The state will increase its net debt and borrowings over next financial year and the forward estimates to fund infrastructure projects in an effort to keep up economic momentum in the state.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Budget papers released on Thursday revealed the state will carry $284.5 million in net debt in 2020 which will blow out to $1.1 billion three years later.
The net debt figure for the first time include the government's lease liabilities.
"This net debt position reflects the impact of the government's commitment to total infrastructure funding of $3.6 billion over the budget and forward estimates period., additional expenditure commitments and significant negative revenue impacts," the budget papers stated.
Treasurer Peter Gutwein claimed the 2019-20 budget was the "budget that I'm most proud of."
"The budget is a $6.5 billion engine and we are asking for it to carry $1.1 billion of net debt and that is serviceable," he said.
"We believe that is a modest and manageable level of net debt."
With net debt, the government will increase its borrowings from $671.2 million in 2019 to $1.81 billion in 2023.
Mr Gutwein said the budget had been framed around substantial losses of revenue and downward pressures in the national economy amid responding to stresses of increased visitation and population growth.
RELATED STORIES:
- Tasmanian Treasurer Peter Gutwein previews the 2019-20 state budget
- Advocacy groups pitch Tasmanian Government demands for 2019-20 state budget
- Infrastructure cash splash the 'centrepiece' of state budget
- State government needs to budget at least $2 billion for health sector: report
- Greens call for funding commitment to disability advocacy services in upcoming state budget
Of revenue reductions, there will be a decrease of $280.3 million in expected GST revenue and $280 million in stamp duty between 2018-19 and 2021-22.
Conveyance duty revenue in 2019-20 is forecast to decline by $69.9 million, or 22.8 per cent, compared to the forward estimate in the previous budget.
However, state taxation revenue is forecast to grow by $100.1 million from 2019-20 mainly due to growth in payroll tax, land tax and motor tax.
Papers include an estimated $450 million of savings next financial year and over the forward estimates.
Mr Gutwein said the savings would not be reached by cuts and redundancies within the public sector workforce, rather spending on consultants, advertising and travel
He said the government wanted the sector to achieve a 0.75 per cent efficiency dividend and would look for vacancies within agencies and natural attribution measures.
"We want to see a more efficient and effective public service and we will work towards that," Mr Gutwein said.
There is anticipated to be $50 million in savings in the budget's first year, $100 million in 2020-21, $150 million in 2021-22, and $150 million in 2022-23.
The government expects to recoup $256.2 million from its government business enterprise in dividends and $89.5 million in special dividends in 2019-20.
This is a difference from the estimated outcome of this budget yet of $193.5 million in dividends and $55 million in special dividends.
The budget is set to be in surplus over the first year of the budget by $57.4 million.
IN OTHER NEWS:
Mr Gutwein denied that the budget was being propped up by payments from GBEs, saying there were a range of revenue sources available to him as Treasurer to meet a surplus.
In 2019-20, the general government sector total revenue is estimated to be $6.4 billion.
This is an increase of $189.4 million on last budget's estimate.
The sector's total expenditure is estimated to be $6.3 billion.
This is an increase of $293.9 million on the previous budget.
Annual growth in operating expenses will be lower than the long-term average growth in revenue.
Employee costs represent about 47 per cent of the government's total operating expenditure.
A one per cent increase in employee costs across the public sector would impact the budget by $28 million each year with an accumulative impact of $285 million over the budget and forward estimates period, budget papers claim.
The budget only provides for a two per cent rise across the workforce whereas unions are pressuring the government for more.
Superannuation funding is identified as a key budget risk and one with a cost that will increase significantly in coming years, increasing by 48.9 per cent over the next 14 years and peaking in 2023-24.
The total superannuation liability is estimated to be $7.54 billion by June 2020.
The budget contributes $303.2 million to the superannuation fund in 2019-20, $305.4 million in 2020-21, $345.6 million in 2021-22, and 2022-23 and $358.7 million including $103.6 million in borrowing costs.
While you're with us, did you know you can now sign up to receive breaking news updates direct to your inbox? Sign up here.
