Thursday's state budget will be vital as a "concurrence of events" threaten finances and inflation squeezes households and business.
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"This is the government's ninth budget and, I would argue, the most important budget in probably 10 years or more," Dr Broad said on Friday.
"There's a concurrence of events they've got to start addressing.
"First of all, we've got a new Treasurer (Michael Ferguson) and Premier (Jeremy Rockliff) and they haven't really laid out their financial strategy.
"Also, we've got big cost of living pressures, we've got economic headwinds on top of reduced GST and growing debt, so the government needs to start being honest about the state of the budget and starting to turn this around ... instead of putting its head in the sand and saying we're going to be fine."
Tasmanian wages increased by a relatively strong 2.8 per cent in the year to March, according to the Australian Bureau of Statistics' wage price index.
However, Hobart inflation rocketed up by 5.8 per cent, meaning most workers' real incomes were going backwards.
Dr Broad expressed concern about rising government debt, saying the government was borrowing $2 million per day.
He said the last budget forecast borrowing costs plus the unfunded liability for public servants' superannuation would take 4.5 per cent of cash receipts in the current financial year, rising to 5.2 per cent by 2024-25, and that was before interest rate hikes.
"On top of that, the government borrowed another $441 million in the last session of parliament to cover expenditure from (the) last year," Dr Broad said.
"They have to start turning this around and it's very important they do that now, rather than wait.
"Treasury said the longer they leave it, the worse it's going to get."
Dr Broad did not dispute the need for the government to spend up big in the early stages of the coronavirus pandemic, but said: "There was over a billion dollars of debt building up before COVID."
He said the government had "levers they could pull" to help Tasmanians with rising living costs.
"They can hold back increases in things like TasWater, making sure power prices don't increase ...," he said.
"Once upon a time, you could argue Tasmanians could put up with lower wages because of lower cost of living and lower house prices.
"That's not the case now."
Mr Ferguson said it was difficult to know what Labor stood for "given that they criticise Tasmania's borrowings to get through the pandemic yet they demand much more spending".
"I've worked flat out with my team over the last six weeks putting the finishing touches on the 2022-23 state budget and working closely on the detail.
"The economy has recently experienced the strongest growth in 13 years.
"Tasmania has outperformed the national economy, with state final demand and GSP (gross state product) both enjoying the second highest growth in the country."
He said private investment grew by 30.7 per cent over the year, exports were at record highs and retail trade was 15.3 per cent higher than at the beginning of the pandemic.
"This means business confidence and secure jobs for Tasmanian families," Mr Ferguson said.
"In addition, this week we have seen the strongest wages growth in the country (2.8 per cent) and the lowest unemployment rate on record (3.8 per cent).
"The positive accolades from all the major commentators - CommSec, Deloitte, ANZ and NAB - is no surprise."
He said it showed the government's plan was working and put the government in a great position to get the budget back on track as the state came out of the pandemic, while continuing to increase investment in health, education, housing and building a thriving community.
"This government has a strong track record of prudent fiscal management and in next week's budget we will build on that foundation to strengthen Tasmania's future even more," he said.