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Failed Treasurer’s dangerous and cavalier approach to budget management

  • Gutwein ignores massive revenue uncertainty
  • Naïve Gutwein blindly accepts Turnbull’s disingenuous GST assurance
  • Tasmania could lose more than $600 million over forward estimates

There has never been such a disconnect between the rhetoric of a government and the reality of a fiscal situation than what we see today, Shadow Treasurer Scott Bacon said.

“The Tasmanian Treasurer claimed the budget has never been in better shape.  He did so while Tasmania’s budget revenue is as uncertain as it has ever been,” Mr Bacon said.

“He did so while his budget is still in underlying deficit.

“The revised estimates report showed an underlying deficit of $136.4 million for 2017-18.

“The Treasurer went on a pre-election spending spree while Moody’s Credit Rating Agency still ranks Tasmania’s finances as the worst in the nation, after Treasurer Gutwein had Tasmania’s rating downgraded to Aa2 in 2016.

“The Treasurer has accepted Malcolm Turnbull’s guarantee given in a radio interview as enough to justify the development and release of a budget that is reliant on the GST for 40 per cent of revenue.

“This is a dangerous and cavalier approach.

“Leading economist Saul Eslake has said Tasmania could lose up to $367 million in 2021-22 while Tasmanian Treasury said Tasmania could lose more than $600 million over the forward estimates.”

Mr Eslake has cast doubt over the Prime Minister’s assurances that Tasmania has nothing to fear from the GST review:

“The Prime Minister has said that Tasmania will not be ‘one dollar worse off’ under any new GST arrangements. But while that sounds like he is being generous, I think he is being disingenuous.”

 

“Treasurer Gutwein and Premier Hodgman have repeatedly ignored these warnings,” Mr Bacon said.

“Responsibility for any change to the GST distribution system will be borne by those who have abjectly failed to take the risk seriously and stand up for Tasmania.”

The fact is that there has never been so much uncertainty around Tasmania’s revenue as there is today:

  • Federal Treasury has always provided GST distribution estimates within the Federal Budget – until this year.
  • The 2018-19 Federal Budget refused to estimate GST distributions past 2018-19, pointing to the uncertainty of the Productivity Commission Inquiry into the GST and creating three years of revenue uncertainty for Tasmania.
  • The Productivity Commission Review has been released to Federal Treasurer Scott Morrison.
  • Treasurer Morrison has offered briefings to the states.
  • Treasurer Gutwein has declined a briefing and deliberately not seen the report.
  • Treasurer Gutwein has built his entire 2018-19 budget based on a Malcolm Turnbull radio interview where he only gave the guarantee that Tasmania’s  GST payment would not be lower than it currently is.

TABLE:  Saul Eslake’s modelling shows the frightening impact of a declining Tasmanian share in the GST

  Aus Budget Maintain share Turnbull assurance
Year Total GST Tas Share ($m) % share $m % share $m % share
2018-19 67,320 2,488 3.70% 2,488 3.70% 2,488 3.70%
2019-20 69,790 ~ ~ 2,579 3.70% 2,488 3.56%
2020-21 73,510 ~ ~ 2,717 3.70% 2,488 3.38%
2021-22 77,270 ~ ~ 2,856 3.70% 2,488 3.22%
Total       10,640   9,952  
Turnbull assurance outcome  
Four year cumulative loss ($m) 688
Loss in FY2021-22 ($m) 367