THE government should spend big on infrastructure, according to leading economist Saul Eslake.
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Addressing the state's business leaders at a Tasmanian Chamber of Commerce and Industry event on Friday, Mr Eslake outlined what the 2016-17 state budget should look like.
Treasurer Peter Gutwein will deliver his third budget on May 26.
Mr Eslake said Tasmania had a strong balance sheet, so it had the scope to splash-out further on infrastructure projects like roads, rail and water.
He said the North and North East regions were still doing it tough economically.
“I think the best type of stimulus would be infrastructure spending,” Mr Eslake said.
“That could be road and rail, it could certainly be water, it could be the construction of new school facilities.
“All of those would not only create jobs in the short term, it would of course improve the business environment and the quality of people’s lives and hopefully the skills of the work force.”
In its first budget, the government provided funds for Northern infrastructure and school construction projects.
Mr Eslake said the government should build on those commitments.
“We’ve been spending less over four years than the national average,” he said.
He said it was time for the government, now more than halfway through its term, to start laying out its longer term aspirations.
That should include developing a mandate for asset sales, Mr Eslake said.
“It’s not an easy thing to do,” he said.
He said the government could look to Queensland as an example of how not to go about it, but said New South Wales Premier Mike Baird had proven successful in his asset sales mandate.
“In your first term you keep your promises, and you use that trust to argue a sensible, plausible and attractive case for doing something bolder in a second term,” he said.
Mr Eslake used the example of Aurora and TasNetworks, and said the proceeds could be used on infrastructure and health rather than paying off debt.
“Why should the government continue to own them if without them we could have better hospitals and roads?” he said.
Mr Gutwein has said next month’s budget won’t be a cash splash.
Tasmania is losing $520 million in GST payments over the next four years, and will also lose money from Hydro Tasmania due to it not paying dividends for the next few years.
On Wednesday, the government released the Tasmanian Government Fiscal Sustainability Report 2016 which highlighted volatile GST revenues, a reliance on Commonwealth funds and rising health expenditure as placing pressure on the state’s finances.
Mr Gutwein said the report vindicated the government’s fiscal restraint, which would continue in the May budget.