TASMANIA BUDGET 2020: Everything you need to know

Premier and Treasurer Gutwein will attempt to restart Tasmania’s COVID-ravaged economy with a historic multi-billion dollar splurge. STATE BUDGET UNPACKED >>

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Peter Gutwein will attempt to restart Tasmania’s COVID-ravaged economy with a historic $5 billion splurge on infrastructure.

The state budget handed down by the Premier and Treasurer on Thursday includes a massive spending boost on roads and bridges, health infrastructure, school upgrades and housing.

He said he was “throwing the kitchen sink” at the pandemic recession in a bid to create 25,000 jobs in four years.

The budget contained are no new taxes or tax increases.

The record spending will come at the cost of three budget deficits in a row, record debt – and the prospect of austerity budgets in years ahead.

The catchcry for the biggest jump in government spending in living memory is “Jobs, confidence, community: rebuilding a stronger Tasmania.”

Premier Peter Gutwein. Parliament question time in the House of Assembly. Picture: RICHARD JUPE

The government will spend $1.1 billion more than it earns this financial year – although Mr Gutwein has defied the uncertainty of the times by predicting razor-thin surpluses of $13.9 million in 2022/23 and $17.2 million 2023/24.

The budget predicts the state will go from having $175 million in the bank in July 2020 to being $4.3 billion in debt in 2023/24.

With interest rates at historic lows, the cost of servicing that debt will consume under one per cent of government spending in four years.

Mr Gutwein said he would leverage the state’s strong pre-COVID performance to rebuild the economy.

Premier Peter Gutwein. Parliament question time in the House of Assembly. Picture: RICHARD JUPE

“I will not sugar coat these challenges for the Tasmanian people,” he said. “The road ahead will not be easy.”

“In the face of the most deadly global pandemic the world has seen in a century, our response must be proportionate and it must be strategic.

“We can never tax our way to prosperity, nor can we cut our way to recovery.

“The way to rebuild a stronger and more resilient Tasmania is to invest heavily to support jobs, to regain confidence and to rebuild our economy and our community.”

The government will spend $7.5 billion this financial year in its bid for fiscal stimulus, while government revenues rise by just 0.23 per cent.

Expenditure will jump by almost 12 per cent – the largest boost in living memory.

The budget papers reveal an element of risk in the government’s plan to rely on infrastructure spending. Of the $723 million committed for infrastructure in 2019/20, only $521 million was delivered: almost a 30 per cent shortfall.

Premier Peter Gutwein at the DEC to announce the commencement of building works. Picture: Richard Jupe

This year’s massive increase in government spending looks set to be followed by a period of austerity and the government moves to contain debt levels.

Government spending is forecast to fall by six per cent in next year’s budget and be flat the year after.

Mr Gutwein said he did not anticipate job cuts to the public service would be the inevitable result.

While Tasmania’s economic growth is expected to bounce from -0.5 per cent in 2020/21, to 3.75 per cent in 2021/22, unemployment is predicted to be upwards of eight per cent in both financial years.

And population growth – once driving the state’s now stalled economic boom – will be a bare 0.6 per cent in 2021/22, although Mr Gutwein said he was optimistic it would be higher.

THE BOTTOM LINE in 2020/21.

REVENUE: $6.4 billion.

EXPENDITURE: $7.5 billion.

DEFICIT: $1.1 billion.

GOVERNMENT DEBT: $1.8 billion.

ECONOMIC GROWTH: -0.25 per cent.

UNEMPLOYMENT: 8.5 per cent.

POPULATION GROWTH: 0.5 per cent.

– DAVID KILLICK

Follow @DavidJKillick