Government debt and unemployment surge in Tasmania as coronavirus crisis continues

A 600 per cent rise in government debt and a doubling of the unemployment rate are the grim cost of the coronavirus pandemic for Tasmania.

TASMANIA will emerge from the coronavirus crisis with a record $2 billion of government debt and 12 per cent unemployment, it has been revealed.

Just weeks ago, the state was leading the nation on a range of economic indicators, but Premier Peter Gutwein says he now faces the task of rebuilding the state’s economy for a second time after the most sudden and dramatic reversal of economic fortunes in generations.

The last time the state’s unemployment rate was above 12 per cent was in mid-1994.

People lining up outside the Centrelink office in Hobart during the COIVD-19 pandemic. Picture: CHRIS KIDD

Last year’s state budget predicted a surplus of $57 million and $284 million in net debt.

Last week Mr Gutwein revealed the budget deficit would be in excess of $500 million.

Today he said the slowing of the economy due to business closures, the fall in state-based tax revenue and a slump in GST receipts would hit government finances hard.

“When we went into this we were leading the country on most economic indicators. We had a very robust, strongly growing economy and in fact, we were the envy of the nation,” Mr Gutwein told reporters.

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“By the end of the June quarter, we expect that more than 27,000 Tasmanians will have lost their jobs and the unemployment rate will be around 12 per cent.

“The slowing national economy and the impact on GST has had a massive impact, along with the impact on our own economy here in terms of our own-source revenues and state taxes. “When you combine that with our efforts to protect and support Tasmanians through this period, I expect that net debt at the end of the next financial year will be around $2 billion.

“It will be a significant impact, it’ll be something that we’re going to have to work through very sensibly and responsively to ensure that we can rebuild our economy and our state’s finances.”

The Government will release its Economic Fiscal Update and March Quarterly update on Friday, with revised budget predictions for this financial year and the next.

Mr Gutwein said he was confident in his ability to turn things around, noting his efforts as Treasurer to improve the state’s fortunes since 2014.

“One of the things that I do know is how to do it,” he said.

“I’ve been through it, and we will do it again.”

Premier Peter Gutwein at the daily COVID-19 update. Picture: Zak Simmonds

Labor’s Michelle O’Byrne said stimulus spending was necessary to restart the economy

“Labor in government steered us through the Global Financial Crisis and we put in place those building blocks that allowed Tasmania to work its way out of significant problems,” she said.

“We need the government to do the same thing, to look up what Labor did in setting up those key building blocks — and that’s about investing in targeted industries to make sure that we are building jobs and capacity and looking at those stimulus programs.”