2021-22 and growth will drop from 4 per cent in 2021-22 to 2 per cent in 2022-23.

It is also a budget that kicks some stubborn problems into the next term and beyond.

Gutwein’s debt legacy comes as Tasmania faces the end of a “no worse off guarantee” under changes to the GST distribution in 2026-27.

At the same time, taxpayers may have to help fund the multi-billion Marinus Link and Battery of the Nation energy schemes. And the state’s unfunded superannuation liability will be $9.68 billion in 2025.

All of which makes the government’s slogan of “Securing Tasmania’s Future” seem a little hollow, despite its success in so far steering the state through the Covid crisis.