Media release – Peter Gutwein, Premier, 15 May 2020
Tasmania’s Economic and Fiscal Update Report May 2020
With a nation leading economy just weeks ago*, today’s Economic and Fiscal Update Report on the state of our economy and budget, demonstrates the significant local impact of COVID-19.
Tasmania is the only state to provide an economic and budget update at this time, however, we believe to move forward from coronavirus together, we first need to all know where we stand.
Before the pandemic hit, the Tasmanian Treasury was forecasting in its mid-year update released in February a surplus of $11 million this year. Now, we are facing a likely deficit of just over $700 million.
From leading jobs growth in March 2020, we now forecast 27,500 jobs lost by the end of June and an unemployment rate of 12.25 per cent.
And from being the fastest economic growth in the nation at 3.6 per cent last financial year, Treasury now forecasts a decline of 1.75 per cent for 2019-20.
Reduced economic activity has impacted government revenue and government expenditure is higher as we manage the impacts.
The slowing national economy will have a significant impact on our GST revenue, which we expect to be written down by $310 million this current financial year and more than $357 million in 2020-21.
State taxation revenues will fall over this financial year, and next, by a total of $360 million.
The increased expenditure since the Budget will be around $396 million more in the current year and $439 million more in 2020-21 than forecast. This includes nearly $330 million associated with the COVID 19 response.
The impacts combined mean that rather than holding net cash and investments, as outlined in the Revised Estimates Report released in February, our net debt position is forecast to be $646 million at 30 June this year and around $2,350 million next year.
Tasmania’s Net Debt position will continue to be the lowest in the country.
COVID-19 has delivered a health challenge and an economic challenge, but saving lives has been our number one priority, with modelling highlighting that had action not been taken up to 89.1 per cent of the Tasmanian population may have been infected.
The Tasmanian Liberal Government has taken Tasmania to a position of strength before, rebuilding our state from the fiscal and economic laggard it was under Labor and the Greens in 2014, to the nation leader it became by March 2020.
This included leading jobs growth, with bold strategies to back our competitive advantages, grow local business and deliver better training and education outcomes.
We have delivered for Tasmania before and we will do it again.
Together, we will regain our confidence and rebuild our strong economy once more.
The Report has been prepared by the Department of Treasury and Finance and is available online.
*CommSec State of the States Report April 2020
Tasmania to build its way out from coronavirus
Today’s Treasury report paints a bleak picture of our economy and budgetary situation.
The coronavirus has brought to the world, our country and our state both a health crisis and an economic crisis.
While it was only in March 2020 our economy was the envy of the nation, it was imperative we move to protect Tasmanian lives and take the action we did to restrict the movement of people to contain the virus.
As we recover in safe steps, we will need to work together to rebuild our Tasmania.
We have climbed that mountain once before, and we will do it again.
Rebuilding our economy and budget from 2014 when we first came to Government, was a significant challenge which we overcame, delivering budget surpluses and taking Tasmania to the fastest growing economy in the country, equal with Victoria.
Rebuilding it from the coronavirus is our next challenge – but together, we will do it.
With a strong balance sheet heading into the coronavirus challenge, we will bolster our economy, target areas for growth and use the strength of our balance sheet to underpin our recovery.
We are going to build ourselves out of this, no ifs no buts.
That is why I have announced today that in the coming weeks and months we lay out the most aggressive construction program in Tasmania’s history.
This week I have tasked Treasury to do an immediate review of the State’s $3.7 billion infrastructure program and identify projects that can be brought forward and commenced swiftly.
Projects like affordable houses, maintenance on schools and Government buildings, regional roads, bridges and dams.
I’ve discussed this strategy with the Chair of the Premier’s Economic and Social Recovery Advisory Council who is strongly supportive of this strategy to provide an immediate injection into the economy and to create jobs.
I expect to announce the re-profiled construction and infrastructure program within coming weeks. This will be the first major step in our rebuild program.
During this time of recovery and rebuild we will also be backing business to do what they do best – investing, innovating, and most importantly employing their fellow Tasmanians.
Our state’s traditional strengths have not gone away, but nor have our more recent growth areas.
So as part of our Plan to rebuild Tasmania, we will focus on our strengths in sectors that underpin our economy.
Along with construction we will focus on agriculture, our visitor economy, aquaculture, renewable energy, advanced manufacturing, skills and education, as well as trade.
We are already drought-proofing our farm gate value by building nation leading irrigation infrastructure.
We will seek to harness our new renewable energy advantage, and our Renewable Energy Action Plan released this week will ensure that Tasmania remains the renewable energy powerhouse of Australia.
We will re-boot our visitor economy, and already Tourism Tasmania is developing a Recovery Response Plan that will position our State and its offerings in the hearts and minds of Tasmanian, national and international travellers in readiness for when it’s safely time for our borders to be relaxed.
And we will look forward to receiving the ideas of the Tasmanian community through the Premier’s Economic and Social Recovery Advisory Council, to identify further opportunities for our state.
The work of the Recovery Council will help to inform the development of the State Budget 20-21, which will now be delivered on 12 November.
Through all of this, we will remain focused on one key aim and that is to get our society back to normal and the thousands of Tasmanians who have lost their jobs back into productive work.
Having people back in work will strengthen our social fabric and we are committed to continuing to support our community organisations so that we recover both economically and socially.
I know it won’t be easy, COVID-19 will be with us for some time yet, but we know this strategy will work.
We have rebuilt our economy once before, we have had the most confident businesses and the most engaged community, and we will do it again.
These are challenging times, but since coming to Government in 2014, we have built the foundations for sustainable, strong economic and jobs growth for our state.
And by working together, we will rebuild what we’ve lost, we will strengthen our community, we will regain our confidence, we will once again have a strong growing economy, the jobs it supported and get back our Tasmanian way of life.
Together, we will rebuild a stronger Tasmania.
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