By Tom O’Meara
Significant decreases in stamp duty and GST payments will challenge Tasmania’s Budget position but record spending will continue in health, education, housing and infrastructure.
Treasurer Peter Gutwein is preparing to hand down his 2019 Budget on May 23 and is expected to remain in surplus, despite admitting there will be significant challenges over the coming four to five years.
Infrastructure development, including the bold 30-year infrastructure plan essential for forward planning, will be a highlight of this year’s document.
Last year the Treasurer announced a record $2.6 billion spend on community infrastructure over four years.
Roads and bridges were to receive $1.1 billion, hospitals and health got $475 million, human services and housing was promised $205 million while schools and education spending was worth $192.2 million.
The rollout of that significant infrastructure spending will continue in this Budget with the essential $650 million redevelopment of the Royal Hobart Hospital completed this year and work still under way at Launceston General Hospital.
There is no expectation that the Government will budge on its current wage offer to the Public Sector.
Mr Gutwein will be stymied by GST receipt reductions and a drop in stamp duty.
In a nutshell, the pool of the national GST is decreasing by an anticipated $11 billion.
Mr Gutwein said there would be a $280 million write down in Tasmania over the next four years from the decreasing GST pool.
It’s important to note that this decrease is not in any way related to a new GST agreement which will come into play in 2021.
It was agreed that Tasmania won’t lose a cent when the GST formula will be altered slowly across six years to target a standard that removes the peaks and troughs created by economic shocks, such as the mining boom.
Mr Gutwein will also write down $280 million of stamp duty over the next four years.
The volume of real estate sales in Hobart has decreased and while the Northern real estate market has improved significantly, prices paid in the north are much lower than the Hobart sales, which means less stamp duty.
Mainland states of NSW and Victoria have experienced massive drop for real estate prices – it has hit hard because both had previously used their stamp duty funds for a champagne approach to massive infrastructure spending and Public Sector wage increases.
Mr Gutwein has shared information with the Tasmanian Business Reporter from Victorian Treasurer Tim Pallas, who has warned that his state was facing a $2.4 billion writedown in stamp duty.
Last year the Victorian Government was upbeat in its revenue forecasts predicting $7 billion in stamp duty flowing into the Treasury coffers.
Mr Pallas should be prepared for “a Budget of hard choice” and has already put an initial 2 per cent on the table as he begins negotiating Public Sector agreements.
Tasmania is already on a 2 per cent wage increase.
Mr Gutwein said the bright light is Tasmania’s strong export income in all sectors.
“Except for the stamp duty, all other incomes are positive and some of exports are returning record figures,” Mr Gutwein said.
New data shows Tasmania’s economy is the equal third strongest in the nation, news that’s expected to assist with a surplus Budget position across the Forward Estimates.
“The budget is still in a good place and remember that the Budget is not the economy and the economy is not the Budget.”
The Treasurer certainly has challenges and costs will be under the microscope but the priority is to continue supporting development opportunities and exports to cover the total $580 million write down over the next four years.