Election 2024 : Budget sustainability

With five weeks of election campaigning to spread the message, this blog site will assist by posting regular vignettes looking at problems ahead and drilling down into some of the claims made by politicians vying for our vote.

Let’s start with a snippet from Premier Rockliff’s media statement of 14^th February the day the election was called:

“Tasmania has come a long way over the last 10 years under majority Liberal Governments led by Will Hodgman, Peter Gutwein and myself and my team.”

What fairer way is there but to examine that statement using the government's chosen measure of sustainability, the Fiscal Balance.

There is little doubt Tasmania has come a long way but it is not in the direction the Premier wishes us to believe.

A few additional comments are needed.

·        The fiscal balance is the government’s chosen metric to measure the sustainability of government revenue and expenditure as per the Fiscal Strategy revealed in the 2023/24 State budget. The government’s fiscal strategy aims to achieve break even over a rolling four year period.

·        The fiscal balance includes most outlays including spending on infrastructure buildings and plant. The previously used Net Operating Balance figure was a narrower profit figure which excluded a lot of capital outlays and was therefore a poor indicator of budget sustainability.

·        The 2017 fiscal balance excludes the $730 million of Mersey money received in that year. As is it drawn down and spent in each of the following 10 years as intended it gets included each year as revenue. The year 2026/27 will be the final drawdown year.

·        The 2024 fiscal balance figure is from the 2023/24 Revised Estimates Report issued on 14^th February 2024.

The chart highlights the budget crisis awaiting the next government. How will break-even be achieved by 2032/33?

Tomorrow’s post will take a closer look at debt servicing costs and declining operating outlays.