Reality bites

It was only a matter of time before the incoming State government started backing down on its forest policy promises such as ripping up the forests agreement and ceasing funding Forestry Tasmania (FT).

The emotive term ‘ripping up the TGA’ suggests the Tasmanian Forests Agreement Act will be repealed. This is, and always has been, unlikely.

Even the latest announcement of changes to the classification of 400,000 hectares doesn’t imply the Act is being repealed or ripped up.

Entitlements and ransoms

Reports about the end of the age of entitlement are greatly exaggerated.

Hobart’s Mercury newspaper reported Deal close on $38 million Hobart International Airport bonanza

Describing the handout as government assistance to upgrade vital public infrastructure masks the reality that it’s a bailout of a private company brought to its knees by the rapacious behaviour of the airport manager Macquarie Bank.

SPC Ardmona asked for $25 million from the Australian government for factory upgrading in addition to $25 million from the Victorian government and $90 million from its own coffers. The financial strength of SPC’s parent Coca Cola Amatil was a factor in the Australian government’s refusal to accede to SPC’s request.

The assistance offered the Hobart Airport will comprise the bulk of the funds required for the airport upgrade and overlooks the ability of managers to raise funds elsewhere, not to mention turning a blind eye to events which necessitated the bail out.

Winning was easy

Winning was easy.

Henceforth it gets a whole lot harder, addressing the issues conveniently overlooked by all parties during the election campaign, not just looming problems with Hydro Tasmania, Forestry Tasmania and TT Line but the overwhelmingly crucial matter of government budgetary sustainability without a fallback position on the horizon.

Tripartite consensus at last?

The most compelling thing about the Liberals’ fiscal strategy just released is that it may signify the dawn of a new era of consensus.

Mid year prognosis

The Premier’s Mid Year update revealed an unsustainable budget position. No policy prescriptions were offered. Likewise Mr Hodgman’s plan, offers no solutions. The government plans to spend more in 2013/14 as a % of operating revenue than it did in 2012/13. The forward estimates reveal cash deficits in the future. The government hasn’t detailed how future deficits will be funded. The government is unlikely to meet any of its key performance indicators (KPIs) over the next 4 years. Nor has it announced any policy changes to help satisfy KPIs in the future. Mr Hodgman’s plan offers no comfort as 97.5% of outlays are the same as those of the government. He has refused to issue his revised costings following the Premier’s update. Both parties intend to spend an unacceptably low amount on infrastructure. Even with the most important election in a generation the Libs are yet to publicly announce their KPIs, their fiscal strategies, as required. Electors are being presented with alternative plans, neither of which will lead the government onto a sustainable pathway.

The Mid Year Report: What to look for

Premier Giddings releases the Mid-Year Financial Report later today. The following are five things to look for:

1.      For 2013/14 do government’s cash outlays still exceed cash inflows? How long will this continue?

2.      The government survived 2012/13 by cutting the capex budget. Does the revised budget for 2013/14 include further downward revisions of capex amounts (infrastructure, roads etc)? How long can this continue?

3.     As the Auditor General confirmed yesterday, the government has survived by internally borrowing amounts received for other purposes, the Royal Hobart Hospital for example. Does the Mid Year update confirm a rise in the level of internal borrowings?. What is the expected figure as at 30^th June 2014.

4.     When will we be able to start repaying the internal borrowings? In other words when will cash receipts exceed cash outlays?

5.     Have the capex outlays relating to the Royal Hobart Hospital ($500 million+) been rescheduled? Or is the upgrade still on track?

The Hodgman plan: Will it work?

 

Will Hodgman’s future plans are at last coming under a little more scrutiny.

The coming election, we are told, is a once in a generation event, a turning point for Tasmania.

The Liberals have, to their credit, unveiled a plan in each of the past few years in response to the government’s budget.

The latest plan titled a Plan for a Brighter Future issued in May 2013 contained the Libs’ plans for 2013/14 and the next 3 years of the forward estimates.

The plan is based on the governments’ budgets for those years. In essence the Libs are planning to cut outlays by about 1% and redirect about 1.5% of wasteful spending to other initiatives.

That’s all.

It’s sometimes touted the Libs have identified $500 million worth of savings. But that’s the four year total. Each year it’s about $125 million.

The government have no plan, we are told. Only the Libs have, a fully costed plan, a once in a generation change to fix the Labor Green Budget mess.

Will it work?