WINNERS AND LOSERS: The 21/22 Tasmania State Budget unpacked
The Tasmanian government has delivered the 2021/22 State Budget. See who gets what, the latest inside analysis and what this means for you >>
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TASMANIA is roaring back from the pandemic – as long as the coronavirus can be kept at bay.
The state government’s 2021-22 Budget paints the picture of robust recovery, with growth doubling and unemployment among the lowest in the nation.
Tasmania has dodged a feared recession, fended off a collapse in private investment and attracted more people to the state.
Describing his mood as “positive and buoyant” Premier and Treasurer Peter Gutwein has set his sights on underwriting 28,000 new jobs in four years and has delivered funding increases promised for health and education.
This year’s fiscal blueprint was delivered under the tagline: “Securing Tasmania’s Future, Delivering on our Plan”.
Government revenues are predicted to rise 5.9 per cent to $7.2bn this financial year as GST receipts and stamp duty help fill Treasury’s coffers.
The combined effect of stimulus and election promises will see spending rise by 9.4 per cent to $7.9bn.
The result will a balance sheet $689m in the red this financial year followed by a $86.4m deficit in 2022/23.
The elusive surplus is two budgets down the road – a bare $39.4m to be delivered in 2023/24.
The last time a Tasmanian Treasurer balanced the books was in 2018/19 and Mr Gutwein has now handed down three deficit budgets in a row.
But the improved outlook means Tasmania will slide into debt more slowly and to a lesser extent than feared: $3bn in 2023/24 instead of $4.3bn as stimulus spending is reined in.
The economic forecasts underpinning the budget show a strong recovery. Growth is forecast to reach four per cent this financial year and unemployment is tipped to be around 5.5 per cent.
But the bright picture could be unravelled by an outbreak of the Delta. There is $300m set aside in case of an outbreak and the NSW and Victorian lockdowns could drag estimates downward.
Small wonder Mr Gutwein began his budget speech with a plea for people to get their jabs.
“While this is a budget speech, I cannot emphasise how important is it that people do get vaccinated,” he said.
“It is the most important safeguard we can provide for ourselves, our loved ones and the whole Tasmanian community.”
The Budget papers put the continuing risk of the pandemic to the state’s finances in stark terms.
“While the state has experienced success in managing the virus, outbreaks that require the reintroduction of restrictions on activity in the state could occur and would adversely affect economic activity and employment,” they note.
The continued lockdowns along the eastern seaboard could put a dampener on the forecast $1.3bn GST bounty the state is anticipating over the next four years.
Mr Gutwein stressed the success of the government’s plan to kick start the economy and its relative strength to other states.
Defying last year’s gloomy outlook, dwelling approvals are up 47 per cent, retail trade up 10.9 per cent, goods exports 5.2 per cent.
There is an upside to the government’s continued struggle to deliver promised infrastructure: a long pipeline of construction. Of the $1bn committed last year, $431m remains unspent, largely on roads and bridges and health upgrades.
Another $828m has been added to the pipeline for this year, though it too is unlikely to all be spent in the time allocated.
There is a hint of good news ahead for teachers and health workers: the government’s tight grip on wages growth appears to be receding into history.
The budget makes provision for a 4.9 per cent increase in employee benefits in the education department this financial year and 6.7 per cent in health, although some will reflect increased staffing and superannuation.
Mr Gutwein said the plan was for 2.3 per cent increases for the next two years, before reverting to two per cent.
ANALYSIS
David Killick
Nothing has a shorter shelf life than a budget prediction in the time of Covid.
Scrolling back through the last half dozen budgets shows that predicting the future is a fraught business. The pandemic has made it even more so.
Although they are prepared by experts using the best information available, budgets in the past have shown that although Treasurers’ and Treasury’s predictions printed in ink on paper, when sometimes pencil might be more appropriate.
Take last’s year’s deficit for example: originally forecast $1.1bn, it ended up being $411m. Out by a mere $707m.
In the time of Covid, prognosticators have even more cause to be nervous.
Tasmania has enjoyed its share of luck which has contributed to the state being in a better position than some other states.
But isn’t it funny who those who put the most effort into preparing seem to enjoy the best luck? Last year’s big-spending budget seems to have had the desired effect. So far.
The Premier and his party have been rewarded by the electorate for competent management of this crisis. The worst fears we harboured 18 months ago have not come to pass. The economic and social disruption of the pandemic has been mercifully brief and relatively limited. The U-shaped recovery looks more like a V.
The 2021/22 Budget is a solid post-election budget for Tasmania. There are no big spending cuts, there are no job losses. There are dollar figures next to election promises.
It is not an emergency response to an unforeseeable crisis. The need to throw the kitchen skin at Covid is hopefully a one-off and in the past.
There’s even a surplus predicted in the not too distant future, the hopeful sign of a return to normalcy.
But it would be a brave Treasurer who staked much at all on coming on revenues exceeding expenditure by 0.5 per cent two budgets from now. Even the before-times were more uncertain than that.
Thursday’s budget comes with one giant asterisk: if we suffer another Covid outbreak, all bets are off.
HEALTH
Cameron Whiteley
MAJOR upgrades to the state’s key hospitals, an attempt to drive down spiralling elective surgery waiting lists and a focus on mental health have headlined a record investment in the sector.
A total of $10.7b will be spent on health infrastructure and operating costs across the current state budget and forward estimates, with $900m more to be invested this year than in 2020-21.
The budget includes $110m for an expanded stage two redevelopment of Royal Hobart Hospital, but that money will not start to be spent until at least 2023, with the project set for completion in 2025.
This funding is on top of the $91m already assigned and currently being spent on stage two, a project which includes an expansion of the hospital’s emergency department and intensive care unit.
There is new money to redevelop hospitals in the North-West, with $20m each to be spent on the Mersey Community Hospital in Latrobe and North West Regional Hospital in Burnie.
Both projects are not expected to be completed until 2026 and 2028, respectively, with no money to be spent on the upgrades this financial year.
Overall, half a billion dollars is set to be invested on health infrastructure over the next four years, but the agency underspent on infrastructure by almost $100m last year, which was partly attributed to the impacts of Covid-19.
A state election commitment to reduce the number of people waiting for elective surgeries will see an additional 29,300 procedures done across the budget and forward estimates.
The Liberals announced a $120m funding boost for elective surgeries during the campaign, bringing its total commitment to $156m. They have now boosted it by a further $40m.
According to the most recent figures, there were more than 11,000 people on the waiting list, a figure that has been steadily rising.
Meanwhile, a focus on mental health services in the state’s north and northwest will see a combined $120m invested to build mental health precincts at the Launceston and Burnie hospitals.
Construction is due start on the Launceston project this year, with building of the Burnie centre, that will replace the ageing Spencer Clinic, to be underway by 2022.
Health Minister Jeremy Rockliff said $41.2m was in the budget to fully fund the state government’s response to the Child and Adolescent Mental Health Services Review report and recommendations.
There is also $30m for stage two of the Kingston Health Centre, with that project scheduled to begin construction in 2023.
Mr Rockliff said more than 50 additional permanent hospital beds would be opened across the state during 2021.
“We recognise that despite significant investments in health, there are challenges due to increasing demand and the impact of Covid-19,’’ he said.
“Our priority is ensuring Tasmanians get the right healthcare in the right place, at the right time, which isn’t necessarily in an emergency department or hospital bed.”
Mr Rockliff said the budget was also aimed at strengthening community-based healthcare initiatives.
JOBS/BUSINESS/ECONOMIC DEVELOPMENT
Cameron Whiteley
THE state government has boldly stated that its budget marked by an ongoing infrastructure blitz will underwrite more than 28,000 jobs, but a specific breakdown of the sectors it will support is unclear.
Premier Peter Gutwein said many of the job areas to benefit would be in construction, a sector deemed key to the state’s economic recovery from Covid-19.
The Premier said the government used a standard multiplier calculation based on the amount budgeted to be spent across the current financial year and forward estimates.
“Confidence is up, jobs are up and importantly the unemployment rate is down,’’ Mr Gutwein declared.
“These results don’t happen by chance. We worked hard to keep people safe, we invested record amounts in support and stimulus packages, confidence stayed strong, investment has increase and jobs have bounced back.”
Mr Gutwein said there were now more than 263,000 people employed in Tasmania, and that the state’s unemployment rate of 4.5 per cent was below the national average.
The budget includes a focus on a high-vis army strategy featuring the Civil Contractors Federation, Housing Industry Association and Master Builders Tasmania, with a plan to increase the building and construction workforce.
The state government has also provided a further $10m to expand on a Building Projects Support Program that designed to help commercial and community projects get off the ground.
It allows for up to 25 per cent of construction costs, to a maximum of $1m, for projects with a minimum construction cost of $2m.
The budget, handed down on Thursday, also included a previously announced $100m interest-free loan to Incat to construct a new high-speed vessel.
State Growth Minister Roger Jaensch said this would not only secure the company’s current workforce of 500 employees, but would add another 120-150 new staff to its operations.
Mr Jaensch said the government had also provide another interest-free loan of $600,000 to PFG Group, to construct a high-density polyethylene prototype vessel to showcase its capability.
Meanwhile, the budget includes support for small businesses in the form of a $1.2m program for specialist financial counselling to help them navigate the Covid-19 pandemic.
There is also hundreds of thousands of dollars of funding for Business Tasmania, the Tasmanian Small Business Council and regional chambers of commerce to support small businesses.
INFRASTRUCTURE
Judy Augustine
Infrastructure was the golden goose of the 2020-21 budget, touted as a “landmark” spending spree to save the state from the potential of economic ruin brought by Covid.
Over the next four years, the infrastructure spend is forecast at $4.6bn, a continued investment in “to support Tasmania’s recovery from the Covid-19 pandemic”.
But despite last year’s figures promising more than $1bn for infrastructure in the 2020-21 period, only $642.4m was actually spent – an underspend of $431m due to “supply constraints”.
Budget papers say actual infrastructure spend varies considerably due to a “range of factors” and that the risk is exacerbated by the ongoing impact of the pandemic.
To follow through with the state government’s “ambitious” program, $9m has been allocated to develop a “high vis army” – an effort to grow the workforce by 25 per cent.
“This initiative will support Master Builders Tasmania, the Civil Contractors Federation and Housing Industry Association in their efforts to develop their industries’ workforce and provide additional training that will attract and retain more workers to the industry,” Mr Ferguson said.
This budget allocates around $524m over four years in capital investment including major hospital redevelopments, health projects and regional and rural facilities and $116m for education infrastructure.
In racing infrastructure, $3m will go to one off infrastructure upgrades at the Longford Racecourse, the Brighton Training Centre and the Devonport racing club.
And $149m over four years has been allocated to the $200m Greater Hobart Traffic Solution which is due for completion in 2027, with $118m over four years will go towards the Midland Highway action plan.
There’s also the promise of $530m over four years for the long awaited Bridgewater Bridge.
Also included is $187m over four years for the South-East traffic solution which includes the four lane Tasman Highway from Hobart to Sorell.
High on the transport infrastructure agenda are initiatives to “bust” traffic congestion, including new buses and park and ride facilities.
$20m has been allocated for more school buses to ease crowding on busy commuter routes.
The budget also allocates funds for greens buses.
“We’re also looking to the future with the budget allocating $6m in equity investment for Metro Tasmania to trial an electric bus in the south,” transport and infrastructure minister Michael Ferguson said.
“With further funding to be provide to support a hydrogen bus trial in the north of the state once hydrogen supply starts.”
$5m has been promised to develop new park and ride facilities near Rokeby, the Sorell and southern beaches communities and Hobart’s northern suburbs.
The “largest port development in Tasmania’s history” is set to be fast tracked, with the government promising to bring forward $385m investment.
This includes $240m for the Port of Devonport and $145m for the Port of Burnie.
$700m will also be allocated to the Tarraleah power station redevelopment.
$64.6m will be provided on operation and capital works costs for Macquarie Point.
“This certainty will get the next development stage to market sooner and provide the foundation for well over half a billion dollars of investment to take place,” Mr Feruson said
Estimates show the infrastructure spend increasing year on year until 2023-24, peaking at $1.04bn, before dipping down to $988.8m in 2024-25.
EDUCATION
Judy Augustine
A record $8bn has been allocated for education, skills and training, with promises of literary coaches, trauma support and clinical nurse educators and other support staff.
$5.3m has been promised to increase the number of literary coaches to 40 from 2022, $8m over four years will go to increasing funding for trauma support, and $5.4m will be provided to employ extra nurse educators to support health prevention and early intervention initiatives.
The budget also allocates $56 million over four years for education adjustments to support students with disabilities in public schools.
The budget also spruiks record education infrastructure, with a commitment of $116.2m.
Millions of dollars have been promised for a number of school upgrades and redevelopments, including $15.1m for a redevelopment at Cambridge primary School, $6.5m for the Lauderdale Primary School redevelopment and an advance of $20m for the revitalisation of Cosgrove High School.
“This will allow investment in coeducation high school facilities in Hobart, a support school package including a new North West support school, upgrades to contemporary classrooms and a renewable energy school program,” education minister Sarah Courtney said.
$250,000 has been allocated each year for the 24 Carrot Gardens Project to establish a garden and kitchen facilities at more than 15 schools.
As the state government prepares to transition TasTAFE to a not for profit GBE, it’s promising 98.6m over the next four years.
That includes 37.6m for an extra 100 teachers $2m to providing free short courses to “support job readiness” and $45m for upgrades to TasTAFE facilities.
The budget papers also flag a focus on developing a “virtual campus” for students in rural and regional areas at a cost of $10m and a collaboration with Libraries Tasmania to use suitable library sites to access a TasTAFE classroom remotely costing $4m.
The School Lunch pilot will also be extended to 30 schools at a cost of nearly $5m over three years.
HOUSING
Kenji Sato
The Gutwein government says it is ramping up its efforts to tackle the growing numbers of homeless, but critics say the state budget goes nowhere near far enough to address the social housing shortfall.
In line with their election promises, the government will fund 3500 social houses by 2027.
However the Tasmanian Council of Social Service estimates they’d roughly need twice as many just to meet current demand trends.
Chief executive Adrienne Picone predicted said around 4000 Tasmanians were currently languishing on social housing waiting lists, and the budget gave little prospect of reducing those numbers.
“The reality is, right now (with the state government’s election promise of 3,500 new homes by 2027) we are running to a standstill on housing and anyone who has set foot in a rental open home of late can attest to the fact the crisis is quite simply getting worse,’’ she said.
State development minister Michael Ferguson said they were spending a record amount on social and affordable housing initiatives, with $615 million set aside in the state budget.
“[No] previous government has responded with such strong measures to deal with the increasing pressure on housing,” Mr Ferguson said.
“We understand that stable and safe housing is critical for Tasmanians and that’s why we are increasing supply at record levels.”
The budget offers no further cuts to stamp duty or land tax rates for homeowners or homebuyers, however it does tweak eligibility thresholds as land values continue to soar.
The lowest threshold has been increased from $24,999 to $49,999 and the top threshold from $350,000 to $400,000 in response to the increases in land prices.
Mr Ferguson said the government would be “further reviewing” the possibility of land tax reform, including putting a cap on future hikes and introducing a foreign investor land tax surcharge.
He admitted that stamp duty prevented many Tasmanians from getting a foot in the property market, but that the government planned to offer more discounts for first home buyers.
“We also appreciate that not all Tasmanians will want to build a new home and that conveyance duty is a significant impost on those buying a home,” Mr Ferguson said.
“The Government introduced legislation in June this year to increase the eligibility threshold for the [first home buyers] concession from $400,000 to $500,000.”
POLICE AND EMERGENCY SERVICES
KENJI SATO
A police crack team is one of the items in this year’s budget, with an elite Special Operations Group to deal with dangerous jobs and Covid rule enforcement.
The SOG squad will also be trained and equipped to deal with “high-risk” policing incidents, security threats, and to support criminal investigations.
The budget sets aside $3.6 million to build a SOG headquarters in the south as well as $1 million to build another SOG facility in the north.
Improving ambulance response times, which are the worst in the country, is another priority in the budget with an additional 48 paramedics and 30 ambulance vehicles over the next four years.
However, it falls significantly short of demands made by the Australian Paramedics Association Tasmania, which says they need another 229 full-time workers to handle the current workload.
Health and Community Services Union secretary Tim Jacobson said 48 extra paramedics was “certainly not enough”, but a step in the right direction.
“The reality is we’ve been behind the 8-ball for some time in terms of ambulance paramedics as opposed to the increasing caseload, but it’s welcome,” Mr Jacobson said.
Health minister Jeremy Rockliff said they were better equipping their ambulance crews and vehicles to improve safety for both patients and paramedics.
“Improving ambulance response times and investing in our health system is a key priority in the Tasmanian Liberal Government’s plan to secure Tasmania’s future,” Mr Rockliff said.
“Importantly, these new vehicles will increase the proportion of the fleet that is equipped with modern safety features and new equipment, including powered stretchers, delivering improved safety for patients and paramedics.”
The budget also includes a brand new station for Burnie and Glenorchy, which had been promised previously.
New police stations will also be part of the mix, with a new St Helen’s Police Station as well as a $12.5 million upgrade for a revamped Bridgewater Police Station.
Around $4 million worth of CCTV cameras will be keeping a watchful eye on local neighbourhoods and any criminal activity therein.
An extra 50 police officers will be hitting the beat, with $11.9 million for more police officers as well as specialist support staff.
Police minister Jacquie Petrusma said officers would be out in force to keep the community safe, both from crime as well as Covid.
“The Budget also locks in the Tasmanian Liberal Government’s election commitments targeted at keeping Tasmanians safe,” Ms Petrusma said.
“We know that Tasmania is one of the safest places to live and our crime rates are reflective of this.”
TOURISM AND HOSPITALITY
KENJI SATO
A rescue package for the lockdown-ravaged tourism and hospitality industry was a prominently featured ticket item on the state budget.
It includes $18 million Tasmanian tourism marketing blitz designed to “effectively compete” for tourist dollars once lockdown eventually ends and the state borders reopen.
Premier Peter Gutwein, who is also the tourism minister, said that Tasmania’s tourism scene had an “enviable” reputation, and would undoubtedly bounce back even higher from Covid.
“A thriving tourism industry is key to securing Tasmania’s future, and we are delivering our plan to support our world-class tourism operators during what has been, and continues to be, a challenging time in the visitor economy,” Mr Gutwein said.
“The Tasmanian Government is delivering our plan to support our world-class tourism industry to rebuild even stronger from Covid-19.”
The budget includes mental health support for baristas, bartenders, restaurant owners, and other hospitality workers who have suffered during the pandemic.
Events and festivals will share in $31 million of state funding, including $21.5 million over the next five years for programs such as Dark Mofo, Mona FOMA, Festivale, and Targa Tasmania.
Hospitality and events minister Sarah Courtney said these industries were a key pillar of the Tasmanian economy, which is why they would be instrumental in the post-Covid recovery efforts.
“We recognise that our regional hospitality businesses are the lifeblood of the communities they operate in and they also help attract visitors to regional Tasmania,” Ms Courtney said.
“Our strong events sector plays an important role in our economy by drawing visitors into regional Tasmanian communities, and attracting interstate tourists.”
The max cap on the government’s interest free loan scheme has been increased from $1 million to $2 million and is open for all Tasmanian tourism operators.
CORRECTIONS AND JUSTICE
KENJI SATO
Keeping prisoners out of jail is another focus for the state budget, with $2.5 million earmarked for prison rehabilitation programs over a three-year period.
The rehab programs include five new therapeutic staff who will work on drug and alcohol interventions, as well as a Just Time Prison Parenting Program.
The cost of keeping a prisoner behind bars has increased to $379 per day, comparable to the cost of a luxury hotel in Hobart’s CBD.
The cost has increased by over $60 compared to the 2018 budget.
Corrections minister Elise Archer said they wanted to stop people reoffending in order to ease the increasing demand pressures on the Tasmanian prison system.
“We know that access to programs, education and employment for inmates is critical to achieving these outcomes which is why, as a priority, we are helping to address the underlying reasons why people reoffend and maximise the chances of successful reintegration back into the community,” Ms Archer said.
Delivering swift justice and clearing the extensive criminal backlog exacerbated by Covid is one of the problems thrown up in the budget.
To this end, they will be hiring another magistrate in Hobart as well as more judges, extra court security, and administrative support.
Attorney-General Elise Archer, who is also the justice minister, said the courts were currently facing high levels of delays and were facing growing demand pressures.
“We are determined to address the delays to finalising proceedings in the criminal court system, particularly due to the impacts of Covid-19,” Ms Archer said.
“This is a Budget that supports the provision of an efficient and effective court and justice system that meets the community’s expectations, and importantly, delivers on our clear commitment to secure Tasmania’s future.”
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