Reform too hard for Treasurer
Greg Barns says the Hodgman Government has frittered away its chance to set the state’s economy up for a positive future
SOME of us have been warning about it for a few years now — the lack of micro and macro economic reform agenda of the Hodgman Government, coupled with an over reliance on seasonal exports and tourism, would mean Tasmania again assumes its position as the nation’s economic basket case.
The release last week of the Treasury’s Fiscal Sustainability Report 2019 showed how poorly Tasmania has managed the five minutes of economic sunshine it has enjoyed since 2014 when the Hodgman government was elected.
The report finds that between now and 2033-34 the net operating balance, which shows the operating position of providing government services, will deteriorate from a surplus position of $41 million to a deficit of $1.7 billion. The health budget will eat more and more of the budget, reaching 42 per cent by 2033-34. Low and declining revenues and higher expenditure will lift net debt to $29.1 billion by 2033-34.
While the Premier and Treasurer Peter Gutwein have boasted of Tasmania’s relatively good growth rate and reduced unemployment both have sat on their hands and refused to tackle the structural weakness in the state’s fiscal architecture. This column has said many times that Mr Hodgman and Mr Gutwein have not a reformist bone in their bodies, despite their Government riding high in popularity and being in a position to set the state on a sustainable footing.
John Lawrence, a first rate budget analyst, and MLC Ruth Forrest, have been on these pages righting the mythology and intellectual dishonesty of Mr Hodgman and Mr Gutwein, and economist Saul Eslake has produced yearly reports for the Tasmanian Chamber of Commerce and Industry which give the Government and Opposition a blueprint for making it less likely the gloomy forecast of Treasury does not become a reality.
The report’s findings make for grim reading because we do not have serious reforming types in the political class, with a handful of exceptions like Ms Forrest or Speaker Sue Hickey. But as Treasury observes, its modelling, based on a series of scenarios, shows that while there are “projected fiscal outcomes that are potentially manageable in the short term” if the current trends continue, by about 2023 to balance the budget “there would need to be a revenue increase of approximately 8 per cent” and by 2024-25 the revenue rise required is about “10 per cent and the size of the corrective action required after this point is projected to increase significantly.”
“Projected health expenditure is the single most significant driver of the projected future fiscal challenges for the state” says the report. Over $4 in $10 will be spent on health in just over a decade from now.
Could things have been different if Mr Hodgman and Mr Gutwein had not been so lazy? The answer is yes. Unlike NSW, Queensland, Victoria, South Australia and Western Australia in recent years Tasmania has refused to sell assets. Mr Hodgman and Mr Gutwein are with the hard Left on that issue. They think government should be spending taxpayer funds on a shipping line, a power