University of Tasmania Associate Professor of Economics Graeme Wells told a KPMG post budget breakfast yesterday that Treasury forecasts in the budget papers put rate rises on the horizon next year.

He also said that for all the efforts in the budget to improve the budget bottom line, payments don't actually reduce.

Most of the work in closing the gap between receipts and spending came from rising tax receipts, he told an audience of about 250 businessmen at the Country Club Tasmania at Prospect.

He said that even the politically tough measures had not got spending down below 24 per cent of GDP as hoped for by the government's commission of audit.

Professor Wells also urged the Hodgman government to ``face up'' to taxation reform. 

The Liberal opposition pulled out of a bipartisan inquiry into tax reform, initiated by the former state government.

Budget papers show that spending will increase in real terms over the next four years, while tax receipts will easily outstrip inflation, and approach 7 per cent growth by 2017.

In other addresses to the breakfast, Bass Liberal MHR Andrew Nikolic said illegal boat arrivals were costing Australia $12 million each boat load before arrivals were stopped.

Mr Nikolic, in Canberra, addressed the KPMG breakfast via video link and said Labor had borrowed to pay off a rising debt interest bill, which was costing $1 billion a month and which was like using one credit card to pay off another.