Mr BAYLEY (Clark) – Deputy Speaker, a vote will be required. I move –
That the House:
(1) Understands that following 12 years of mismanagement by the Liberals, Tasmania’s budget is in a dire position.
(2) Notes:
(a) the state’s credit rating has recently been downgraded by Moody’s and S&P; and
(b) the International Monetary Fund has also cited concerns about the Tasmanian budget, including raising the prospect of external intervention.
(3) Recognises that for many years the Liberal Government has refused to listen to advice from Treasury and independent economists about the worrying trajectory of the state’s finances and has instead continued with policy decisions that make things worse.
(4) Accepts that in its 2026 Fiscal Sustainability Report, Treasury has sounded its loudest alarm yet, warning of unprecedented levels of debt and the possibility of a bailout.
(5) Notes with deep concern that the Treasurer’s response to the Fiscal Sustainability Report has been characterised by dismissal and denial.
(6) Further understands that Tasmania’s budget position is critical for the economy, community, business, environment, and in supporting the essential services that all Tasmanians rely on.
(7) Acknowledges that while there are different views on specific measures to address the budget crisis, there is no doubt that the Government’s stated approach is recklessly inadequate.
(8) Agrees with Treasury and economists that increased revenue is an essential component of responding to the budget crisis and getting the state back on track.
(9) Calls on the Government to heed expert advice and to finally accept the need to increase revenue in the upcoming State Budget.
I rise to speak on this motion which, at its heart, is about the budget and assisting the government to come to terms with the fact that they need to be raising more revenue. They need to be entertaining the notion of raising more revenue through, in our view, and as I’ll go through this, making big corporations pay their fair share. I say that this is the House assisting the government to come to this realisation because it appears that the government is vexed and challenged on this.
We had the Treasurer, Mr Abetz, on 14 August in the wake of the election, acknowledge that raising taxes is not in their DNA but being open to it. He said:
Our instinct is not to increase the tax burden on our fellow Tasmanians, but that said, we have to be flexible in a parliament where we might control only 14 of 35 seats.
That is the case, obviously. The Treasurer went on to say:
All options are on the table but it stands to reason that we have a very strong low tax proposition. That’s the sort of part of the DNA of the Liberal Party.
Well, we’re here to help and we want to help you change your DNA because it is utterly clear that that is what is required because you also have a fundamental conflict with your Premier. In the state-of-the state speech on the 3 March, Premier Rockliff was very clear when he said, ‘in line with our election commitment, we will not be introducing new or increased taxes’, so there is an inherent conflict here between your willingness to entertain this and your Premier utterly ruling it out. The sad thing about this debate and that quote from the Premier that they won’t be introducing new or increased taxes is that that came immediately after the Treasury’s pretty profound fiscal sustainability report in late February that said we have to do everything to fix the budget. I’ll come to that, but there is no doubt that after 12 years of the Liberals, the budget is in a critical state.
We’ve heard it already from Mr Winter in a debate in this House today and I’m sure we’ll hear it afterwards here that the Liberals inherited no net debt when they took over government and there were cash reserves. We were in a very good situation in this state, and if you don’t believe Mr Winter, honourable Treasurer, Saul Eslake in his review of the state’s finances in August 2024 made it abundantly clear that the fiscal situation we are in today is a direct result of the policy decisions of this government. Let me quote directly from Mr Eslake’s report:
Tasmania’s public sector finances have deteriorated significantly since the latter part of the 2010s, despite a noticeable improvement in Tasmania’s economic fortunes.
The review finds that the deterioration in the financial position of Tasmania’s general government sector over the past decade is entirely attributable to policy decisions by governments to increase operating or recurrent expenses and spending on infrastructure projects and, to a lesser extent, to reduce taxes. That’s from Mr Eslake, an eminent economist from Tasmania, who is commenting on a government-commissioned report looking into the state’s finances.
We’ve heard Mr Jaensch already today interjecting, ‘Don’t forget about COVID, don’t forget about those other things’. Yes, of course we acknowledge that that put incredible strain on the system and our budget did have to wear some of that strain, but again, Mr Eslake is abundantly clear that it is policy decisions and not just COVID. He says:
These trends were partly attributed to the COVID-19 pandemic and more recently to the need to provide compensation payments to survivors of child sexual abuse in state institutions, but they began before the onset of the pandemic and they have continued after.
It is policy decisions and the absolute nub of this motion is that the policy decision to raise own-source revenue is utterly critical.
The policy decisions that have got us into this woeful situation the government continues to pursue are ongoing subsidies to industries that simply shouldn’t have them, whether it be Forestry Tasmania, whether it be mining exploration licences, or whether it be Tasracing and the $30 million across the forward Estimates, this government spends money on things that don’t have a social licence and don’t have a return.
Many people have been critical of this government’s response to pork-barrelling and there is a need to absolutely ban pork-barrelling, but unfunded spending promises in elections have led in a significant way to the situation we’re in. Borrowing to fund operational expenses is a critical issue. We have the largest public infrastructure spend relative to the size of our economy of any state in the country, and this is something that needs to be addressed. I’ll talk a little bit later about some of them, including the multibillion-dollar stadium at Macquarie Point and pursuing ineffective measures like efficiency dividends. They don’t deliver the sort of structural changes that we need. The government has refused to raise revenue. That’s the subject of this report.
Treasury’s been clear over many years about this. Whether it be the Revised Estimates Reports or the Pre-Election Financial Outlooks of 2024 or 2025, Treasury, particularly when it has its independence, is abundantly clear about the challenge and the need for action from this government. The most recent wake-up call – and was it ever a wake-up call – was the 2026 Fiscal Sustainability Report released in February. It’s the most damning yet. It has 150 pages of absolutely devastating analysis and statements and finding after finding calling for action from this government. Let me just read from the very high-level key findings in the summary document, because they sum it up.
Tasmania’s finances are projected to rapidly deteriorate. Doing nothing is not a responsible option. Immediate action is required to stabilise debt before it becomes unmanageable. Budget repair is required over the next five to 10 years. Budget repair is achievable if action is taken.
To summarise, it’s bad, action is needed, act on debt, and we can do it if we start doing it now. That’s Treasury and Mr Eslake making these kinds of recommendations. If you want to look further afield to third parties that are doing an analysis of our budget situation, you need look no further than the ratings agencies. Both S&P and Moody’s have downgraded Tasmania and this is significant, not only because it’s a black mark against our name in the context of all the other economies out there, but it makes the cost of debt even more expensive so it actually makes the problem even deeper and more challenging to address. In November Standard & Poors downgraded us from AA-plus to AA and said:
We expect Tasmania’s operating accounts to remain in deficit until fiscal 2027 due to strong growth in operating expenditure in recent years. This will result in a much weaker fiscal metrics than for many AA-plus rated peers globally.
They actually flagged a downside scenario as well:
We could lower our rating further on Tasmania if its operating deficits persist or if its deficits after capital accounts underperform our forecast, driving debt materially higher.
Moody’s as well identified our reliance on Commonwealth grants as opposed to our own-source revenue. They explicitly named up the fact that we rely on Commonwealth grants more than own-source revenue and called this a structural constraint. I quote:
As a result, these pressures will increasingly constrain the state’s ability to respond to future shocks, reflecting weaker governance strength than we have assessed in the past.
So they downgraded us as well.
I want to pause for a minute because there were questions earlier this morning in question time and over the last week about those shocks. These assessments, including the 2026 Fiscal Sustainability Report, pre-empted the newest economic shock to our system, the chaos of the war in the Middle East. We are now facing an oil crisis that’s worse than the 1970s and COVID constrained. Some of these international agencies have highlighted the fact that shocks are a real risk to our system. We are currently in the middle of a really significant shock like we have not seen.
As I said, these credit rating downgrades have a significant impact on the budget, not least because they make the cost of debt more expensive and our debt projections are truly alarming. The Fiscal Sustainability Report highlighted that we had $4 billion worth of debt in 2024-25 and by 2039-40 our debt could spiral to $129.5 billion. That’s incredible. If you include the government businesses – which we absolutely should do in this case because they’re ultimately our responsibility, as we have seen with the TT-Line needing to come to the government, to the taxpayer, for bailouts and financial assistance – if you take into account government businesses it will be $146.3 billion by 2039-40. This is incredible, and the cost of servicing this debt would increase from 2 per cent of operating revenue to more than 15 per cent of operating revenue within 15 years.
It is clearly an utterly unsustainable situation, which is why I want to pause here for a moment and touch on the Macquarie Point stadium, because it is such a ludicrous proposition when we are in this situation. This parliament really abrogated its responsibility to go against all of the expert advice offered up to say don’t do this because it’s the wrong spot, don’t do this because it’s going to cost too much, don’t do this because it’s going to add $1.8 billion to our debt over 10 years based on the previous cost estimate. That was based on the $945 million cost estimate and it has obviously now blown out to $1.13 billion, so the impact of that in terms of debt is going to be even greater than the $1.8 billion the TPC assessed.
We’ve heard reports in the news that simple things like PVC piping has gone up by 30 per cent in the last little while because of the war in Iran and the Middle East. Can you imagine what impact that will have on the Macquarie Point stadium? We know $1.13 billion is utterly undercooked and it’s going be significantly more; and significantly more again now we are in this crisis.
Borrowing to service this debt will be about $40 million a year or so; and that comes from the general government sector. Every single year we’ll borrow money to pay the debt to build the stadium, we’re borrowing to service that debt and that comes at the expense of all the other government services that need to be funded from the general government sector, things like health, education, housing, environmental protection and restoration.
I want to pause on that because it is such a reckless decision to be making in this budget situation, but also because it is a case in point as to why the Treasurer is completely off the mark when he says we’re just going to grow our way out of this problem. We don’t need to raise revenue, we’re going to build the economy, we’re going to grow our way out of this problem. It was a significant piece of rhetoric, a significant line from the Treasurer and the government throughout the stadium debate, ‘it will grow our economy.’ That has been directly refuted by the Tasmanian Planning Commission which had people on it such as quite esteemed ex Treasury boss Martin Wallace and it said that the stadium will diminish the economic welfare of Tasmanians. That was the finding of the independent Planning Commission.
The International Monetary Fund also included us in a significant report in February this year and highlighted some of the challenges that we are facing, that we risk needing a federal bailout, and that there are significant issues.
I read a quote specifically from it:
In 2023/24, the Tas government committed to 11 strategic actions and targets to be met by 2032/33 including debt targets, fiscal balance target, revenue target, expenditure target and target for credit ratio. Although these targets are comprehensive, meeting them will prove very challenging. For instance, on the government’s own forecasts, gross debt per capita is on clear upward trajectory and is forecast to exceed the 2032/33 target every year over the forecast horizons.
The International Monetary Fund is commenting on our challenging situation and, again, the fiscal sustainability report highlighted the challenges when it comes to our fiscal sustainability by actually flagging that our fiscal sovereignty was at risk. We’re at significant risk of needing our bailout and it is clear that simply growing the economy won’t fix the problem. The Treasury has said that economic growth correlates weakly with general government sector revenue growth in Tasmania. Accordingly, the budget repair task will not be resolved through economic growth within Tasmania.
The advice is really clear. The advice is clear that we need to do far more than grow the economy and we clearly need to do far more than the kind of efficiency dividends and measures and sacking 2800 public servants because they’re the people who deliver the services that we need. Savings alone will not address the challenge, and we need to pull every single lever.
Capital savings are one of the savings that need to happen. I’ve mentioned the stadium. Clearly that would be a benefit to the budget. There are other infrastructure projects such as the fifth lane on the Southern Outlet. Completely ludicrous propositions. We can increase productivity. We do need to improve operational savings, including when it comes to servicing our debt.
The subject of this motion, in the minutes I have, is about revenue raising, and the motion is really clear that the government needs to be, it’s calling on the government to heed the expert advice and to finally accept the need to increase revenue in the upcoming state budget.
Let me be abundantly clear that when we say increased revenue we mean own source revenue and the Greens have been really clear that this can come from a number of different sectors of our community and our industry. Big industry, big corporations need to pay their fair share, potentially by increasing mining royalties. Currently, mining companies pay 40 per cent less revenue per capita than the national average. Salmon company royalties – they don’t pay any royalties for using our public waterways. Property developer windfalls from rezoning; casino taxes; a vacant property levy – we’ve also identified some budget repair measures in our numerous policy initiatives. For example, the Treasurer’s reserve, which previously was $10 million was increased to $50 million during the COVID pandemic. Something like that needs to be significantly reined in.
The motion is really clear. It calls on the government to entertain these revenue raising measures. It doesn’t prescribe what needs to be done. It’s not trying to dictate terms to the Treasurer. It’s simply trying to provide some encouragement to him from this House, that yes, his DNA may not like the notions of raising taxes, or increasing revenue, but he needs to make sure that it happens for the benefit of each and every Tasmanian, not only living today but future generations.
The Treasurer came into this place railing against intergenerational debt, railing against the fact that it is immoral, unjust and inappropriate for one generation to leave another significant volumes of debt. We have a situation now where Tasmania is staring down the barrel of exactly that. My children and their children are staring down the barrel of inheriting and having to pay for and having to service the debt that we’re racking up now because of the poor decisions of this government. This motion is simply encouraging the Treasurer to take on his Premier, to challenge his DNA, to challenge that ideology, and to step up and do what is needed for the Tasmanian budget.
I want to address and really welcome comments from the shadow treasurer, Mr Winter, in terms of the Labor Party’s openness to new revenue raising measures. We’ve heard you in relation to the podcast Poll Position and your acknowledgement that there needs to be tax increases. It’s really welcome. I’m not trying to position you, Mr Winter, I’m just trying to recognise that there has been a shift in the Labor Party. You said this during the election or in the wake of the election as well. I acknowledge that, while you took to the election no plans for increased taxes, when you did roll out for them with the member for Murchison, you recognised that that would need to be reviewed and readjusted. I’m trying to recognise that and welcome that.
I commend this motion to the House because, at the end of the day, this is in the interests of all Tasmanians today and into the future. We need to be pulling all levers to fix the budget. It would be utterly negligent and an abrogation of our responsibility if that did not include new revenue raising measures to improve the budget situation.
