Economy
Budget to be a pain in asset
SUE NEALES: THERE were two strange lines in the State Budget this week which gave the game away.
Both revealed beyond doubt that the Labor Government — and by its very nature now, the Tasmanian Greens Party as well — is sailing very close to the wind in its efforts to return the state’s finances to the black.
It was already clear to most Budget watchers that the Government’s $500 million of election promises made in the desperate last two months preceding the March election had left little spare cash in state coffers for the Government to play with in future years.
Sure, there was a nominal and unexpected operating surplus shown on paper this week of $24 million for the Government’s accounts, recorded for the current financial year.
But anything more than a cursory glance at the details of Tasmania’s latest $4.6 billion Budget revealed that this was entirely due to the millions of dollars of Commonwealth funds poured through Tasmania’s accounts by the Federal Government in its Building the Education Revolution program and other stimulus measures, successfully designed to get a stalled economy moving and keep its construction industry in work.
Without such federal largesse, Treasury figures show the state’s nominal operating surplus would actually have been turned into an underlying deficit of $109 million for 2009-10.
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One wonders how the Government will be able to both afford to increase public-servant wages by an average 3 per cent a year, as outlined in the Budget, to meet yet another election commitment yet also be aiming for its expenses to be less than total income.
In recent years, few departments have met their budget targets, with blowouts evident again in this year’s Budget papers.
The Premier’s own department was one of the worst offenders.
But unless public service costs, which make up 49 per cent of the Government’s Budget expenditure now, can be contained, it will prove impossible for the Budget to even look close to regaining a net operating surplus position in three years’ time as Mr Aird has trumpeted.
But without a surplus, the Government will not be able to top up its net cash reserves that have been raided to pay for this last election, to keep its public-service superannuation liabilities and future obligations under control.
In that eventuality, the sales of major public assets or government businesses will become increasingly necessary despite Mr Aird’s determined assertions on Thursday that this eventuality is not part of the Government’s pre-ordained financial plans.
Earlier:
GETTING a handle on yesterday’s Budget was not easy, says SUE NEALES
There was an absence of any overall direction, or thrust.
The reason of course, as Treasurer Michael Aird openly admitted, was that this was a typical post-election Budget.
One that had to account for all the swimming pools, war memorials, jetties, local roads, and surf club boats promised in the dying days of the election campaign in March, when Labor was trying to hang on to power.
Those election promises all added up to more than $500 million.
Most of them Treasury says 75 per cent have been funded in this Budget, although many will suffer from delays in delivery, while others have been pruned back.
Mr Aird said yesterday all those promises were about keeping local communities happy and industry sectors vibrant.
It was impossible to drill down into the state of Tasmania’s finances yesterday without concluding these lavish election promises had cost the state dearly.
No wonder the Budget lacked an overall strategic funding direction there was simply not enough left after meeting election commitments and adding some Green ones too. The Budget reveals special funds set aside from the sale of public assets for strategic purposes, such as preserving Tasmania’s heritage or building new social and economic infrastructure, have been mercilessly plundered to pay for Labor’s election cash splash.