Becher Townshend – Managing Director, Font PR
Well it probably comes as no surprise to hear that the State Government has shied away from the hard decisions in this year’s Budget, with a steady as she goes approach in the lead up to the 2014 Election.
However, such a decision does come at a price – $440 to be precise, for every man, woman and child in Tasmania in terms of net debt by the end of the 2013/14 financial year.
This figure comes from a deficit of $425m. for the current financial year, which is 50 per cent higher than predicted last year and adds to a $226m. deficit for 2013/14 financial year.
While sweeteners are thin on the ground, there are some, with the payroll tax threshold lifted for the first time in 14 years from $1m. to $1.25m. Many in business will argue that all such a move has done is compensate for bracket creep, but the reality for business is that something is better than nothing.
Offsetting this, according to the Government is a decision to scrap the first home buyers grant of $7,000 on existing housing, which as of 2014/15 will only be applied to new housing.
Premier Giddings argues that the grant has been found to distort housing prices and will now be more focussed on stimulating housing and construction.
From a social agenda perspective, Premier Giddings has made much of the State Government honouring on its undertakings to the National Disability Insurance Scheme, as well as supporting the Gonski education reforms.
On top of this, the bushfire support scheme continues to roll out funds, with energy reform and the sale of the Aurora retail book, the big ticket items for 2013/14, along with the forest package.
In terms of numbers, Treasury are predicting a modest growth in the economy of 2 per cent which is in line with the long-term average, while expenditure has been contained at 1.9 per cent compared with an estimated growth in revenue of 3.5 per cent.
Given the wild variation in numbers from last year’s State and Federal budgets, many will take these estimates with a grain of salt, but they do indicate a desire at least to contain expenditure growth to something below income growth, which in a situation where you spend more than you earn is probably a good thing.
Our unemployment rate is predicted to fall modestly to 6.75 per cent, still well above the national average, but an improvement nonetheless.
Importantly for the community sector, the Government continues to support some of the lowest paid workers granting an extra $16.3 million for wages over the next three years.
Elsewhere, the Government committed some $13 million over two years to support the new Theatre Royal Performing Arts and Education Centre.
It also looks clear the Government is moving to sell the RBF, but in terms of true economic reform beyond the energy market, there isn’t any.
Overall, the good news stories in this year’s Budget are thin on the ground and once you get past the issue of spiralling deficits and huge debt, the State Government has played it safe with no big cuts and ‘a steady as she goes’ approach.
However, with the polls showing the Liberals likely to be in office by this time next year, the State faces some tough times ahead despite some signs of economic improvement.
With a net debt of some $220 million, the usual raft of electoral pork barrelling and some questions around the accuracy of budget forecasts, whomever is in office in 2014 is likely to face some pretty hard budgetary decisions.
John Barker – John Barker & Associates
The 2013/14 State Budget has a familiar tune to the recent Federal Budget.
It provides a deficit of a staggering $425 million yet Tasmania’s finances are predicted to return to surplus in 2016/17.
While the Premier has indicated that the deficit blow-out is due to a reduction of $140 million in GST receipts, a high Australian dollar and declines in stamp duty, payroll tax revenue, electricity authority dividends and the January bushfires, I expect many observers will remember last years State Budget which significantly reduced the Federal Government’s GST receipts estimates. Not withstanding this and continued warnings, the State Government stuck to its estimates.
This leaves some doubt as to Tasmania’s real position therefore more than ever before the States 2013/14 mid-year financials, to be delivered just prior to the scheduled March State election, will be critical.
The Premier has indicated Treasury “is now forecasting a more positive economic outlook including a return to stronger dwelling investment, household spending, business investment and a return to jobs growth”. The proof will be in the pudding.
Expenditure will exceed $5 billion for the first time with spending limited to grow 1.9%.
There are no new taxes or increases in existing taxes which is welcome however a close-watch will need to be kept to ensure the plethora of departmental charges do not impose unreasonable imposts on consumers.
A continued emphasis on job creation is also welcome but the increasing unemployment rate suggests more needs to be done.
The increase in the payroll tax threshold from $1m to $1.25 million will provide relief for 2250 businesses and 130 businesses will no longer pay payroll tax. The payroll tax incentives are able to be provided at the cost of changes to the first home buyers scheme to the tune of $11 million per year.
Investment in infrastructure projects will exceed $1.46 billion over four years. This will include expenditure of over $300 million in 2013/14.
The large proportion of these funds are provided by the Federal Government and while the programs are a continuation of those announced in previous budgets the $38.8 billion ($750,000 State contribution) the expenditure on the continuation of five irrigation schemes is a significant contribution toTasmania’s future wealth.
Infrastructure spending will include:
- $38.6m for major upgrades at nine schools
- $13m over two years towards the contribution of a new Conservatorium of Music
- $4.6m for the redevelopment of the Royal Hobart Hospital
- Completion of the Launceston General Hospital upgrade
- Total roads expenditure of $163.4 m
- $21.4m equity contribution to Tas Rail’s upgrade of its network and rolling stock.
New concessions for people with medical needs which result in additional electricity bills have been announced with extension of concessions to asylum seekers or bridging visas or in a community detention centre are included.
A welcome initiative is $16.3 million over three years to assist the community sector pay the very significant salary increases announced late last year.
Health expenditure will increase to $1.4 billion while education expenditure will increase $1.35 billion. They contribute 54.3% of all Government spending.
The budget also includes a commitment to Gonski, NDIS and NBN.
Police numbers will be maintained at 1120 requiring an extra $4.5m this year and 25 new trainees will begin early in the financial year. $11.2m will be spent over four years for the additional operational cost of Risdon Prison.
The Tasmanian Forest Agreement legislation has unlocked $220m of Federal and State funding with an additional $33m over four years to support implementation of the Agreement.
This budget summary relies on the Premier budget speech, not a detailed analysis of all supporting documentation.
While this budget has some welcome initiatives, and maintains the infrastructure expenditure there is;
- No funding for micro economic reforms such as local government reform
- No funding to address the difficulties being experienced by exporters
- No relief for private investors and developers from exorbitant water and sewerage and Aurora developments and connection charges; and
- Doubt if the revenue derived from Aurora’s customer database will be allocated to consolidated revenue
The huge deficit of $425 million dictates my assessment.
The budget at a glance
- Deficit for this financial year is $425 million, up 48 per cent on the $283m forecast.
- It is forecast to be $266 million in 2013 – 14 with the State predicted to return to surplus by 2016 – 17.
- Growth, for this financial year is expected to be ¾ of 1 per cent, rising to 2 per cent in 2013 – 14. According to the Government, this is in line with the long-term average.
- Net Debt will be $226.1 million or $440 per head of population.
- Revenue Growth to Government is expected to be 3.5 per cent.
- Commonwealth grants and GST will make up 59.5 per cent of total State revenue
- Employment is expected to be 6.75 per cent.
- Total Tax revenue is forecast to be $940 million.
Health & Human Services
10.4 million over two years for Trinity Hill mixed accommodation and training in North Hobart for young homeless people or those at risk of homelessness.
$16.3 million over four years for pay rises to Tasmania’s low-paid community service workers.
$13.5 million in 2013/14 to Housing Tasmania for purchase and construction of public housing.
$16.8 million over four years for disability services through the National Disability Insurance Scheme (NDIS).
$900,000 for a new screening unit for stronger background and risk assessment checks for people working with children or vulnerable Tasmanians.
$900,000 in support of the National Rental Affordability Scheme (NRAS).
$300,000 for purchase of land for affordable housing development.
$40 million for 2013/14 for the continued investment in the Royal Hobart Hospital redevelopment – $27 million for stage 1 of a new inpatient precinct, $13 million for new inpatient area for women and children:
Capital improvements to Launceston General Hospital and North-West Regional Hospital
- $4 million for the Flinders Island Multi-Purpose Centre upgrade
- $7 million for the Glenorchy Tier Three Community Health Services Facility
- $2.25 million for the Kingston Tier Three Community Health Services Facility
- $1.6 million for the Launceston Integrated Care Centre
- $415,000 for refurbishment of the Latrobe Dental Clinic
$500,000 for new Mental Health Tribunal.
$500,000 per annum over two years for preventative health for both action and research.
$1.74 million to improve access to rural breast screening services.
$4 million for upgrades and maintenance to Neighbourhood and Community Houses.
$300,000 additional funding to strengthen the Office of the Anti-Discrimination Commissioner.
$50,000 per annum over five years in grants to support community events to mark the ANZAC centenary.
$100 million per annum for Children and Youth Services.
$12 million in funding for disability and family support services through Gateways.
Economic Development & Planning
$2.5 million worth of grants for the third round of the Tasmanian Government Innovation and Investment Fund to supporting innovative and sustainable business investment. The allocation brings the TGIIF program to $10 million since October 2012.
Potentially 470 new jobs to be created over the next two years with this program.
Over the next four years it is estimated that 10,400 jobs will be created to bring the unemployment rate down to 6.75 per cent.
From July 2013, the payroll exemption tax threshold will be raised from $1 million to 1.25 million.
A continued commitment of $200,000 a year to establish a new Asia Institute in partnership with the University of Tasmania.
UTAS and State Government have proposed to more than double the current numbers (3550) of international students by 2018.
$1.3 million will be spent over the next four years to establish State Government’s White Paper initiatives including:
- Establishing a Tasmanian representative in China
- Improving signage at key arrival points and attractions
- Developing a Tasmanian Gourmet food brand
- Cultural awareness workshops in partnership with the Federal Government and local industry representatives.
Additional $500,000 has been allocated to the Tasmanian Planning Commission to finalise assessment of interim planning schemes.
An additional $3.2 million dollars will be provided to the Tasmanian Museum and Arts Gallery (TMAG)to complete the museum’s $30 million renovation.
An extra $800,000 will be allocated over the next four years to assist with operational costs associated with TMAG’s redevelopment.
New funding of $13 million for the Theatre Royal Performing Arts and Education Centre as part of the construction of a new Conservatorium of Music, new theatre spaces and improved amenities and foyer space .
asmania will spend $11 million in 2013/14 on marketing for the State as a world class tourist destination.
$1 million dollars allocated to work with major air and sea carriers to promote the State
Investment in tourism research to ensure a more targeted approach to marketing.
State Government will continue to work with the Tasmanian Hospitality Association and has allocated a further $100,000 to support Tasmania’s hospitality sector.
$83 million over four years to implement the response to the reforms advocated by the Gonski Report.
$65 million over four years to capital works upgrades:
- $9.3 million over two years to Brooks High School
- $2.8 million over two years to New Town High School
- $5.8 million for Montrose Bay High School over four years
- $1.6 million for Lauderdale Primary School over four years
- $4 million for Glenorchy Primary School over four years
- $2.15 million for Kings Meadows High School over four years
- $3.6million for South Hobart Primary School over four years
$900,000 over four years supporting Year 11 and 12 Regional Education services.
$4 million for upgrades to information technology devices for teachers.
$2.5 million made available to build and improve kindergarten facilities and schools.
Investment over four years in North-West schools
- $3.5 million over two years for Smithton High School
- $850,000 to Devonport High School
- $4.1 million for Parklands High School
- $800,000 for North-West Special School
$2.3 million still in the School Transition Fund to develop facilities and assist communities who may choose to voluntarily close, amalgamate or co-locate.
$3.1 million over three years as endorsed by the Skills Tasmania Board for a VET eStrategy to support a range of learning models for 15-19 year olds in regional Tasmania.
Justice & Police
An extra $31.9 million over the next four years will be spent to boost frontline police numbers.
Tasmanian police numbers will be maintained at a minimum of 1120.
An extra $4.5 million in 2013/14 will be allocated to police recruitment and maintaining police numbers .
$2.23 Million allocated to fund the first year of operational costs of new Prison Infrastructure Redevelopment program.
$4.36 million allocated for the program ongoing from 2015/16 to boost staff safety and allow for improved staffing and services for prisoners.
$500,000 provided to enhance security at Risdon Prison.
Launceston Reception Prison will receive $1 million for safety, security and infrastructure improvements.
Primary Industries, Parks & Environment
Funding of almost $5 million to the Tasmanian Institute of Agriculture, a joint venture between the University of Tasmania and the State Government.
$38 million in 2013-2014 for the roll out of irrigation projects around the State.
$18.7 million to support services across the Tasmanian biosecurity system, including quarantine, diagnostic laboratories and emergency response capabilities.
$50,000 funding allocated to undertake a cost-benefit study on a state-based Container Deposit system for Tasmania.
$100,000 in 2013-2014 to investigate the establishment of a Mine Remediation and Innovation Centre of Excellence.
$6.7 million committed to Tasman Peninsula’s Three Capes Track attraction, with first walkers expected in 2015.
$175,000 per year to continue operating the Tasmanian Seed Conservation Centre at the Royal Tasmanian Botanical Gardens.
Additional $3 million to protect the Port Arthur penitentiary, the largest and most recognisable building at the Port Arthur Historic Site.
$600,000 per year for the next four years to support the introduction of new Aboriginal Heritage legislation.
$400,000 over the next two years towards helping Tasmanian communities adapt to climate change. Funding to be used for coastal, regional and sector-based climate change adaptation activities.
Infrastructure, Energy & Resources
$38.8 million in irrigation schemes to Midlands, Lower South Esk, Kindred North Motton, South East and Upper Ringarooma. It should be noted that this is not new money.
Infrastructure spending will be increased to $1.4 billion over four years, with $350 million allocated for 2013 – 14.
The $350 million is spread across the following areas:
- $163.4 million for the Roads Program for 2013 – 14 however funding drops away dramatically after 2015
- $136.5 million for health and human services
$27.8 million for housingo $68.1 million for health infrastructure
$40.6 million for the Royal Hobart Hospital
- $16.4 million for prisons
- $22 million for schools
- $7.3 million for Crown Land Services asset upgrades and the Three Cape Track.
From July 1 2013 the sale of a caravan or camper trailer will be exempt from stamp duty in an aim to create jobs and to make it easier and cheaper to buy camper trailers or caravans.
$410,000 to continue the implementation of Passenger Transport Innovation Programs, including draft Transit Corridor Plan between Hobart and Glenorchy.
$680,000 for a 12-month trial for Metro to deliver more frequent services along Main Rd between Glenorchy and Hobart (buses to run at least every 10 minutes).
Sport & Recreation
Reintroduction of the Trails and Bikeways program, with $1 million in funding over two years.
Additional $440,000 to boost prize money in the Tasmanian racing industry, bringing total racing industry investment to $29 million per year.
Further $75,000 to promote the Tasmanian mining industry internationally, on top of almost $6.2 million funding to support exploration and management of the State’s mineral resources.
Further $33 million over four years to support implementation of the Tasmanian Forest Agreement.