New government likely to inherit bleak bottom line

WE WILL know today the full extent of the mess Labor has made of the books. Premier Lara Giddings has already warned of a worsening budget situation, which is code for a worsening mess caused by poor management.

Today she goes into government caretaker mode ahead of the March 15 election.

She will be restricted on major decisions, and what major decisions she does consider will have to be run by Opposition Leader and alternative premier Will Hodgman.

In other words, Ms Giddings will have to win the election to get another crack at the budget levers, and even if she does retain government she won't survive as premier for another four years.

Most Tasmanians would expect Mr Hodgman to become premier in March even if they don't vote Liberal.

The polls consistently say so.

The big question then becomes: Will he have the guts to dramatically improve the economy and turn around the budget?

The answer to the first question is, not substantially.

He can try, and do pro-forestry things and restrict planning appeal rights.

He can hire more police and dub Tasmania "open for business" but it's really just a slogan.

A $5 billion budget, suffering falling revenue and mostly taken up with salaries and other non- discretionary housekeeping functions, is not exactly a sledge hammer to wave at a $24 billion island economy.

On the budget front Tasmanian governments are generally constrained to survival mode.

It`s all housekeeping and services like ambulances, schools and police.

There's money set aside for development grants and investments, but there's usually big outlays like school maintenance and a roadworks backlog, a huge public sector wages bill and runaway hospital costs.

The government can make laws but it can't make money grow on trees.

The great fiscal hope of the new millennium, the GST, was pure gold for the states in its first few years as the economy surged, but the global finance crisis belted the GST all over the park.

Tasmania will take another hit of almost $100 million in less GST revenue this year. The hit over the past few years totals more than $1 billion.

As well there's an uncontrollable superannuation debt for all those public servants who successive governments have hired to soak up the jobless queues in the Southern electorates.

The government plundered almost $2 billion saved over a decade to tackle this $6 billion super debt, and then two years ago gave up and closed the savings account.

Tasmania's economy is still struggling, with economic output falling and the jobless rate at stellar heights.

State government debt is around $230 million and while the government says its $425 million deficit is estimated to ease in future years, if you believe that you're just plain naive.

So you see, the Liberals won't exactly set the place on fire in March, because there's little scope.

Our biggest benefactor, the federal government, which funds 63 per cent of our budget, has its own budget woes and is shortly to receive an audit aimed at dramatically cutting outlays. The May federal budget will be the "smallest in decades" quipped a colleague recently.

The state election on March 15 will amount to the changing of the guard.

An old administration, 16 years old and weary of the constraints of minority government, taking a break while a new bunch of enthusiastic recruits, with not a day of ministerial experience between them, grab hold of the levers.

After winning power in 1998, Labor has survived almost as long as the Menzies era, mainly because the Liberals were never ready as a credible alternative.

We will soon see if they are now, but don't expect fireworks.


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