Conclusions
For all scenarios analysed, the results show projected fiscal outcomes that are manageable in the short to medium-term. However, the size of the corrective action required to maintain fiscal sustainability increases over the projection period.
The high-level analysis of the impacts of the updated data in the RER and the PEFO indicate that changed circumstances over the short-term are not the primary drivers of the outcomes over the longer-term. Rather, the outcomes over the full projection period continue to be driven by long-term expenditure and revenue growth trends.
Projected health expenditure is the single most significant driver of the projected future fiscal challenges for the State. It is the largest expenditure category within the Budget and is projected to grow at a significantly greater rate than projected revenue growth.
This outcome is consistent with the outcomes of the analysis undertaken in the 2016 and 2019 Reports and is also consistent with the significant health service funding pressures being experienced by all Australian jurisdictions and internationally. There is a range of drivers behind this growth in health expenditure, including continuing medical advances that provide opportunities for improving health outcomes but often at a higher cost.
The principles of sound fiscal management detailed in the Act provide an important framework for the maintenance of fiscal sustainability and the development of appropriate measures to maintain fiscal sustainability.
The analysis undertaken in this and previous Fiscal Sustainability Reports has established the importance of the following:
• early action to correct fiscal deterioration will mitigate the severity of the measures required to effectively maintain fiscal sustainability;
• given the composition of the State’s revenue base, it is not possible to rely entirely on economic growth to maintain fiscal sustainability;
• any action to maintain fiscal sustainability must recognise and address major drivers of a deterioration in the Budget position; and
• it is likely that effective action to maintain fiscal sustainability will require the successful implementation of a range of measures.
Read the full Tasmanian Government Fiscal Sustainability Report 2021.
Media release – Peter Gutwein, Premier, 10 June 2021
Fiscal Sustainability Report
The majority Gutwein Liberal Government welcomes the Tasmanian Government Fiscal Sustainability Report, released today by Treasury.
The report confirms our finances are strong and for all scenarios analysed, the results show projected fiscal outcomes that are manageable in the short to medium-term.
Importantly, the Report does not take into account the strong plan we took to the recent election that will secure Tasmania’s Future and return our State to surplus in 2022-23.
The report does also not take into account the significant growth in GST receipts the State will receive as a result of Tasmania’s nation-leading economic recovery and the faster than expected national growth as announced in the recent Federal Budget for 2021-22.
While the projections and scenarios in the report do not attempt to predict what will happen in the future, we do have a Fiscal Strategy that will ensure the State’s fiscal position remains sustainable.
Importantly, we are already seeing our plan working with businesses confident, investing and hiring with payroll jobs now 1.7 per cent higher than before the pandemic. In the four weeks to 22 May 2021, payroll jobs grew 0.4 per cent, which was the third highest monthly growth of any State.
Last week, the ABS found that our State Final Demand grew 1.6 per cent in the March quarter, which was the third fastest growth rate of the states, to be 2.9 per cent higher than before the pandemic. This includes business investment which is 6.4 per cent higher than before the pandemic as well.
Later this year we will deliver the 2021-22 Budget that will deliver on the promises we made during the election, and outline a clear pathway back to surplus so we can reinvest even more into essential services.
We have a clear, long-term plan to Secure Tasmania’s Future based on a clear fiscal strategy as well as the responsible budget discipline and track record to deliver it.
The report can be found here: www.treasury.tas.gov.au/Documents/Tasmanian-Government-Fiscal-Sustainability-Report-2021.pdf
Cassy O’Connor MP | Greens Leader and Treasury spokesperson, 10 June 2021
Government Fiscal Sustainability Report 2021 – Time to Make the Corporates Pay
The Tasmanian Government Fiscal Sustainability Report 2021 reiterates the findings of previous reports from Treasury. It makes it clear things need to change.
The Tasmanian budget is on an unsustainable pathway due to the skyrocketing cost of health services. In this context, the Gutwein Government’s fiscal philosophy, policy or rhetoric is largely irrelevant.
While factors like the State’s ageing population and a high chronic disease burden are contributors, the demand for services is not the primary culprit. The costs causing the budget blowout are supply pressures, such as the cost of new technologies.
Improving the health of Tasmanians, while critical, will not address the budget shortfall in coming years.
Under all assessed scenarios the budget is plummeting into the red across the forward estimates. This is regardless of revenue growth, expenditure constraint, or any other assessed inputs.
To be able to continue providing essential services – like healthcare, education and housing – into the future, the only solution is to find new revenue sources.
It’s time to make the corporates pay their fair share.
The Liberals only took one taxation policy to the State election – to adjust land tax thresholds. That sop to the propertied class will likely result in decreased revenue, not what’s needed to pay for critical services into the future.
The Greens’ plan to make wealthy corporations and investors pay their fair share, on the other hand, would ensure a functioning health, education or housing system into the future. It’s the only fiscally sustainable pathway forward for Tasmania.
