Most of the post budget responses have sadly failed to come to grips with the budgetary problems confronting this State.
Maybe the graph above will highlight the situation.
The first Liberal budget is similar in approach to Lara Giddings’ first budget. Cash on hand at that stage was almost $1 billion, but the outlook wasn’t great.
A cash deficit of more than $300 million was predicted for the 2011 budget with cash surpluses thereafter. This is shown by the red line.
However during Ms Giddings tenure, cash continued to run down to $362 million (excluding any temporary borrowings) by 30th June 2014. This is shown by the green line.
Enter Mr Hodgman.
The recent budget - even if all measures are successfully implemented on time - will continue the cash drain until there won’t be anything left in four years’ time. See blue line.
With scarcely any cash in the final year of the forward estimates, the government hasn’t provided for any interest payable. It will be a masterful cash flow management achievement to run a $5 billion budget without a cash buffer or a line of credit. No more internal borrowings or money shuffles will be possible if there’s no cash.
The cash run down is despite:
• Special dividends from MAIB of $100 million and Hydro Tasmania of $75 million which assist the government cash flow by simply increasing the debt of government businesses.
• Cash savings of at least $50 million per annum by not having to fund superannuation for the 7,500 existing employees who are members of the defined benefits fund.
• Based on past experiences there are negligible chances of achieving forward estimates, forever framed using heroic assumptions.
This is a plan that won’t work. To say that more work needs to be done is a chronic understatement that gives the plan credit which it doesn’t deserve, and lulls people into thinking that a bit of tweaking is all that is required.
We have an unsustainable system that all plans from all parties over the past 5 years have failed to address.
Listening to legislators debate the budget leaves little doubt that the State government is almost beyond salvation.
AND, John Lawrence gets to grips with unfunded superannuation:
• Unfunded superannuation not the biggest problem Judging by the budget reactions, there is still a common misconception that one of our biggest budgetary problems is the unfunded superannuation liability for government employees. If there is one issue in the Budget the government addressed it was the unfunded superannuation liability for members of the now closed defined benefits scheme …
• TT MEDIA HERE, as Bec White says public housing is about to be privatised, Nick McKim says Libs have been caught out on public sector pay cuts, Rene Hidding gives an update on Furneaux shipping, Will Hodgman says Tasmanian tourism is sailing into new waters etc, etc, etc ...
• Gordon Bradbury, in Comments: “Listening to legislators debate the budget leaves little doubt that the State government is almost beyond salvation”. I think John means the State Government AND the whole State Parliament. They are all well out of their depth. This train wreck is now unavoidable. The Hydro will have to be sold off under “distressed seller” circumstances at a bargain price just to keep a few coins in the money box. Then we do a “Thelma & Louise” over the cliff.
• John Hawkins, in Comments: Hodgman real people are now in a position to call you to public account via the internet. This is going to collapse the ivory tower containing your talking but brain dead heads attacked in the public arena by retired intellectuals with real skills who can demolish your non existent credentials. Appoint JL as an external consultant and run the results on TT and we can all be part of the dialogue. This is the approach of the 21st century. Over to you sir.