David Killick State Budget 2024 analysis: Returning budget to surplus a future Treasurer’s issue

ANALYSIS: Tasmania could really do with a “magic money tree” after the government hands down a budget full of highs and lows, Political expert David Killick writes.

Treasurer Michael Ferguson and Premier Jeremy Rockliff discuss the 2024/25 Budget with reporters at the Executive building in Hobart on Thursday, September 12, 2024.

During this year’s election campaign, Premier Jeremy Rockliff was fond of accusing Labor of free-spending and of having a “magic money tree”.

Tasmania could use one of those right now.

Government spending, so critical to our economy will actually fall in 2024/25 on what was spent last year.

That’s only happened once before in recent times, as stimulus and emergency response spending was wound down in the wake of the Covid pandemic.

Budgets are aspirational documents that are sometimes as accurate as horoscopes.

Last year the government planned to spend $8.7bln and actually spent $10bn.

This year’s budget has predicted spending of $9.7bln. That’s $1bln more than was budgeted last year, but $353m less than was actually spent.

Trimming 3.5 per cent from expenditure this year will depend on how disciplined agencies can be. The one-off Commission of Inquiry implementation costs won’t recur, but of course, it’s 3.5 per cent in dollar terms, factoring in inflation, real spending reductions will need to be north of five per cent if Mr Ferguson’s predictions are to prove correct.

Hopefully, there are no unforeseen events, like Covid, flooding, bushfires and so on.

Health, in particular, won’t be able to go over budget by $300m for staff and $165m for supplies and consumables this financial year. And there’s an ambitious $300m in “efficiency dividends” to find across the entire government sector.

Infrastructure spending is down and state sector employee expenses are in for a trim over last year’s preliminary outcome. There’s not much detail on who and where.

In good news, cost of living measures will make life easier for ordinary Tasmanians: with $211m in electricity concessions, $90m for pensioners to pay their rates, $42m for water and sewerage concessions.

It is too soon for the findings of the Eslake report to have been reflected in policy.

Debt will continue to increase, the government says it’s under control, but $8.5bn sounds like a lot of money. It’s Covid on top of the Commission of Inquiry on top of election promises.

The forward estimates reveal a string of deficit budgets ahead. Tasmania’s last surplus result was delivered in 2018/19. The next surplus, the next chance to start paying down that debt is over the horizon.

It’s after the next election and its round of expensive promises. That’s barring unforeseen events.

It’s if current predictions hold true, just like they haven’t for half a decade or more.

Delivering a surplus, and starting to pay down the debt is a job for whoever is Treasurer in May 2027. It sounds about as likely as finding that magic money tree.