By Becher Townshend
The Tasmanian Chamber of Commerce and Industry has welcomed the State Government’s decision to maintain momentum through significant infrastructure spending in the 2019-20 State Budget.
TCCI Chief Executive Michael Bailey said business was comfortable with the Budget going into net debt as it was investing in infrastructure and stimulating economic growth.
Treasurer Peter Gutwein’s sixth State Budget was handed down late last month and while it predicts surpluses across the forward estimates, Tasmania will rack up $1.1 billion in net debt by 2023.
The 2019-20 Budget shows the contradiction that Tasmania currently has – on one hand the economy continues to boom with some of the best economic numbers we’ve seen in the history of the state, but on the other hand revenue is falling.
The state is becoming a victim of its own success. GST revenue and Stamp Duty are predicted to fall half a billion dollars over the next four years.
GST is going down, because Tasmania is performing better relative to the rest of the nation, while stamp duty is also coming down, not because of a fall in property prices, but because houses in the south aren’t changing hands because they’re so expensive and the boom in the north and north west is not enough to cover the difference.
As a result, Treasurer Peter Gutwein has been forced to make some difficult decisions.
First up, there will be the introduction of two new taxes – foreign investor land tax to catch overseas money, but more importantly for Tasmanians a 15 per cent point of consumption tax on gambling – capturing gambling online and bringing Tasmania in line with the rest of the nation.
In addition, there will be a $50 million special dividend taken from the MAIB, while the Tasmanian Public Finance Corporation will hand over $39.5 million.
Government departments will also be required to provide a 0.75 per cent special dividend and the so-called hard-line two per cent wages target continues.
However, given the teachers’ wages decision, it remains to be seen if this can be achieved.
The moves to increase taxes and take further special dividends are designed to cover the loss of revenue and thus allow the Government to continue its fiscal path.
This sees yet another record year of infrastructure spending at some $3.6 billion and while some question the ability of the Government to spend this amount, a drive down the Midland Highway and through the Hobart CBD certainly proves something is happening.
Elsewhere health continues to receive record funding at $8.1 billion – which is now about 32 per cent of the total budget, while education is not far behind at $7.1 billion.
In terms of numbers – there are some remarkable figures for those who study the long-term economic growth of Tasmania – that being a gross state product figure of 2.75 per cent – this has been revised up by half a per cent since last year and is three quarters of a per cent better than the long-term average.
Then there is population growth which is running at double the long-term average, continued strength in tourism numbers and a respectable 6.5 per cent unemployment rate.
Meanwhile this year we’ll see a budget surplus of $41 million, next year it will see a $57 million surplus, which interestingly won’t get us out of net debt until 2021 but given the circumstances a steady as she goes budget from Peter Gutwein is not such a bad thing.