Gutwein delivers $54.3m surplus
Tasmania's Treasurer Peter Gutwein delivered a surplus of $54.3 million in his fourth Budget, with expenditure focussed on health, education and jobs.
An expected GST windfall and improved returns from several Government Business Enterprises (GBEs) enabled expenditure of $5,800 million to be planned for 2017-18.
Budget surpluses are projected for each of the next four years.
Highlights of the May Budget are:
- $1,700 million for health, with 106 extra beds and 360 more staff.
- $1,500 million for education.
- $245 million on new infrastructure projects.
- No new taxes.
- Improved returns from GBEs and increased revenue from tax/stamp duty.
Mr Gutwein described the Budget as one on which Tasmania's future could be built.
"It provides us with a buffer, as well as providing us with a balanced outcome that provides for the most significant boost to health spending in the State's history," he said.
"Construction is going well, tourism is going. We're seeing a return to strength in our agricultural sector and forestry.
"State revenues are up, federal revenues are up."
Leading economic commentator, Saul Eslake, wrote: "A combination of good management and good luck has ... put the Hodgman Liberal Government in a strong position ahead of the next State election — whenever it is held."
Mr Eslake said the Government's improved operating position had allowed it to set aside a $335 million election honey pot.
He said the Government was now reaping benefits of three tight budgets, but he felt fundamental reform needed to close the gap between the State and national economies was missing from the Budget papers.
Mr Eslake wrote: "New spending in the Budget is, for the most part, well targeted towards meeting pressing needs — as in the State's hospitals, or the care of vulnerable children — or creating jobs, and supporting key drivers of economic growth, including tourism and agriculture.
"The Budget's assumptions about the Tasmanian economy — economic growth of 2.5 per cent in 2017-18, easing back to 2 per cent per annum after that, employment growth of 1.25 per cent in the coming financial year, and 1 per cent per annum thereafter — are by no means unreasonably optimistic.
"And the Budget is more conservative in its assumptions about Tasmania's share of the GST revenue than those contained in the recent Federal Budget.
"Even so, these upward revisions to forecasts of all of the Government's major sources of revenue have allowed it to increase recurrent spending by more than $320 million per annum over and above what was envisaged in last year's Budget — including, as the result of 187 new policy decisions costing an average total of $195 million per annum — while still leaving the underlying net operating balance an average of almost $50 million per annum better off than anticipated a year ago.
"This improved 'operating' position, together with a willingness to borrow a bit more than planned a year ago, has allowed the Government to make 44 new infrastructure spending commitments totalling almost $260 million over the four years to 2020-21."
Mr Eslake said the total level of projected infrastructure spending during the four-year period was now over $2 billion.
"This includes a 'general provision' of $335 million for infrastructure projects 'yet to be announced' — a honey pot which will no doubt be drawn on ahead of the forthcoming election," he wrote.
Mr Gutwein told Parliament the State's surpluses relied heavily on GST revenue and the Government would continue to fight for its fair share.
"Any significant change there would have a detrimental impact on the State," he said.
GST payments to the State will be $2.3 billion in 2017-18, about $40 million more than previously projected.
The Budget confirmed Hydro Tasmania would not pay a dividend for a second consecutive year, but projected a $12 million contribution from the GBE in 2018–19.
Overall revenue from GBEs increased $94 million on the previous year, including higher dividends from the Motor Accidents Insurance Board and TasNetworks.
A total of $100 million will be added to the TT Line's Vessel Replacement Fund, including $20 million from the Government and $80 million from the GBE, bringing the reserved amount to $180 million.
The Government has put aside $25 million for a youth employment strategy which includes $17.1 million in payroll tax relief for businesses that employ apprentices, trainees and young people, with grants of up to $4,000 for small businesses that take on a trainee or apprentice.
Health expenditure takes the biggest slice of the budget pie, with investment in hospital infrastructure and $144 million allocated to recruit extra staff.
A total of $6 million will be spent over four years on a statewide operations and command centre to improve communication between Tasmania's major hospitals.
A second search-and-rescue helicopter will be purchased at a cost of $9 million to address increasing demand.
A record investment in education will include $6.9 million to employ more support staff, including pathologists, psychologists and social workers.
There is also a $1.6 million child and student well-being strategy investing in more school nurses in district schools, and $250,000 for suicide prevention.
A $500,000 injection into Tasmania’s brand to differentiate and market the State was welcomed by the Tasmanian Farmers and Graziers Association.
Mr Eslake restated his concerns about the State's superannuation liability.
"Tasmania's overall public sector net debt is smaller, relative to the size of the State's economy, than anywhere else in Australia," he wrote.
"That would be sufficient to warrant Tasmania having an AAA credit rating — if it weren't for the nearly $7 billion unfunded superannuation liability, which (scaled against the size of Tasmania's economy) is by far the largest of any State or Territory."
The superannuation liability inherited from the Public Sector Defined Benefits Scheme is sitting at $6.3 billion and will not be off the Government's books until 2078.
Nevertheless, Mr Gutwein finished his Budget speech with a message to Tasmanians who have moved away.
"There is no better time to come home if you're a Tasmanian who has left," he said.
Image courtesy of Oliver King and The Examiner
5 June 2017, Edition 184