Two horror budgets too much to bear


TREASURER Peter Gutwein is acutely aware of how two Joe Hockey-style budgets in a year could hurt Tasmania badly.

The state has been in a recession. In 2007-08, gross state product, or economic output, was 2.9 per cent but now it is just 0.6 per cent.

In 2007-08, unemployment was a healthy 4.9 per cent. Now it has blown out to more than 7 per cent.

Business investment is down and despite a recent surge, retail sales are historically down almost 2 per cent on a few years ago.

Against this background, with a fragile economy in need of a boost - or resuscitation - Mr Gutwein must tread a prudent path between restraint and hope.

In an interview with The Examiner last Friday he promised that the budget would not shock Tasmanians.

It won't be a Hockey-shocker, not only because of the political imperatives but because two consecutive horror budgets would literally hit the economy too hard.

"I am acutely aware that job losses in the public sector hurts the whole of the state, not just Hobart," Mr Gutwein said.

"So, we are taking a responsible approach and that is why a pay pause in the public sector is so important. It will save jobs."

Mr Gutwein has ruled out forced redundancies, major asset sales and any new taxes or tax increases.

The budget is relying almost exclusively on deficit spending, a 12-month wages pause and other employment savings tools such as inter-agency transfers and by not replacing staff who have resigned.

The big headache for the Liberals is the $400 million worth of promises over four years that they made before the election.

This elephant in the big room of Parliament has enabled the opposition to mount a clever and deadly attack - that public sector job losses are paying for grandiose and unsustainable Liberal promises.

This is why the Liberals have ditched their plan for a budget surplus in three years.

They have so few options that deficit spending over six years is all they've got, and even despite this there will have to be job losses.

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