Tasmanian budget: Peter Gutwein throws kitchen sink in hope of saving the house

This is a budget reminiscent of Tasmania’s basket-case days: soaring debt, economic contraction, runaway spending and stagnant population growth.

The hope is that rather than heralding a return to form, Peter Gutwein’s seventh budget is a one-off binge to cauterise COVID’s economic haemorrhaging.

Hand-passed the premiership on the eve of the pandemic, he describes his $4.4bn lurch into net debt as “throwing the kitchen sink” at a crisis he inherited. It will fund an infrastructure splurge of almost $5bn: bridges, roads, hospital wards, schools, and irrigation.

The Premier and Treasurer was unwilling to predict when his debt legacy would be paid off, but no debt is good debt for a state with revenue and population bases as restricted as Tasmania’s. These are, at least, intergenerational assets being purchased on the never-never in return for intergenerational debt burden.

With an electorate and business community still in recovery mode, Gutwein essentially argued he had few options other than to spend big to stimulate growth and jobs.

He may be right. It’s also true the debt repayments constitute less than 1 per cent of overall revenues, and that the level of debt compares favourably with many other jurisdictions.

However, the predicament the state finds itself in only underscores the repeated failure of successive governments to embrace structural reform.