The Northern Cities project was a big winner in Thursday’s state budget, with the government boosting it by $30 million.

The project covers the relocation of the University of Tasmania in Launceston and Burnie, as well as the Devonport Living City project.

Launceston will benefit from $75 million, and $15 million will go to the North West.

The total project funding now fetches $90 million, and an announcement by the federal government to match a Labor promise of $150 million towards the UTAS relocation is expected any day. 

Mr Gutwein labelled it a “transformational project”. 

“I’m confident we’ll see an annoucement from the federal government,” he said.

Handing down his third state budget, Mr Gutwein reminded Tasmanians the document had to cope with large financial shocks, including lost GST of $500 million, a $100 million write-down from Hydro Tasmania and a $30 million hit from the January bushfires.

The budget will reach a surplus of $77 million in 2016-17, but drops back into a $60 million deficit in 2018-19.

While hailing no new taxes or saving measures, a promised reduced MAIB motor tax set to begin next year has been deferred by the government until the budget is in a stronger position.

Mr Gutwein said the decision had not been taken lightly and a deferral was the responsible thing to do.

“That’s a deferral of what would be a reduction in motor tax and we think Tasmanians will understand that it’s sensible to defer that,” he said.

“We’re not walking away from it but we need to deal with $500 million of GST loss.”

He said he was faced with a “sea of red ink” when the Liberals came into government.

“We’re returning to surplus three years ahead of what we predicted in our first budget,” he said.

“I’m very proud of this budget.

“We need to be disciplined, and this is a balanced budget across the forward estimates.”

Mr Gutwein said he was confident the government could deliver what was in the budget and improve the financial position moving forward.

“We were faced with $1.1 billion worth of deficits across the forward estimates,” he said.

“We’ve delivered the first surplus is seven years.

“There’s always more to be done but the state’s finances are back on track.”

Labor has accused the government of cooking the books by including a $80 million dividend from TT-Line for replacement ferries.

“Even if we took out the TT-Line replacement money we’d still be surplus,” Mr Gutwein said.

The government will lose about $100 million in dividends from Hydro Tasmania due to the energy crisis.

“It’s no surprise that Hydro is providing a much lower return,” he said.

“We’ve taken the decision to budget for no dividends at all from Hydro over the next four years.”

The budget includes a $140 million industry and job package, $113 million for school capital works and a doubling of the first home builders grant.

Mr Gutwein said the budget, over the forward estimates, supports the creation of 8000 new jobs.

“We will have a very keen focus on ensuring we create as many jobs as we can.”

Labor finance spokesman Scott Bacon said the budget amounted to “nothing more than a con job designed to fool Tasmanians into believing the state is in surplus”.

“Mr Gutwein has staged a cash grab from TT-Line and a sneaky tax on all vehicle owners to create a temporary surplus forecast before the budget rapidly returns to deficit,” Mr Bacon said.

“Without Peter Gutwein’s $80 million raid on TT-Line there would be no surplus across the forward estimates.

“That amounts to a complete con job and shows just how desperate this government is to create the appearance of a surplus after the pain it has inflicted on Tasmanians over the past two years.”

Greens Leader Cassy O’Connor said the budget lacked courage and vision.

“It pays only tokenistic attention to investing in preventative health programs to keep people out of hospitals and does too little to repair the damage to public health caused by the first Abbott and Hodgman budgets,” Mr O’Connor said.

“While the investment in school infrastructure is welcome, there will still be about 130 fewer teachers in the public education system than there were when the Tasmanian Liberals took office.  

“And of course, the environment is the big loser in this budget, with the Parks and Wildlife Service copping a near $6 million cut over the forward estimates, losing key staff with experience in fire management in our reserves.”

Leading economic Saul Eslake said despite the surplus, the budget was in a worse position than projected this time last year due to less GST and less income from state owned businesses.

“This underscores the wisdom of the government’s decision last year to save most of the $620 million windfall it received from favourable movements in Tasmania’s GST share,” he said.

“It has been conservative in some of its important revenue estimates.

“It has sensibly allowed for a further deterioration in Tasmania’s share of GST revenues.”