State Budget to reveal new record $8.5bn debt for Tasmania

A series of deficit budgets will more than double Tasmania’s government debt to a record $8.5bn by 2027-28, Treasurer Michael Ferguson has revealed.

Treasurer Michael Ferguson and Attorney-General Guy Barnett speak to the media at Parliament Square in Hobart on Tuesday, September 10, 2024.

A series of deficit budgets will more than double Tasmania’s government debt to a record $8.5bn by 2027-28, Treasurer Michael Ferguson has revealed

Net debt currently stands at $3.5bn and was last year projected to reach $5.5bn in 2026-27.

Mr Ferguson said Thursday’s state budget will contain forecasts showing a massive increase in the state’s debt while announcing an additional $423m to fund the response to the recommendations of the Commission of Inquiry.

The Liberal minority government has been criticised for running up debt by delivering repeated deficits on the back of massive infrastructure investment and big-spending election promises.

Even before the latest debt blowout, economist Saul Eslake noted the state’s finances were arguably “in worst shape of all states and territories”.

The Preliminary Outcomes Report for last financial year revealed a $1.2bn blowout in the budget deficit for 2023-24.

Mr Ferguson said the additional debt in the 2024-25 budget would reflect spending a total of $1.1bn on the Commission of Inquiry response “and other expenditures”.

“As I’ve said in the past, this will be expensive, this will hurt the budget, but it’s necessary to attempt to heal the wounds of the past,” he said.

“We’re able today to indicate that these expenditures are going to be met in the upcoming budget, starting with the $650m provision that’s been recognised, which is well understood, together with Thursday’s new allocations in the budget of $423m.

“These are massive expenses for the budget, and we make them willingly, we’re not apologising for it.

“We believe we need to do this. It will be hard on the budget to 27/28

“These and other expenditures will take state net debt to $8.5bn.

“These are expensive investments, including protecting children and righting the wrongs of the past.”

Labor leader Dean Winter. Picture: Stephanie Dalton

Mr Ferguson said he did not expect Thursday’s budget will be well received — and there was no surplus in sight.

“I expect to be heavily criticised on Thursday because the pre-election fiscal outlook identified deficits in the budget year and in the forward estimates and that won’t change on Thursday because we’re making more investments into health and education and commission of inquiry responses,” he said.

“This will be an expensive phase for the state government and those frontline services will in fact be supported with greater funding in those key agencies than they had in last year’s budget.”

Labor leader Dean Winter said the Liberals had been terrible economic managers during more than a decade in power. .

“This goes to a pattern of behaviour: this is early election after early election, and when they get to an early election, it’s about spending as much as possible.

“And the Liberals have now taken Tasmania to record debt, record deficit.

“Last year’s deficit of $1.5bn is almost triple the record deficit in Tasmania’s history and the record debt means that over the course of next couple years, Tasmanians will have to start paying over $700m per year just to service the debt.”