Could compensation claims bankrupt the state?

IN theory child sex abuse compensation could bankrupt the state. But that won’t happen. It wouldn’t even happen in a theoretical scenario where the Supreme Court of Tasmania ordered 1000 claimants each be paid $1.2m by the state government over the coming few years.

Economist Saul Eslake (right) said the government was already expecting a $3.5bn deficit by the end of financial year 2025, down from a previously expected deficit of $4.3bn – “and the sky did not fall in”.

“Relative to our state income, Tasmania’s debt would still be smaller than most of the other states,” he said.

“We have had worse in the past. It would not go bankrupt.”

Mr Eslake said if the government did consider that level of debt too high, they could do what the Anglican Church was currently doing, and sell off assets.

He said the state government currently had assets of $22.3bn, including land and buildings to the tune of $7.5bn, but liabilities of $12.9bn.

It also owned $6.1bn in infrastructure assets, as well as $4.9bn in government business enterprises like Hydro and Aurora.

Mr Eslake said history also showed the commonwealth would usually step in as a final measure to bail out Australia’s states or territories that had run into dire financial straits.

Shadow Attorney-General Ella Haddad said it would be “worrying in the extreme” if the state government started making “any kinds of noises” about not paying out survivors.

“They’re going to have to find a way to meet these expenses. To do otherwise would be to deny the experience of survivors,” she said.