The Treasury’s Pre-Election Financial Outlook (PEFO) Report released 25 June 2025, delivers a clear warning about Tasmania’s deteriorating financial position.
The report highlights a significant increase in projected net debt for the General Government Sector (GGS), which is now expected to grow from $4.2 billion in 2024-25 to $13 billion in 2027-28, a substantial jump from earlier estimates.
This deepening debt crisis is projected to lead to an “eyewatering” rise in annual interest payments, potentially reaching $700 million, which will severely constrain the state’s capacity to manage economic shocks and deliver essential community services.
The PEFO report states “This rate of growth in debt is not sustainable and the size of the problem will only increase if not addressed. Immediate and sustained action is needed. “As a state, we are spending more than we earn and the gap is growing.”
This constitutes a direct warning that without decisive policy interventions, Tasmania’s financial stability and ability to fund public services will be significantly challenged in the coming years.
The Liberals claimed that the PEFO “shows a world where government decisions and the flow-on impact on the fiscal position were not included” despite their claim of a return to surplus lacking evidence
Shadow Treasurer Josh Willie said the report shows “the Liberals’ budget mess was even worse than they were admitting.”
Kristie Johnston (independent, Clark) recognised that the budget is in “deep trouble” and put forward a four-point plan for repair.
The Greens back the revenue raising raising measures suggested by economist Saul Eslake in his independent report submitted to Parliament last year in which he was tasked with reviewing State of Tasmania finances.
Their statements are reproduced below.
Media Release – Guy Barnett, Liberal Member for Lyons, 25 June 2025
PEFO confirms Government’s Budget plan is needed
The release of Treasury’s Pre-Election Financial Outlook (PEFO) has confirmed that the Tasmanian Liberal Government has taken the strong action needed to return the Budget to surplus.
The PEFO shows a world where government decisions and the flow-on impact on the fiscal position were not included.
As outlined in the PEFO, if decisions weren’t made, the fiscal position would have deteriorated.
Our Government, however, took action.
The Government was taking the action required, and as demonstrated by the 2025-26 Budget, a range of measures proposed by the Government would’ve seen a sensible return to surplus.
The PEFO today backs in the Government’s plan. It was Dean Winter who stopped this corrective action and has sent Tasmania to an election.
This election wasn’t our choice. Labor forced the election on you because they are more interested in political games than Tasmanian families.
Media release – Josh Willie MP, Shadow Treasurer, 25 June 2025
Even worse than the budget – PEFO more proof Tasmania needs a Fresh Start after 11 years of the Liberals
Last month, Treasurer Guy Barnett delivered the worst budget of all time.
Today’s Pre-Election Financial Outlook Report (PEFO) shows the Liberals’ budget mess was even worse than they were admitting.
Last year, the Liberals asked Parliament for an additional half-a-billion dollars just months after the budget was handed down, because they’d fudged the figures. Today’s report shows they’ve been caught out again.
After 11 years of the Liberals, net debt is now projected to grow to $13 billion by 2027-28. This will see annual interest payments reach an eyewatering $700 million.
The PEFO proves that the Liberals can’t be trusted to manage Tasmania’s finances. If you can’t manage the budget, you can’t govern Tasmania.
Labor will soon be releasing our fiscal strategy to get Tasmania’s finances back on track. It will demonstrate how we will be responsible with the budget, while growing our economy in the long term.
After 11 years of the Liberals, Tasmania needs a Fresh Start.
Media Release – Kristie Johnson, Independent Member for Clark, 25 June 2025
Reaction to Treasury’s Pre-Election Financial Outlook
We’re in deep trouble. With no change, net debt for the general government sector will grow from $4.2 billion in 2024-25 to $13 billion in 2027-28.
Our annual interest bill will at least rise from $230.9 million to $697.9 million over the same period.
PEFO says about the debt crisis:
- “The State Budget has a structural problem … (which) will not be resolved by future economic growth.
- “A combination of revenue and expenditure measures will be required.”
- “Immediate and sustained action is needed.”
The next government needs to adopt my 4 Steps to Budget Repair –
- Smarter Infrastructure Spending
- Get Treasury advice on what we actually need and can afford
- Rank projects by bang-for-buck — fund the best ones first
- Independent Auditor to check compliance each year
- Raise Fair Revenue
- Royalties on mining and salmon: pay for the resources they profit from
- Luxury car & land tax reform — protect people who need it and fund the future
- Cut Wasteful Industry Handouts
- Clear rules for subsidies: What do taxpayers get in return?
- Annual public reports on who got what — and whether it worked
- End Pork-Barreling
- No more backroom grants or photo-op funding
- If it’s public money, it must go through a fair, open process
Media release – Rosalie Woodruff MP, Greens Leader, 26 June 2025
Better Call Saul: Greens Announce Measures to Tackle the Budget Crisis
Treasury’s shocking Pre-Election Outlook was clear – the Liberals’ business as usual is terrible for Tasmania’s finances, and Labor’s plan won’t make a meaningful difference. The Greens have known this for some time, which is why we’ve been calling for corporates to pay their fair share.
In the face of an ever-worsening budget situation, the major parties are living in a dream world. On one hand, the Liberals are pretending there’s nothing to worry about and they have it in hand. On the other, Labor recognises there’s a huge problem, but won’t consider obvious solutions.
To the Liberal and Labor politicians who refuse to act on the budget situation, we’d say this: better call Saul. Our plan to tackle the budget mess is based on the expert advice of pre-eminent economist, Saul Eslake. He’s pointed out a number of budget fixes, if only the major parties would listen.
The Greens recognise Treasury’s clear call for new revenue. By making mining and salmon farming corporations pay their fair share, and ending subsidies to the greyhound racing industry, Tasmania would be more than $500 million better off. This is obvious and simple stuff, and it would make a real difference.
When we first announced these measures years ago, the Liberals and Labor called us kooky. Now both Treasury and Saul Eslake have made it clear this is not just common-sense, but necessary.
The Liberals have spent a decade giving their corporate mates a free ride, instead of getting them to pay their fair share. And while Labor keep banging on about the terrible budget, they’re not offering any meaningful solutions. Critically, both major parties are still committed to building a billion-dollar stadium in Hobart – a plan that will add $2 billion to the state’s debt.
The budget is important for all Tasmanians because essential services like health, housing and public transport need to be paid for. The Liberal and Labor parties need to get their priorities sorted, make big corporations pay their fair share, and focus on making sure the state budget can meet the needs of our community.
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