Tasmania's net debt to blow out even more, State Budget reveals

Tasmania’s net debt will blow out to nearly $11 billion by 2028-29, and Tasmania will record its third consecutive year of billion dollar-plus deficits, according to Treasurer Guy Barnett’s first budget.

The budget reveals not only a predicted deficit of $1.008 billion in the coming year (2025/26) but also an estimated deficit of $1.287 billion in the current year – a nearly $500 million blow out from last year’s budgeted amount.

This follows the previous year’s final result of a deficit of $1.5 billion.

The Government’s gross debt per capita (excluding the defined benefit superannuation liability of around $400 million per year) is budgeted to increase from $18,878 in 2024-25 to $23,157 in the coming year. It will reach nearly $30,000 per capita by 2029-30.

Heroically, the budget predicts a meagre two per cent increase in spending this year, followed by effectively flat spending in the following three years.

This includes an implied reduction in the size of the Tasmanian public service by around 2,500 FTEs by 2032-33, back to 2022 levels.

According to the budget, this will be achieved through the continuation of the current recruitment freeze for non-essential workers, State Service Vacancy Control and redeployment, ⁠targeted and negotiated voluntary redundancies, and ⁠the Workplace Renewal Incentive Program.

An Efficiency and Productivity Unit will also be established to audit all Government programs and systems. Savings measures announced in last year’s budget increasing to $150 million per year by 2026-27 will be continued, with an additional savings measure of $150 million per annum from 2027-28.

The budget continues to deliver on the Government’s commitment to no new or increased taxes, and general State economic measures remain strong with state final demand forecast to grow at 3.5 per cent in 2025-26, and the unemployment rate forecast to remain stable at around 4 per cent.

By far the biggest expenditure measure in the budget is health, with an additional nearly $1 billion set aside for the sector over the budget and forward estimates.

There’s also a significant increase in education spending to deliver the “full Gonski”, with over $150 million in additional funding for education over the budget and forward estimates.

A total of $615.2 million will be pumped into the Macquarie Point Development Corporation for the new stadium (including the Federal Government contribution of $240 million and $15 million from the AFL), along with $138 million into Stadiums Tasmania (again including Federal contribution) for upgrades including to York Park. There is also $75.9 million for the Northern Access Road, part of the Macquarie Point Stadium project.

$98.5 million has been set aside for Tasmania’s contribution to the Marinus energy link, and there’s an equity injection of $197.6 million for TasNetwork’s North West Transmission Developments. Homes Tasmania will receive $52.9 million. 

Other major areas of new investment include another $12.9 million for the West Coast Wilderness Railway, and $12.3 million for King Island Dairy.

While the Treasurer has added Port Arthur, Tascorp, Tasracing, TasRail, Entura and the Public Trustee in addition to the previously announced Hydro on the “not for sale” list, the budget otherwise provides little clarity on the government’s mooted asset sales.

The rest of the State’s GBEs, we are told, “will continue to be thoroughly assessed” and that the “Parliament will have decisions to make in coming months that will be vital for Tasmania for years to come.”  On what exactly, remains unclear.

“This budget backs business, creates jobs, supports families, and builds stronger safer communities”, Treasurer Guy Barnett said.

“This budget invests in the things that matter to Tasmanians: cost of living, health, education, public safety and housing…[it] gets the balance right…[and] builds a better Tasmania, now and for the future.”