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Budget Overview

Thu 17 May 2012

Lara Giddings

Premier

The State Government will boost support for Tasmanians in need while prioritising core health and education services in this year's Budget.

The Premier, Lara Giddings, said the 2012/13 Budget struck the right balance between protecting vital services while continuing to provide responsible financial management in the face of significant economic challenges.
 
"I recognise that not all of our decisions have been popular, but they have been necessary to guide Tasmania through the biggest global economic upheaval we have faced since the Great Depression," Ms Giddings said.
 
"While we cannot afford to abandon fiscal discipline, this Budget also has a heart.
 
"It is a Budget in the core Labor tradition; making sure we spend only what we can afford and in a way that will improve people's lives and grow our economy."
 
Ms Giddings also thanked the Greens for their responsible approach to the Budget management.
 
"This Budget contains a number of initiatives we can jointly be proud of, not least our shared commitment to supporting Tasmanians most in need.
 
"We have introduced measures to reduce household power bills by around $200 and increased spending on concessions for disadvantaged Tasmanians.
 
"We are investing $5 million in new cost of living initiatives to help Tasmanians in need.
 
"We are contributing to low paid community sector workers receiving long overdue pay rises.
 
"And we are investing in infrastructure and targeted programs that will help to create jobs."
 
Ms Giddings said a further decline in GST revenue, a drop off in state-own taxes and demand pressures across departments had made this year's Budget particularly challenging.
 
"There was simply no way to avoid a short period of net debt without further impacting on frontline services, which is something we were not prepared to do.
 
"Public servants across our health system have worked hard to cut costs and improve efficiency but seeking a higher level of savings would unduly affect critical services. That is why the savings target for Health will be reduced by $120 million across the Forward Estimates.
 
"This decision will be offset with additional savings required of other Departments and increases in a small number of fees and charges, meaning our long-term plan to save $1.4 billion across the Forward Estimates remains unchanged.
 
Education and police have also been quarantined from additional savings beyond those announced in last year's Budget.
 
"We have had to strike a balance that protects our core services, while ensuring that we have a clear and swift pathway out of debt."
 
Ms Giddings said Treasury had used the same methodology used by Victoria, NSW, WA and South Australia to forecast a strong improvement on GST revenues across the forward estimates driven by factors including:
 
  •   Revenue growth nationally from the mining boom; and
  •   The wind down of Federal stimulus funding and Royal Hobart Hospital upgrade payments to  Tasmania.
 
"The Budget projects that Net Debt will peak at $134 million in 2012-13 and, importantly, will be eliminated in 2014-15.
 
"As a result of the fiscal discipline we have imposed across government, and with GST and State taxation revenue expected to rebound, it is forecast that we will return to savings in excess of $500 million by 2016.
"Contrast that with the do-nothing approach advocated by our political opponents, which would have plunged Tasmania deep into an unsustainable period of debt of $4 billion, with interest payments of around $300 million a year by 2015-16.
 
"To put that in perspective, that's more than the entire budget for Police and Emergency Management required to pay interest on debt.
 
Ms Giddings said a similar pattern of improvement could be expected in the Net Operating Balance.
"In 2012-13 we expect a deficit of around $280 million.
 
"But the following year Treasury is predicting a modest surplus of around $50 million, before a return to a strong Budget surplus of well over $200 million for the remainder of the Forward Estimates.
 
"This is clear and compelling evidence to the business community, investors and the wider community that the strong decisions the Government is making are leading us towards a better future."

Budget Overview