Tasmania is facing a fiscal crisis requiring immediate action, Treasury has warned, with a new report finding the state’s debt levels have become unsustainable may lead to external intervention being needed.
Treasury’s 2026 Fiscal Sustainability Report was released today and reveals government spending is growing faster than state revenue, creating a structural budget problem that has worsened dramatically since 2021.
Treasury projects debt could reach $129.5 billion by 2039-40 without significant changes and annual debt servicing costs are expected to exceed revenue growth within a decade.
The report warns of potential external intervention similar to Greece or Puerto Rico if the state loses control of its finances.
Tasmania previously experienced external intervention during the 1990s.
Shadow Treasurer Dean Winter blamed the crisis on Liberal “mismanagement” since the party was elected.
“There was no net debt when the Liberals came to power in 2014. This mess has entirely been created by them,” Winter said.
He said the “bulk of damage” occurred during Jeremy Rockliff’s tenure as Premier.
Winter warned debt servicing would cost at least $600 million annually – money that could support critical services.
He claimed public sector cuts and new taxes were inevitable.
Greens Treasury spokesperson Vica Bayley called the 150-page report “the most damning indictment yet” of Liberal financial management.
“Despite all the evidence, the Rockliff Government has always claimed the only way to fix the budget is to grow the economy. This report again directly contradicts that argument,” Bayley said.
Bayley criticised continued spending on the stadium while debt spiralled.
The report bluntly stated that “doing nothing is not a responsible action”.
“Tasmania has recently been downgraded to the equal-lowest credit rating of any Australian jurisdiction,” the report said.
“Without financial improvement, there is an increased probability that Tasmania’s credit rating will be further downgraded, increasing interest costs.”
Treasurer Eric Abetz said the government is “well aware of the need for discipline and budget sustainability”.
“A number of the findings are already underway, acknowledging that no single action will be sufficient on its own,” he said.
“We have created more than 50,000 jobs since coming into Government, and we are continuing to invest in job-creating projects like Marinus Link and the Macquarie Point Stadium.”
“As we look to the May Budget, budget sustainability and the ongoing delivery of the services and infrastructure Tasmanians need and expect will continue to be front of mind.”
The state government said the latest Treasury report simply highlights the “fiscal challenges in the aftermath of the Covid years”.
