Ex-senator takes scalpel to spending in debut budget
Ethan James |
Tasmania’s Liberal government has flagged greater cost-cutting measures and additional public sector job losses as it grapples with ballooning debt.
Treasurer Eric Abetz on Thursday handed down his 2025/26 interim state budget, after the original May version never passed parliament because of a snap election.
It forecasts net debt to grow from $5 billion in 2024/25 to almost $10.4 billion by 2028/29, essentially in line with the original budget.
Mr Abetz said several factors had “conspired” to make a challenge of returning to pre-pandemic spending levels including two early elections, COVID-19 itself and payments to abuse survivors.
He also took aim at the federal government, saying Canberra had chronically underfunded health services in the state.
Delivering his first budget as state treasurer, the former senator has set up an efficiency and productivity unit to identify public sector savings.
Discretionary government spending would be tightened and the public service “right-sized” as part of the efficiencies.
Further details about savings measures will be detailed in the May 2026/27 budget, following a Treasury report in February.
A previously announced pledge to cut 2500 public service jobs has increased to roughly 2800, Mr Abetz said.
A new measure has been added to cut spending on marketing, leasing and procurement by $5.9 million in 2025/26 and $11.9 million each year afterwards.
Labor MP Dean Winter said the budget set the scene for even greater cuts.
“After 11 years, the Liberals have taken Tasmania from having no net debt to the worst set of financials of any state in Australia,” he said.
Tasmania was plunged into an early election in July after Premier Jeremy Rockliff lost a no-confidence motion in parliament that was critical of his budget management.
The Greens said the Liberals’ pursuit of a new AFL stadium remained the wrong priority in the financial circumstances.
The budget noted the $1.13 billion venue, a condition of the Devils entering the AFL and AFLW, carried the risk of cost blowouts similar to other major projects.
“They are doggedly pursuing the stadium, and delivering another budget that will cause more hardship for people already struggling,” Greens leader Rosalie Woodruff said.
There could be further financial worries for the Liberals, who have reached a stalemate in pay negotiations with public sector unions.
Workers have already rejected a three per cent offer, with the budget figures only accounting for a 2.5 per cent rise.
Public sector wages, including superannuation, make up almost half of Tasmania’s annual $10 billion overall expenditure.
Debt would be paid down beyond the 2028/29 forward estimates, Mr Abetz said, but no details were provided.
The 2025/26 budget has a $1.08 billion deficit and forecasts a wafer-thin $5.6 million surplus in 2028/29.
Mr Abetz said he remained convinced the state’s future was bright but noted there were structural fiscal issues the budget must confront.
“Tasmania’s resources of people and nature’s bounty ensures no challenge is too great,” he said.
The Treasurer hasn’t ruled out increasing taxes in the 2026/27 budget, with Treasury having warned that more revenue is needed.
TASMANIA’S INTERIM 2025/26 BUDGET:
* Deficit: $1.01 billion
* Revenue: $9.5 billion
* Expenditure: $10.5 billion
* Net debt: $7.1 billion
* GST revenue: $3.8 billion
* Unemployment: Four per cent
* Five biggest spending areas: health (34 per cent), education (23 per cent), public order and safety (nine per cent), social protection (seven per cent) and general public services (six per cent)
AAP
