In case anyone was thinking fiscal profligacy was purely a Labor disease — or that Crikey was unfair in constantly pointing out how bad the fiscal positions of Victoria and the Commonwealth are — behold last week’s budget from the Tasmanian government of Jeremy Rockliff and his Treasurer Guy Barnett.
Not merely is the Rockliff government promising deficits out to 2028-29, the budget represent a marked deterioration since last year’s budget — despite increased revenue.
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The deficit for the year about to be completed, 2024-25, has blown out by $500 million to nearly $1.3 billion. And the coming financial year’s deficit, which last year was forecast as less than $400 million, is now expected to be over $1 billion. And that’s despite a $400 million increase in revenue.
The story is the same across the forwards: significantly more revenue, but much higher spending pushing the deficit higher. In 2027-28, net debt will hit $10 billion, and is headed well over 20% of gross state product. Net interest payments are heading for over $500 million a year by the end of the forwards.
It’s the same problem as in Canberra, and in Victoria: governments keep increasing spending, without matching it with tax revenue, pushing up debt and building up interest payments into a major budget item. The mooted return to fiscal discipline is always pushed back, as each new budget shows that the coming year will be worse than previously forecast.
What’s interesting about the Tasmanian budget, however, is that, while the government boasts of increased health and education spending, its forecasts suggest it is keeping overall growth in those portfolios — which dominate spending — under relatively tight control. Instead it’s “general government services” that sees a big expansion — with a very long list of relatively small election-style commitments across a variety of portfolios that total up to $350 million of new spending
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That includes $13.2 million to fund the operations of the “Macquarie Point Development Corporation”, the spivvy government body charged with developing the prize example of the Tasmanian government’s inability to control spending: the new stadium being forced on Tasmania by the Australian Football League. The government willingness to entirely abandon good process around this benighted project was necessitated by the fact that any rigorous assessment of the new stadium reveals how the government has relied on garbage modelling to justify the spending.
And, inevitably, that spending has blown out. Once mooted as costing only $775 million, the stadium will now, the government admits, cost at least $945 million.
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The blowout vindicates independent economist Nicholas Gruen, who ripped apart the dodgy modelling behind the original estimate and warned the stadium was more likely to cost just over $1 billion. For that, Gruen was smeared by Hobart journalists and attacked as a partisan aligned with stadium opponents — without anyone managing to find a problem with his sums.
The stadium is a perfect example not merely of the profligacy of a desperate government but of the link between fiscal indiscipline and the abandonment of good policy process. And Tasmanians will continue to pay for it via surging interest payments for many years to come.
Should the Tasmanian government ditch its stadium plans, even if it means no AFL team?
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