The state government’s budget cuts would be the deepest imposed by any state or territory this century, according to a new report.
The McKell Institute compared the 2026-27 Tasmanian Budget with more than two decades of state and territory finances, using Parliamentary Budget Office data.
The report, released today with the support of Unions Tasmania, says the cuts budgeted for 2027-28 would be the largest single reduction in spending by any Australian jurisdiction since at least 2003-04.
It says the restraint would also run for longer than any comparable period in the country this century.
The report says a 2.1% cut to health funding this financial year would mark the only time this century a state or territory had spent less on health than the year before.
The one exception it identifies is the Northern Territory in 2022-23, which it attributes to the winding back of COVID programs.
The savings come mainly through departmental targets the budget calls “operational efficiencies”, worth close to $1.5 billion over four years.
More than $700 million of that falls on the Department of Health.
The report says more than 80% of the total savings are spread across three agencies – health, education and State Growth, now Building Tasmania.
The budget papers point to about 1,700 full-time jobs going or more than 2,000 by headcount, through attrition, workforce renewal and negotiated voluntary redundancies.
The report says workforce costs make up more than two-thirds of health spending and more than 80% of health staff work in patient-facing roles.
On that basis, it argues the savings could not be delivered without affecting the quality and availability of health services.
The report does not dispute that Tasmania needs to repair its finances.
It cites a Treasury warning that state debt could reach nearly $130 billion by 2040 without action.
But it says both Treasury and economist Saul Eslake advised that spending cuts alone were not the preferred path and argues the government chose that path anyway.
The government has maintained since budget day that the savings can come from the back office without affecting frontline staff.
Treasurer Eric Abetz has said health will maintain frontline services while finding more than $700 million in savings.
In parliament on Thursday, Abetz questioned who paid for the report.
“It is not surprising that the McKell Institute would make a finding of that nature, nor is it surprising that that finding was funded by Unions Tasmania,” he said.
He did not dispute the report’s figures in his answers to those questions.
Abetz said the report also found cuts alone were not the answer.
He pointed to Labor’s vote against a proposed 5% short-stay levy the day before, saying it had rejected $32 million in extra revenue that would have been paid largely by interstate and international tourists.
“In the absence of an alternative budget, the Labor Party have absolutely no right to seek to criticise when they are unable to come up with an alternative,” he said.
Labor leader Josh Willie twice asked what services Tasmanians would lose. Abetz did not name any in either answer.
Asked separately whether forced redundancies were coming, Abetz said “we have, at this stage, no intention to engage in compulsory or non-voluntary redundancies”.
Unions Tasmania secretary Jessica Munday said in a statement the government had “picked the most extreme option available”.
“If these cuts are delivered, Tasmanians will feel them in hospitals, schools and frontline services,” she said.
