Treasurer Eric Abetz wants Tasmanians to believe he can turn a budget deficit of almost a billion dollars into a $193 million surplus in just two years.
Pulse political contributor Alex Johnston takes a closer look at the treasurer’s ambitious plan.
He’s promising he can do it without increasing taxes or hurting essential services.
He admits there’ll be short-term pain, at the same time pledging to provide “the care Tasmanians need”.
“This budget has no new taxes and, in the forward estimates, has surpluses and the commencement of paying down debt,” Abetz said.
The pain will be shared across all departments.
Huge savings are earmarked for the state’s health system but given they’re offset by an increase in funding from the National Health Reform Agreement, it’s unclear how much pain will be inflicted on the department.
The injection of money from Canberra has allowed Abetz to cut comparable amounts year on year.
The federal government is pouring in $700 million as the treasurer tries to find the same amount in “operational efficiencies”.
But while the incoming money is for hospitals, the government is promising the cuts will be made to the likes of consultancies and “backroom staff”.
“I think most people will accept that there is a substantial bureaucracy in the health department that can be right-sized,” he said.
Expect the health savings to be a major point of contention in the coming weeks because there appears to be inconsistency among senior members of government about how they fit alongside the extra money from Canberra.
History would show that keeping downward pressure on health spending is significantly easier said than done.
In education, the treasurer has been more explicit about where savings can be found.
He wants to remove 10 per cent of “back-office functions” to meet his 2026/27 target.
Across four years, that could see a reduction of around 300 non-frontline staff.
Across the budget, the treasurer thinks he can extract a massive $1.46 billion in “operational efficiencies” over four years.
It really does beg the question – if there’s that amount of waste in the public service, why have we waited this long to do something about it?
After all, net debt is predicted to peak just short of $10 billion.
The plan also relies heavily on state-owned businesses providing handsome dividends.
Hydro Tasmania is being asked to go from paying a dividend of $4.7 million in 2025/26 to $173.8 million in 2029/30.
TasNetworks is being asked to improve its return as well, with dividends in excess of $30 million earmarked in three consecutive years.
Infrastructure investment from the general government sector will ease over the coming years, going from $730.7 million in this budget to $395.5 million in 2029/30.
When combined with infrastructure investment from government businesses and other entities, it totals $1.467 billion this year.
But the state government continues to ignore the advice of economist Saul Eslake when it comes to new sources of revenue.
Despite the dire state of Tasmania’s finances, the premier and treasurer are sticking to their “no new taxes” mantra.
The treasurer argues we’ve got a spending problem, not a revenue problem.
“Revenue has continued to increase, but expenditure has overtaken and increased quicker than the revenue,” Abetz said.
“We believe that in winding back the expenditure, we will be able to sustain the budget.”
“I have no doubt about the difficulty of the task, the toughness of the task, but it is a necessary task,” he said.
That attitude underpins Abetz’s approach to his first budget.
He has launched a much more ambitious attempt to rein in debt and deficit than his immediate predecessors, but he’s also picked a bigger fight.
Alex Johnston is a political contributor for Pulse Tasmania. He is co-host of the Poll Position Tasmanian political podcast and has worked in Tasmanian media, politics and communications for over 22 years.
