Tasmanian Government Announces $5.1 Billion Infrastructure Investment Amid Deficit Concerns

The Tasmanian Government has announced a $5.1 billion allocation for infrastructure over the next four years in its upcoming budget, even as concerns mount over the state’s rising debt. This marks an increase from last year's nearly $5 billion investment.

Treasurer Michael Ferguson emphasized that this spending is crucial to support jobs and maintain the state's economic stability amidst a national economic slowdown.

Independent economist Saul Eslake, in a recent review of Tasmania’s finances, questioned whether the state could afford such a large infrastructure program. He noted that Tasmania is set to run the largest public sector infrastructure program in Australia relative to its size. Eslake recommended reducing infrastructure spending from nearly 7% of the state's gross product to around 4%, but Ferguson rejected this, saying that cutting back would be a mistake, given the current economic conditions.

Ferguson added that the budget will also focus on public services and cost-of-living relief, with no plans to implement new revenue-raising measures, such as changes to stamp duty or payroll tax, as suggested by Eslake.

Diverging Views on Economic Strategy

Construction industry leaders have voiced support for the government's approach, with Master Builders Tasmania CEO David Clerk praising the decision to invest in commercial and civil sectors, which he says will encourage business confidence. Andrew Winch of the Civil Contractors Federation described the infrastructure investment as a broader economic stimulus, benefiting local businesses across Tasmania.

However, the opposition has criticized the government’s spending priorities. Labor’s Shadow Treasurer Josh Willie warned that public services are already under strain and that continued infrastructure investment without addressing debt will worsen the state's financial position. The Greens leader, Rosalie Woodruff, also expressed concern that the government is increasing infrastructure spending while cutting public service jobs through an "efficiency dividend," which requires departments to find savings.

As Tasmania’s net debt reached $3.5 billion at the end of the 2023-24 fiscal year, debate continues over the long-term sustainability of the government’s economic strategy. Both critics and supporters agree on the need for careful management of the state’s finances but differ sharply on the best path forward.

Source: ABC News Hobart/Pulse Tasmania

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