BUDGET BLOWOUT

CORONAVIRUS LEAVES STATE WITH $1 BILLION DEFICIT

PREMIER Peter Gutwein has revealed the budget he hands down on November 12 will contain the biggest deficit the state has ever had at $1.1 billion.

A blowout in last year’s budget, combined with the coming monster deficit, will see the state slide into net debt of $1.8 billion this financial year.

THE pandemic has torn a $1bn hole in the state budget.

Premier and Treasurer Peter Gutwein has revealed the budget he hands down on November 12 will include a $1.1bn deficit.

It will be Mr Gutwein’s second deficit in a row, more than double what was first feared and the biggest the state has seen.

The government released the Treasurer’s Annual Financial Report for the 2019-20 financial year.

Last year’s budget predicted to deliver a surplus of $57m — but a blowout in employee costs and COVID-related expenses meant the actual result was a $338m deficit.

That result, combined with the coming monster deficit, will see the state slide into net debt of $1.8bn this financial year.

“The pandemic has been one of the largest shocks to our way of life and to our economy and to our budget,” Mr Gutwein said.

“Expenditures were up due to increased spending, primarily due to additional funding for the Tasmanian health service as well as COVID-related expenditures, including community and business support.”

But Mr Gutwein described the coming level of public sector debts as “manageable”.

“It’s forecast to be the lowest debt level in the country,” he said.

“We know the best way to get our budget back on track and create jobs is to ensure that we maintain high confidence levels and that we grow the economy and that’s what we’re doing.”

And he ruled out new taxes or tax increases.

“Obviously, you can’t tax your way to prosperity.”

GST receipts were down as consumer spending tightened nationwide, but state tax revenue grew despite payroll tax concessions.

Labor Treasury spokesman David O’Byrne questioned why the budget update was released in Launceston on a Friday afternoon.

“Here we are again, with this government throwing out a document late on a Friday afternoon giving journalists and the community no opportunity to have a look at it and be able to cross-examine him on the details.”

Mr O’Byrne also said the government had failed to reach its targets for infrastructure spending, raising questions on the delivery of stimulus projects.

“In the last financial year they spent only $500 million of the budgeted $700 million,” he said.

“How do they think they’re going to deliver the infrastructure projects they’ve promised in their COVID construction blitz?

“They’ve pinned Tasmania’s economic recovery, and the creation of thousands of jobs, on something they demonstrably can’t deliver.”

Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey said the only way to fix the budget was to grow the economy.

“The budget will need to answer a few clear questions — how are we going to get cranes back in the sky, bring forward infrastructure investment, keep our skilled workers in the state and most importantly, create more jobs,” Mr Bailey said.