Ms O’CONNOR (Hobart) – I thank the member for Murchison for bringing this forward for consideration by the Council, and for her ongoing work to strengthen the accountability and transparency mechanisms of this place, for which she was acknowledged by the Better Politics Foundation as the 2025 inductee to the Politicians Hall of Fame.
There can be no doubt the state’s finances are in unprecedentedly dire circumstances. The often-cited 2025 post election financial outlook report revised the forward estimates of net debt for 2028 from $10 billion to $13 billion. They’re just staggering, mind-numbing numbers. I feel the need to lay on the record, just for contrast, that when the former Premier Will Hodgman came to office in 2014, net debt left by the Labour-Greens government was $226 million, and now we’re staring down the barrel of $13 billion in net debt by 2028.
The post-election financial outlook noted recent state budgets and forward estimates have been defined by increasing deficits and debt, and said ‘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.’
Reflecting this state of affairs, in November 2024 both Standard & Poors and Moodys revised their respective outlook on the state’s rating from ‘stable’ to ‘negative watch’. Our financial situation is parlous. I don’t know if any members saw the story in The Age and The Sydney Morning Herald last week. It is an embarrassment to the state that we’re being talked about in the national media as the financial basket case. I will read a couple of excerpts from this article titled ‘Tasmania’s Fall Would Hit All of Us’. (tbc 3.57)
Now there’s chatter about which of the states and territories are in financial trouble, and there’s one at the top of that list: Tasmania. The utter mess of the state’s finances was laid bare by the Tasmanian Treasury just ahead of the July state election. Annual interest costs, for instance, are expected to climb by 202 per cent between the just completed financial year and 2027-28. General government net debt is on track to rise from $4.2 billion to $13 billion. Spending has been growing at close to 10 per cent a year since the turn of the decade. Revenues have not matched the spending explosion.
Treasury officials used their pre-election outlook report, the PEFO, over which politicians have no control, to paint a picture bleaker than the Tasmanian wilderness in the depths of winter.
‘The state budget has a structural problem. Expenses significantly driven by health demand and costs are growing at a faster rate than the state’s current sources of revenue’, it said. ‘This structural imbalance has developed over a number of years. Recent state budgets and forward estimates have been defined by increasing deficits and debt. As a state, we’re spending more than we earn, and the gap is growing.’
It goes on to speculate that –
If Tasmania found it was unable to pay its creditors, it’s difficult to imagine a federal government allowing the state to default.
That’s how serious it is. We’re being talked about as a state that’s gone broke that could need a massive federal bailout.
Abetz and his team should be bracing for the state’s credit rating to be downgraded no matter what comes out next week, that is, the state budget. Standard & Poors Global, for instance, put Tasmania on a negative outlook when it last examined the state’s finances in November. It has gone pear-shaped since then. Tasmania’s credit rating is likely likely to be cut to AA or even lower, with a knock-on effect to the interest rates on its future borrowings. That should be a warning bell to every state and territory – bar Western Australia, which continues to be funnelled cash by the rest of Australia due to the increasingly disastrous GST deal – that budget management still matters.
Ms O’CONNOR (Hobart) – Mr President, I will finish reading from this article in The Age and The Sydney Morning Herald, where the state of our finances has received national media attention:
Abetz used his first speech to the Tasmanian parliament last year to argue:
The current generation should not leave debts for future generations because we’re too selfish to tighten our belts.
That rhetorical flourish is about to be utterly tested. If he fails, watch out for a state Premier wandering around with empty suitcases looking for cash. Potential changes to our credit rating tell us there’s now a much higher likelihood that the credit rating will be lowered over the short‑to‑medium term. Both rating agencies cited the state’s weakening fiscal performance and growing debt burden as key factors in assigning the negative outlook to the state.
The budget outlook is exacerbated by the government’s reckless fiscal policy, careless as it is about wasting public money on follies such as the Macquarie Point Stadium. The lower‑case strategy for revenue outlined by this government has consistently been – if the Council will forgive some paraphrasing – that by investing in business and the economy, our economy will grow and our revenue base will grow. That, indeed, is a philosophy that’s been echoed by the Tasmanian Labor Party in recent months. It’s a failed trickle‑down approach by any other name.
What the Greens are particularly concerned about is that the state is heading for a period of deep stadium austerity, should the stadium order be approved, where political choices will be made that deprive Tasmanians of the public health, housing, education, services that they need, making it much harder for us to respond to galloping, runaway climate change. That’s the risk that we face as a state, should the stadium be approved: intergenerational stadium austerity. It’s notable that in the PEFO, the Treasury states:
Economic growth correlates weakly with general government sector revenue growth in Tasmania. Accordingly, this structural problem will not be resolved through future economic growth. Explicit policy choices are required. [TBC]
But there’s no real evidence of any will on this government’s part to make those specific and difficult policy choices. In fact, I was reminded this morning of a statement, again from the Treasurer, but this time in his inaugural speech, where he said, ‘All government priorities will need to be set based on genuine necessity’. It begs the question: what does our Treasurer regard as necessary in terms of funding? Of course, we won’t have long to wait to find out what the Treasurer’s definition of necessity is and whether it will adequately cover the public service needs of the people of Tasmania.
The PEFO also makes it clear that growing the revenue base will be a necessary step to get the budget under control. This government has explicitly refused new taxes, charges, levies; it is foolhardy at best to rule out sensible and equitable revenue‑raising measures.
In essence, the government has a number of overt positions on budget management that are directly inconsistent with very clear Treasury advice that leaves no wriggle room. So in this context, the case for scrutiny of the budget situation is oxygen clear. That’s why this bill does have merit to establish a budget oversight committee; but we are concerned that it hasn’t been properly consulted or fully consulted, that it’s potentially duplicative with the role of the Public Accounts Committee and other scrutiny mechanisms that we have across the two Houses of parliament that we potentially could strengthen.
When the situation is so chronic, and the strategy of the government is effectively exposed as one that will lead to further deterioration of the budget, parliament can and should look at mechanisms to scrutinise and influence the government over their handling of the state’s finances. The Public Accounts Committee is one such mechanism. Expanding membership of that committee is one step that would help to improve scrutiny, and I hope that members favourably consider the bill that will come before this place on expanding the PAC.
I’ve watched many PAC hearings. Any concern that honourable members of this place, or the other place, have about PAC being politicised by expanding it, I hope would be realistic given that currently the membership of PAC has two government members, two Labor members, two very capable Independents from this place, but it’s not representative of the parliament. It’s not representative of the people of Tasmania, and often it devolves into highly‑partisan political sparring between the two alleged parties of government in this place: political point scoring.
Ms Forrest – Through you, Mr President, that’s an unfair representation of the PAC.
Ms O’CONNOR – That’s my perception.
Ms Forrest – As the Chair, I shut down party politics as quick as a flash. You can check with the members here.
Ms O’CONNOR – I’m passing on to you my observations over a long period of time of watching the way the PAC works. You as Chair, honourable member for Murchison, do your best, but it has not infrequently devolved into highly‑partisan politics between the two parties of government. In fact, we saw it just the other day when the Coordinator‑General came before the Public Accounts Committee. To his credit, Mr Winter was pressing Mr Perry about his very bold assertions and output assessment of the stadium’s benefit. Then the Liberal member of PAC couldn’t help himself. Mr Winter’s questions were completely legitimate to drill into a state servant’s bold assertions that fly in the face of the Tasmanian Planning Commission’s report. The Liberal government member of the PAC got a bit prissy, if you like, about the fact that Mr Winter was asking difficult questions and tried to make a political point out of it.
The PAC, as it stands now, plays an incredibly important function, but it is not representative of this parliament or of the Tasmanian community.
The bill in front of us today establishes a new legislative joint standing committee on budget accountability and oversight. It would be tasked with looking at matters relating to the budget, fiscal sustainability, public finances and fiscal strategy. This proposed committee does have significant overlap with the existing Public Accounts Committee, which the Public Accounts Committee Act 1970 gives the broad mandate of examining, ‘the management, administration or use of public sector finances’.
In contrast, the proposed budget accountability and oversight committee’s purpose is to evaluate, ‘the management of public sector finances’. Very similar, really, not much contrast at all. While the purpose is effectively identical to the PAC, there are some specific powers that would be provided for under this bill which are not available to the PAC. The budget accountability and oversight committee would have the power to set its own budget targets and then the Treasurer is expected to take those targets into account and make a statement against each of them in the budget. The budget papers would also have to justify why targets made by the committee were not met. The Auditor-General may also, under this bill, make commentary about whether or not the government is meeting those targets in any of their reports. Whether or not it’s appropriate that the Auditor-General examine the work of a government committee and explore whether or not the government has sufficiently responded to the recommendations of that committee is a relevant question, and perhaps the member for Murchison could address that in the second reading reply, but the Auditor-General already has a very significant work plan. Whether or not it’s something the Auditor-General would want to undertake, I am uncertain.
Essentially, the committee would have the power to develop an alternative fiscal strategy the government is obliged to take note of and report on. The experts who presented at a briefing last week when I was on leave, but also provided papers to members expressing their concerns, have raised some issues about their concern this would be something of an overreach for a committee of parliament and Professor Richard Herr’s brief paper says:[tbc 4.41]
Maintaining parliamentary supremacy is an ongoing struggle. Governments constantly seek to circumvent obligations to parliament with claims, inter alia, of executive privilege, public interest immunity, and commercial in confidence. The bill under review is clearly intended as a full-throated pushback against such efforts to pull a cloak of executive invisibility over the government’s use of the public money appropriated by the parliament. However, and this is a qualification that pains me, as generally I find parliaments do not push back enough, the unamended bill seems to me to be an attempt at overreach of parliamentary authority. The constitutional position is that the crown in its executive function asks the parliament to raise supply to pay the cost of the government doing its job. Requests are also made to undertakings deemed to be in the public interest. Parliamentary supremacy does not extend to micro-managing the administration of government. A government collectively and individually is responsible for what it does not do, does not, what in doing, what Parliament tells it to do.
Professor Herr acknowledges the amendments go some way towards mitigating his concerns, but still, he is not, in broad terms, supportive of the bill. He finally offers some helpful observations to promote, in a practical way, some of the intentions of the bill:[tbc 4.43]
(28) The resources and capacity of the parliamentary research service should be enhanced substantially. Parliamentarians and parliamentary committees need more independent in-house research assistants to better challenge the enormous resources available to the government through bureaucracy and other sources.
(29) Restating a point I have made for more than two decades – the Legislative Council should cease cooperating unnecessarily with the government through participating in private briefings. It’s important that decisions made as a consequence of such briefings be fully discussed openly on the floor of the Chamber. Courts and the public need to be aware of the rationale behind the laws and regulations made and sustained in parliament.
(30) The Legislative Council should insist on a clearer senate-style separation of government and parliament. Private members should not act as leader for government business where a minister is available, nor should private members answer questions on behalf of the government.
Professor Gabrielle Appleby also raises concerns about this bill and her advice to Council is to have a look at the accountability and transparency mechanisms that you already have in place and strengthen them where you need to. She says:[tbc]
Consider reference to a committee of an inquiry that looks more holistically at the operation of budget and expenditure scrutiny in the state across the budget cycle, including consideration of the roles, membership functions, and effectiveness of the Public Accounts Committee, the role resourcing and effectiveness of the Auditor-General, the effectiveness of scrutiny of budget through estimates processes; the effectiveness of the multi-partisan budget consultation panel [which I’m a bit sceptical about to be honest] the proposed establishment of the Parliamentary Budget Office and the proposal of the Budget Accountability and Oversight Committee as an holistic examination of the mechanisms that we have here.
It is also worth noting that having two separate strategies within the budget is potentially confusing, particularly when one of them is a strategy the government may or may not support. Indeed, the government may choose to not let the strategy form part of the lens through which they produce a budget at all.
I note a number of amendments have been proposed that would be significantly mitigating these concerns. It is always a good thing when a member, government or otherwise, takes into account feedback, and takes steps to amend their bill to reflect that feedback. This is something that the government itself seems to be learning, although quite slowly. I commend the member for Murchison for this, and acknowledge the amendment considerably addresses these concerns.
However, it does again raise the question of how the committee is materially distinct from the Public Accounts Committee. It is fair to acknowledge the specific outlined function of producing an alternative fiscal strategy is something that PAC doesn’t currently do, even if it’s theoretically could. It is still a valid question, regardless of whether or not the amendments passed, why would you not just add to the existing functions of PAC, rather than establish a whole new committee with a near-identical purview in order to fulfil this function?
It is also relevant to consider that part of the context of contemporary discussions about the budget relate to specific contemporary circumstances. While long-term scrutiny is certainly important, there is a question in the Greens’ view over whether we need mechanisms to deal with the current and looming crisis to persist indefinitely as it would, should this bill be passed. For example, we currently have a sessional committee on the recommendations of the final report of the commission of inquiry. The importance of this committee and its work are in no way diminished by the fact that it’s a sessional committee and not a legislated standing committee.
There’s also the question of efficiency, which is particularly relevant in a budget crisis. When resources are limited, it is not particularly efficient to create a new committee with ostensibly the same purpose as an existing one for the purpose of performing only one specific function that could be performed by an existing committee.
I am curious to know – and it’s a question we’ve asked in briefings, but on the record, an answer would be good – if there’s any example of another jurisdiction that has this mechanism, this legislated standing budget oversight and accountability kind of mechanism of the parliament in place. As far as we know, I don’t think there is, but happy to stand corrected.
In summary, Mr President, the Greens support the intent and some of the ideas behind this bill and would be more than happy to support the establishment of an inquiry into budget repair and related matters, as well as any form of investigation into reforms to Parliament’s budget scrutiny processes. However, we remain unconvinced that the proposal in front of the Council today is precisely the right way to proceed.
On that basis, as well as the input from experts in legal and parliamentary processes and accountability and transparency mechanisms, we made the decision – with heavy hearts, to be honest, because we are big on accountability and transparency – to not support this bill.
