Government's saving plan working: Auditor-General

Tasmania's Auditor-General is warning the state's unfunded superannuation liability will blow a massive hole in the budget within the next two decades.

Auditor-General Mike Blake has released the results of his review of the state's financial performance in 2012-13 ahead of tomorrow's mid-year budget update.

He found the government's efforts to rein in spending were working.

``The trouble is revenue growth's stagnant so we haven't yet caught up so we're still in a position where expenditure is greater than revenue so we're making deficit.''

He says future governments will need to continue to limit expenditure growth.

``They're going to have to do that for some time I think because if you look at the expected GST revenue which is a big component of our income, that's not growing or it's growing quite slowly.''

Mr Blake highlighted the state's unfunded superannuation liability and skyrocketing health costs as risks.

Two years ago the government burned through $1.3 billion that had been set aside to cover future superannuation costs.

``In about 15 to 20 years time the amount we're going to have to pay out in cash terms to people retiring will peak,'' Mr Blake said.

``We need to start planning for that today, but it becomes a problem particularly in about 15 years time.''

His report also reveals the state government has spent Commonwealth money allocated to upgrade the Royal Hobart Hospital and implement the Tasmanian Forests Agreement on other things which he described as a sensible way to reduce borrowing and save on interest.

``At some point that'll catch up with you.''

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