The absence of an articulated strategy to tackle spiralling public sector costs could damage Tasmania’s credit rating and set the economy up for years of Budget deficits.
Tasmanian financial analyst Tom Ellison said Treasurer Lara Giddings had missed the opportunity to reform the public sector, instead releasing a Budget seemingly designed to appease Union concerns about job cuts rather than tackling underlying problems and inefficiencies in Tasmania’s public sector.
“Although the Government is claiming its Budget will see the existing $500 million deficit improve in coming years, there is no evidence that cross-agency cost cuts will achieve anywhere near the savings needed,’’ Mr Ellison said.
“Instead of identifying which services and programs could be cut or reduced, the Treasurer has simply instructed all agencies to tighten their belts,’’ he said. There is no evidence that the proposed savings are achievable or that they won’t be negated by budget blowouts elsewhere.’’
“As an example, the Health Budget has been rising at 8 per cent every year for a decade, yet Ms Giddings is betting the State’s future on her claim that expenditure in that portfolio will be held at the current level for the next four years.’’
“I doubt ratings agency Standard & Poors will be impressed by Ms Giddings’ first Budget, and the State could well have its credit rating downgraded later this year,’’ Mr Ellison said. “That will make it even harder to reduce deficits in coming years.’’
Mr Ellison said the business community will be concerned about the near-absence of material initiatives to encourage investment and jobs growth from the private sector.
“An economic resurgence will be driven by Tasmania’s 35,000 small businesses, yet we are told to wait for the Government’s long-delayed Economic Development Plan before we know whether the Government will help, or hinder businesses to expand and grow.’’
Tom Ellison is general manager of Wills Financial Group, an independent advisory, investment management and consultancy firm based in Tasmania.
• An analysis of the Budget by Tasmanian Times specialist commentator Jarvis Cocker will follow later today.
• David Killick, Mercury: Jobs, Schools cut in Budget
PUBLIC service jobs will be slashed, schools will close and there will be fewer police on the beat after the Tasmanian Government handed down a brutal State Budget today.
Premier and Treasurer Lara Giddings has slashed Government spending by $290 million next year – with bigger cuts to come in next year’s budget totalling $1.4 billion over the forward estimates.
Describing the State’s financial crisis as the worst since the 1930s, Ms Giddings said the equivalent of up to 1700 full time jobs would disappear from the public sector in the next three years.
The figure is less than the 2300 foreshadowed in the mid-year Financial Report, but still represents around 7 per cent of jobs.
Budget in a nutshell:
1.Revenue 4.6 billion
2.Spending 4.7 billion
3.Deficit $113 million
4.GST revenue up 1 per cent to $1.7 billion
5.20 schools earmarked for closure
6.Up to 1700 public sector jobs at risk
7.$100 million cut to health budget
8.Up to 100 police to go
9.Planning system to be reformed at cost of $6 million
10.2.5 per cent limit on public servant wage rises
11.No new taxes introduced but land tax exemptions to shack owners to go.
12.Three Capes Track to still be built
13.Bay of Fires will not become a national park
14.24 Tourism Tasmania jobs to go
Sackings will be a last resort, the Premier said, though those public servants who remain will have to accept real wage cuts as pay rises are kept under 2 per cent a year.
Read the full David Killick, Mercury report HERE
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• Nick McKim …
HISTORY REPEATS ITSELF: POWERSHARING PARLIAMENTS NEED TO FIX PROBLEMS LEFT IN WAKE OF MAJORITY GOVERNMENTS
Greens’ Initial State Budget Response
Nick McKim MP
Greens Leader
Thursday, 16 June 2011
The Tasmanian Greens today said that once again a minority government has had to make the tough budget decisions in the wake of majority government financial mismanagement, repeating history from the Labor-Green Accord in he 1980s and the Rundle minority government in the 1990s.
Greens Leader Nick McKim MP said the State Budget delivered today presents many challenges for the community in the immediate and short-term, but that a long-term strategic approach to putting the state’s finances has long been advocated by the Greens.
Mr McKim also said that the budget challenges facing Tasmania required responsible and measured decisions to be made, no matter how tough, and that the Greens advocated that these decisions would be made within the broader policy imperatives that the vulnerable must not be left behind, and strategic investment into capacity building within our community and local economies must be prioritised.
“It will not come as a surprise to many in the community that poor decisions made by previous governments have cost Tasmania dearly, and that tough decisions have had to be made as a result,” Mr McKim said.
“Once again the Greens have been prepared to help to haul the budget back on track after the spending sprees of majority governments.”
“Just as the Greens supported previous Labor and Liberal minority governments’ when tough remedial budget action was required, we have rolled up our sleeves to take on a similar responsible role once again.”
“The Greens do not shirk from this responsibility. However we are clear that there are key requirements which must be delivered, including the fact that all effort must be made to ensure this debilitating boom-bust cycle is stopped, and that there is a clear focus on putting the State’s finances on a sustainable footing.”
“We are also adamant that the vulnerable in our community must not be left behind. Therefore we negotiated an extra investment of $6 million to deliver energy efficiency programs to help reduce the cost of power bills, and lower emissions, as well as extra investment in Neighbourhood Houses.”
“The bulk of the Greens’ energy efficiency initiative will be delivered through Housing Tasmania, to again help those most in need.”
“The Greens welcome the move to a new fiscal strategy, which reflects much of what we have argued about needing a sustainable economic management framework to underpin budget direction.”
“This acknowledgment is a welcome change of position from Labor.”
“The Greens also negotiated broader public sector reforms to improve productivity and efficiencies while protecting service delivery, which includes investment in the professional development of our public sector workers, and streamlining centralised services technologies, which are reflected in this Budget.”
“The Greens also sought a recommitment of Labor’s previous undertaking that there will be no additional direct financial assistance for the proposed Gunns’ Tamar valley pulp mill,” Mr McKim said.
Mr McKim also said that clearly both he and Ms O’Connor have had to shoulder their share of the heavy lifting required by the State’s budget position in their respective ministerial portfolios.
