Tasmanian economist Saul Eslake says diverting Hydro Tasmania's profits away from the government and into the pockets of Tasmanians could mean higher state taxes or cuts to government spending.
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Over the weekend, the Liberal and Labor parties announced that should either of them win government after the state election, the state-owned company's charter will be rewritten to ensure each decision made by Hydro is driven by delivering the lowest possible power prices.
At present, the charter's principal purpose is to generate, trade and sell electricity in the national electricity market.
Mr Eslake said both proposals from the major parties were an example of poor public policy.
"I acknowledge this policy is popular - but just because it's popular doesn't mean it's good policy," he said.
Mr Eslake said Hydro Tasmania had made profits totalling $706 million over the four years to 2022-23, of which $675 million has been paid to the state government in income tax and rates equivalents, loan guarantee fees and dividends.
"That's money that has been available to the government to spend on, among other things, schools, hospitals, and rebates to electricity consumers," he said.
Mr Eslake said the recent Revised Estimates Report anticipated that Hydro would contribute $565 million to state coffers over the four years to 2026-27.
"But it won't be able to do that if it is required to sell "Tasmanian power at Tasmanian prices to Tasmanian consumers"," he said.