State Budget Roundup: Tasmania and Queensland

Tasmania: A Bold Austerity Plan Faces Scrutiny

Fiscal Outlook

The Tasmanian government's 2026-27 budget projects a net operating deficit of $596.7 million, with a fiscal deficit of $1.057 billion when capital expenditure is included. Treasurer Eric Abetz has forecast a return to surplus by 2027-28, with a projected $192.3 million surplus rising to $622 million by 2029-30.

"There is a season for deficit budgeting, and now is the season for balancing the budget." – Treasurer Eric Abetz

Key fiscal figures:

• Operating expenses: $10.788 billion (2026-27), dropping to $10.394 billion (2027-28)
• Revenue growth: From $10.191 billion (2026-27) to $11.603 billion (2029-30), driven by federal payments and GST
• Net debt: $8.4 billion by end of 2026-27, reaching $10.4 billion by 2028-29
• Debt servicing costs: $441 million (2026-27), rising to $638.4 million (2029-30)

Operational Efficiency: $1.47 Billion in Cuts

The government plans to find $1.47 billion in operational efficiencies over four years, primarily through reducing department spending. By 2029-30, total annual savings reach $441 million.

Workforce reductions include:

• 1,700 positions eliminated through natural attrition, voluntary redundancies, and workforce renewal
• Department of State Growth restructured into Building Tasmania, cutting 250 full-time positions
• Premier's Department reduced by 82 staff
• Education: 155 back-line positions cut over four years; a review of education delivery will examine service sustainability
• Health: $131 million in cuts for 2026-27, with total health cuts exceeding $700 million over four years

Superannuation Liability: A Looming Challenge

The unfunded superannuation liability is projected to surpass $7 billion by June. The Department of Treasury and Finance is evaluating options to reduce this burden, including potentially decreasing payments for individuals receiving over $200,000 annually in superannuation.

"Reducing superannuation payments for already retired public servants would involve breach of contract considerations that would need to be carefully worked through." – Economist Saul Eslake

The defined benefit scheme, available to public servants who joined before May 1999, is forecast to peak at $490.2 million annually in 2034-35 and is not projected to cease costing the budget until 2072.

Spending Priorities

• Health: 34% of budget ($3.671 billion)
• Education: 23% ($2.439 billion)
• Infrastructure: $3.46 billion
• Election commitments: $16 million for bulk billing GP clinics, $31 million for breast screening, $24 million for free public transport
• West Coast Wilderness Railway: $28.3 million
• Macquarie Point Stadium: $26.6 million (2026-27), $194.8 million over two years

No new taxes were introduced, though fee and charge reviews are planned. The government aims to reduce debt servicing costs to 7% of revenue and keep employee expenses below 44% by 2032.

Reactions and Assessments

Credit Rating Agency (S&P Global):

"Tasmania's plan for a dramatic fiscal turnaround faces high execution risk."

S&P cited rising spending pressures, demographic obstacles, and limited revenue-generating capacity as key challenges to hitting targets.

Economist Saul Eslake described the budget as "a genuine, serious, and for the most part, credible attempt to impose restraint," but cautioned that improved projections partly rely on "windfall gains" from federal grants and further savings may be needed.

Political Reactions:

• Labor's Dean Winter called the cuts a "chainsaw massacre," highlighting $131 million in health cuts
• Greens Leader Rosalie Woodruff suggested higher taxes on corporations or halting the stadium project instead

Stakeholder Concerns:

• AMA Tasmania: "Cutting health funding will cause patient harm"
• Nursing and Midwifery Federation: Health cuts are "simply horrifying"
• Australian Education Union: Demanded "straight answers" on which education jobs will be cut
• Tasmanian Council of Social Services: Expressed concern about long-term impacts on community services
• Tasmanian Chamber of Commerce: Supported the intent but noted the need for "discipline in delivery"

Queensland: Cost-of-Living Relief and Water Security

Patient Travel Subsidy Boost

The Queensland government announced an 11-cent increase in the Patient Travel Subsidy Scheme fuel payment – from 34 to 45 cents per kilometer – with an additional $17 million allocated to the scheme. The accommodation subsidy remains at $70 per person per night. The government committed to reducing reimbursement processing from 30 days to one week.

"It's a drop in the ocean." – Patient advocate Justine Christerson, calling for 86 cents per kilometer

Premier David Crisafulli stated the new rate would be "the most generous in the country" but acknowledged it "falls a long way short" of covering patient costs. AMA Queensland welcomed the increase but noted the unchanged accommodation subsidy may not feel sufficient.

Shadow Treasurer Shannon Fentiman said the increase "doesn't go far enough" and called the overall cost-of-living measures "underwhelming."

Water Security: $545 Million Investment

The government announced a $545 million investment in water security, including:

• North Pine Dam: Restoration to full-service levels (currently at 54% capacity)
• Lake Macdonald Dam: Restoration to full-service levels (currently at 42% capacity)
• New Dam Site Scouting: $10 million for Seqwater to scout potential sites (timeline not confirmed)
• Paradise Dam: $59.8 million for rebuilding (total cost estimated at $4.4 billion, start date not provided)

Treasurer David Janetzki stated that restoring these dams would create capacity equivalent to 2.5 times the size of Bjelke-Petersen Dam (134,000 megalitres).

Cost-of-Living Package ($9.3 Billion)

• Back to School Boost Voucher: Increased by $50 to $150 for primary school students
• Electricity Rebate: 3.4% increase to almost $400 for 700,000 vulnerable households
• Play On! Sports Vouchers: $200 vouchers for children aged 5-17 to continue
• Public Transport: Government committed to legislating 50-cent fares
• Bulk Water Charges: Frozen for two years in south-east Queensland, saving households $130 over two years
• Vehicle Registration: 3.4% increase (below inflation)

Energy

Treasurer Janetzki directed government-owned Ergon Energy to pass on a 6.9% electricity price reduction to regional households and 8.1% to small businesses from July 1.

Fiscal Position

• No commitment to return to surplus within four years
• State debt forecast: $204.89 billion by 2028-29
• Operating deficit: $1.04 billion expected
• No changes to coal royalties regime
• Janetzki ruled out cuts to the public service
• Government defended advertising spending, with Meta data showing $622,251 spent from March 21 to June 18 on 198 ads

"Our cost-of-living measures are targeted and responsive." – Treasurer David Janetzki

Opposition Leader Steven Miles reported claims of non-renewal of temporary contracts across the public service. Shadow Treasurer Fentiman called for reduced advertising spending. The government indicated it cannot currently address payroll tax changes requested by business groups due to financial challenges.