AFL funding, ‘efficiency dividends’ and looming debt — Michael Ferguson hands down his second budget Tasmanian Treasurer Michael Ferguson has delivered a restrained second budget as he begins the long journey back to surplus and tries to rein in ballooning debt. The money the government is spending is focused on health and education, combined with multiple measures to address the rising cost of living. The budget shows revenue was far lower than expected over the past year, with the $7.8 billion coming into the coffers about $691.8 million less than the government had anticipated. Overall, the budget shows the economy is moving in the right direction, but some key measures aren’t so flattering. Next financial year there is an expected deficit of $297.5 million – with modest surpluses expected in the last two years of the forward estimates. The Tasmanian premier wants to make the Macquarie Point AFL stadium a “project of state significance”. But it’s no guarantee of success. But when you remove one-off payments from the federal government for things like the Bridgewater Bridge and the Royal Hobart Hospital redevelopment, the picture looks significantly less rosy, with a deficit of $988.38 million in 2023-24 and deficits for each of the following three years. Net debt will rise to $3.5 billion by next June and then steadily increase over future years, soaring to $5.6 billion in 2026-27. There are no new taxes, although a flagged change to the Emergency Services Levy is not factored into the budget. The government has tried to save money though, imposing what’s called an “efficiency dividend” on all government departments. The Tasmanian government promised a budget that focused on health, education and cost of living. See how these sectors fared — and who are the winners and losers of this year’s budget. It won’t start until July next year, and will deliver a $300 million saving to the budget over the next four years. In his speech, Mr Ferguson said the figure was “modest” compared to the 0.75 per cent efficiency dividend announced in 2019, and then abandoned due to the COVID pandemic. He said the federal government had also imposed efficiency dividends of between 1 and 2 per cent. The Treasurer pledged to work with departments to make sure it did not impact frontline services – saying it could mostly be achieved through things like improved use of technology. But the announcement is still likely to anger public sector unions and prompt a fight against the measure. The biggest chunk of revenue feeding into Tasmania’s coffers comes from the GST, which is divvied up amongst the states by the federal government. The rest comes from things like conveyance duty raised from the sale of property, land tax and payroll tax. Almost a third of budget spending goes into the state’s health system (33 per cent) with a quarter going into education and 10 per cent spent on public order and safety. The budget includes a $4.3 billion infrastructure spend — a $1.3 billion drop on last year’s budget — but that doesn’t factor in Commonwealth funding on projects like the York Park upgrade and the Macquarie Point precinct. More than half of this year’s infrastructure spend (55 per cent) will go on roads and bridges. There’s a promised $45 million energy relief package, with the federal government also tipping in $45 million. That will provide a $650 discount to businesses and $250 per year, for two years, to up to 140,000 eligible households. In health, where the total spend is $12.1 billion over four years, there’s $680 million for upgrades to hospitals, ambulance stations and mental health centres. That includes $170 million towards the 30-year Royal Hobart Hospital and $115 million for the first and second stages of the Launceston General Hospital redevelopment. There’s also $30 million to implement the recommendations of the Commission of Inquiry into responses to child sexual abuse in institutional settings, which will deliver its final report at the end of August. The deal signed with the AFL sees the government commit $12 million a year for 12 years, with that money to flow from 2028. But there’s also an unexpected $22.5 million dollars going to the new club, as part of a “Tasmanian AFL club package”. The funds will support the establishment and initial operations of the AFL and AFLW club, starting from next year. The bottom line has already been battered by a fall in GST revenues and the budget warns there could be more shocks on the horizon. Like always, it says the national GST pool is highly volatile and any change could have a major impact on the state budget (each 1 per cent change to the national pool results in a $35.2 million reduction in Tasmania’s GST revenue). The budget flags a possible drop in Tasmania’s population share, which could affect how much GST revenue the state gets, and there’s always the risk of a spending blow out on the government’s response to the Commission of Inquiry, health, the Macquarie Point football stadium or moving the wastewater treatment plant at Macquarie Point. Set the ABC News website or the app to “Tasmania Top Stories” from either the home page or the settings menu in the app to continue getting the same national news but with a sprinkle of more relevant state stories. We acknowledge Aboriginal and Torres Strait Islander peoples as the First Australians and Traditional Custodians of the lands where we live, learn, and work. This service may include material from Agence France-Presse (AFP), APTN, Reuters, AAP, CNN and the BBC World Service which is copyright and cannot be reproduced. AEST = Australian Eastern Standard Time which is 10 hours ahead of GMT (Greenwich Mean Time)
