Thoughts on a Budget

When framing the state budget the Government faces competing interests, as a manager of its own books and that of manager of the state economy.

It is crucial the budget and underlying strategy has an eye not only on the short term but also the medium and longer term. In my view there are no areas of public policy that can be developed and implemented for today with little or no thought for tomorrow.

The bookends of the circumstances surrounding the budget are at one end collapsing state revenue and GST receipts and the other end massive COAG and Education revolution spend.

The good news is that sound financial management over the last 10 years has meant we have cash reserves to see us through this period without having to borrow, so the net debt free position the government is able to deliver on is structurally sound and protects the states credit rating.

The bad news is that some jobs in the public sector will be lost and some programs and activities either deferred or discontinued.

There have been many changes to the states public sector to reduce overall Government spend but there are two methods used that concern me and they are 1. the flat percentage figure efficiency dividend from departments delivered back to the treasury and 2. vacancy control as means of reducing wage costs.

These are blunt instruments to reduce overall costs and whilst I am sure they will result in ‘savings’ they do not guarantee sound public policy outcomes. The role of the public sector is to provide high quality, predominantly essential, services, and that should not be forgotten.

My preference would be a more forensic review of departmental activities with some intellectual rigor applied that improves the quality of the services delivered and did so in an efficient, common sense way that is related and connected to an overall government strategy.

The opposition parties response have been varied, when looking at the Liberals approach to these matters when actually in government, as opposed to a politically refined response, we look to two experiences, the first is the example set by Robin Gray, a premier who bankrupted the state for short-term political gain and the Howard government who cut public services, made massive short-term cash splashes to small sections of the community to curry favor with, to hold/win seats, and more importantly or should I say more disgracefully an appalling underinvestment in the human and physical infrastructure of our nation. They offer nothing new.

The Tas Greens took a couple of unusual steps firstly of releasing a pre-budget response, I am not sure of the sense of it as the full budget position would have been unknown to them and secondly was the proposal to unilaterally cut public sector employees hours by 2.5 per week, it does seem to show a naivety about the level of wages paid to public sector employees and the commitments they have as I am sure cleaners in our schools who earn an ave of 35k per annum, in many instances these people live week to week, would not be able to cope with a pay cut. They offer nothing strategic.

As Saul Eslake has observed in his assessment, the Treasury forecasts are pessimistic because they compare the current state position to those that were in place during the recession of the early 90’s and do not take into account the structural differences in the Tas economy that have occurred since that time. I share Estlake’s view and its inherent optimism.

There has been much change and reform to Tasmania's economy that has benefited the community and strengthened our economy, this work should be acknowledged and built on as there is much more work to do.