Financial Policy

Our financial policy will ensure that:

• All of our commitments are fully funded and fully costed
  
• We return to surplus over the Forward Estimates period, with a forecast surplus of $5.6 million in 2022-23 and $34.5 million in 2023-24
  
• We demonstrate responsible budget management for the well-being of Tasmanians

Fiscal Strategy

The Tasmanian Liberal Fiscal Strategy provides an effective and appropriate framework for the ongoing management of the State’s Budget position. It is focused on the achievement of long-term fiscal principles that are embedded within the Charter of Budget Responsibility Act 2007. These principles are:

• manage the State’s finances responsibly for the wellbeing of all Tasmanians;
• provide for the future for the next generation of Tasmanians;
• prepare for unexpected events by building a robust financial position;
• improve services to Tasmanians by building a strong economy and efficiently allocating resources to gain the maximum community benefit;
• formulate spending and taxation policies that ensure a reasonable degree of equity, stability and predictability; and
• ensure transparency and accountability in developing, implementing and reporting fiscal objectives.

A focus on these principles reflects responsible financial management and drives the achievement of long-term Budget sustainability.Through the need to prepare for the unexpected, a focus on these principles also recognises that Tasmania’s economic and fiscal circumstances can change quickly and significantly.The occurrence and impact of the COVID-19 pandemic demonstrates the speed with which circumstances can change.

The use of a principles based approach also recognises that a government can, in the short-term, legitimately depart from fiscal objectives in response to changing circumstances, as long as that departure is necessary, transparent and justifiable.

The Tasmanian Liberal Fiscal Strategy has stood us in good stead for the last seven Budgets we have delivered and includes six important strategic actions that are aimed at achieving the long-term fiscal principles. These strategic actions are detailed below:

• Annual growth in General Government operating expenses will be lower than the long-term average growth in revenue.
• General Government debt and defined benefit superannuation liabilities will be managed to ensure the combined annual servicing cost is less than six per cent of General Government cash receipts.
• A competitive tax environment will be maintained with an objective for state taxes to be efficient, fair, simple, stable and sustainable.
• Government businesses will be required to deliver services to Tasmanians at the lowest sustainable cost, while also providing an appropriate financial return to the Government.
• Tasmanian Government infrastructure investment will maintain existing assets, respond to economic and population growth and reflect the changing needs of the community.
• Public sector efficiency, productivity and financial transparency will be improved.

Our Record

The Pre-Election Fiscal Outlook (PEFO) released by the Department of Treasury and Finance on 13 April 2021 confirmed that Tasmania’s Budget has significantly improved since the 2020-21Budget and the Revised Estimates Report were published.

The successful management of the COVID-19 pandemic has allowed the Tasmanian economy to continue to recover, the scale of which is now being reflected through new economic data released by the Australian Bureau of Statistics.

Jobs have rebounded strongly and our economic outlook is positive with strong growth expected.

There is significant jobs growth over and above what is already forecast.

As a result, Treasury has revised upwards its economic forecasts across all key indicators, with larger than expected growth in our economy, employment and participation.

A strong economy and responsible budget management allows us to invest in the essential services Tasmanians need, and only a majority Liberal Government has the track record to deliver this.

Prior to the COVID-19 Pandemic, the Liberal Government delivered four surplus Budgets.

Tasmania’s economy has come through COVID better than just about anywhere else because of our management of the pandemic.

Only a majority Gutwein Liberal Government can be trusted to manage Tasmania’s post-COVID recovery.

Our Forecasts

A summary of our 2021 Election commitments and commitments made in the State of the State Address to Parliament on 16 March 2021 is listed in Table 1 below.

Table 1 below shows the Budget returning to surplus over the Forward Estimate period, after taking into account our 2021 Election and State of the State commitments. Importantly, our commitments are fully costed and fully funded. The Net Operating Balance is forecast to be in surplus of $5.6 million in 2022-23 and in surplus of $34.5 million in 2023-24.

A summary of our infrastructure investment commitments is provided in Table 2 below. Table 3 below identifies commitments that will be made through equity transfers to support Government businesses to deliver on the Government’s policy priorities.

Table 1: Financial Position Summary

Notes: Expenditure is shown as a positive number, and revenue as a negative number.

* While some policies result in reduced revenue, for example the stamp duty waiver on Electric Vehicles, these have been costed as an expense for ease of illustration.

** Commonwealth ABF revenue has been incorporated into the net cost of the health commitments.

Table 2: Infrastructure Investment Summary