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Budget back to surplus in just two years after unprecedented shock

12 November, 2020

Peter Gutwein MP

Premier and Treasurer

2020-21 Budget: Budget back to surplus in just two years after unprecedented shock

The Tasmanian Liberal Government is committed to Rebuilding a stronger Tasmania.

We entered the pandemic from a position of strength, with one of the strongest economies in the nation and no net debt.

We have been able to use our balance sheet as an economic stabiliser, delivering the largest economic and social support package in the nation as a proportion of our economy, at over $1 billion.

In this Budget, we will continue to leverage our strong balance sheet to stimulate our economy, support our community, attract investment and support jobs through targeted initiatives and record infrastructure investment.

It should come as no surprise that this support has come at a cost. I have been open with Tasmanians about that from day one.

GST receipts this current year are expected to be $347 million lower as a result of a contraction in the size of the national pool of $25.4 billion over the next four years.

However, due to the staged reopening of our economy and the economic stimulus measures we have put in place, the impact has been mitigated, to some extent, on our own source revenues.

These are expected to be broadly similar with previous forecasts and strong growth is expected over the Forward Estimates period.

However, over the next two years operating deficits are forecast.

This year the deficit will be $1.1 billion, before improving to a deficit of $281 million in 2021‑22.

Importantly as our economy returns to growth, there is a pathway back to the black with a return to a modest surplus in 2022‑23.

The $5 billion infrastructure investment outlined in this Budget over four years will stand us in good stead, underpinning a strong return to growth in our economy of 3 ¾ per cent in the 2021‑22 financial year.

As a result our Net Operating Balance improves significantly over the Forward Estimates, and the Budget returns to modest operating surpluses in 2022‑23 of $14 million and in 2023‑24, $17 million.

As a result of the impact of the pandemic on our revenues, and unprecedented infrastructure investment over the next four years, our State will need to carry a level of net debt.

In 2020‑21 it is estimated that net debt will be $1.854 billion, rising to $4.380 billion over the Forward Estimates.

Importantly, this debt will be manageable, with interest rates remaining at record lows ‑ and it will be the lowest level of net debt carried by any jurisdiction in the country.

We have delivered for Tasmania before and we will do it again.