Tasmania's Budget: Cuts Under Wraps and Questions Remain

Since Eric Abetz became Tasmania's treasurer nine months ago, there have been two prevailing questions.

How much will be cut? And what will be cut?

He's delivered on the first question.

The 2026-27 year's $600 million operating deficit is an improvement on the $923 million estimated deficit for the current year.

The rubber really hits the road in 2027-28 when he's hoping to record a surplus.

But what has he cut?

We don't really know.

The financial turnaround is dependent on $1.47 billion in "operational efficiencies".

The treasurer has pointed to the back-end of the public service as the main target for cuts, eyeing off 1,700 jobs in the next four years.

"Did we have an appropriate bureaucracy prior to COVID? I think most people would say 'yes,'" he said.

But $1.47 billion sounds like a tall order.

Look through the individual chapters and you won't find much more detail.

To cut its $131 million this year, the Department of Health will review fees and charges, increase its focus on lowering locum and agency costs and revise its executive structure.

The Justice Department will remove one deputy secretary position and invest in digital and AI solutions and a few other actions for $7.5 million in savings.

The Department of Natural Resources and Environment will consolidate office accommodation and streamline training delivery to find $5 million this year.

Is there genuinely $1.47 billion worth of deputy secretaries doing nothing and wasted office accommodation that can be scrapped without affecting frontline services?

If the answer is yes, that's almost more troubling.

Australian Education Union branch president David Genford is none the wiser about how the government's reaching those targets.

"We're told there will be streamlining of services. There's not 155 jobs that can be simply cleared up like that."

The truth is, it will be nigh on impossible to entirely protect frontline services from $1.47 billion in cuts.

From the government's promise of "no cuts" to frontline services two years ago, the treasurer could only promise yesterday that they'll be "maintained".

The budget book itself goes even further, saying only that "consideration will be given to minimising impacts on frontline service delivery".

Cuts kept under wraps

This year's budget continues a trend of the government making "efficiency" its main savings method.

Four years ago, then-treasurer Michael Ferguson reintroduced the efficiency dividend. Last year, Guy Barnett founded the EPU (efficiency and productivity unit).

Those efficiency measures have become less and less about keeping budgets in check and more about the main game.

Putting all those savings under one broad budget line also keeps them under wraps.

"Operational efficiency" is a lot easier reading than "closing schools" or "closing wards".

By not painting a specific target on its back, the government can avoid a backlash.

Take last week's federal budget. Prime Minister Anthony Albanese and Treasurer Jim Chalmers are facing some opposition to their tax changes.

They're now in a fight over not just breaking an election promise, but having to explain the impact on small businesses.

Former treasurer Guy Barnett flagged asset sales in last year's state budget.

Three weeks later, that was listed as a reason for a no-confidence motion in Premier Jeremy Rockliff.

Upon returning to government, Mr Barnett was no longer treasurer and asset sales were off the table.

But given the scale of these cuts, shouldn't we get to see them?

Unions Tasmania secretary Jessica Munday called on the government to explain further.

"This is another case of the government pushing responsibility onto the public sector to make decisions about where to cut," she said.

It's a lot harder to mobilise a campaign against operational efficiencies.

But there is $1.47 billion worth of bad press to come.

Can the state hit budget targets?

Credit rating agency S&P Global, which recently revised down Tasmania's credit rating from AA+ to AA said the "ambitious" budget "hinges on execution".

"We believe the state will find it difficult to hit its targets given rising spending pressures, demographic obstacles, and limited revenue-generating capacity," the agency said in a statement following the budget's delivery.

Economist Saul Eslake, who was bullish on this budget, said people were entitled to be sceptical that the government could reach these targets.

But he said the Abetz budget was clearer than previous ones about how the money would be saved.

Onus on departments to identify where to cut

This is a government that routinely overshoots its expenditure targets (it did by about $132 million last year) and is saved by lower-than-forecast infrastructure spending and higher-than-expected GST payments from the federal government.

It's also tied one arm behind its back in refusing to consider any new revenue, though the fees and charges review mentioned in the budget will be worth watching.

The treasurer has laid out the plan.

It's now the responsibility of the entire cabinet, and the departments themselves, to stick to it.

It is tough to believe that this will not have an impact on frontline services. Will those cuts really be followed through on?

Sugar-hit spending will need to be resisted.

There's also an election scheduled for 2029, just as the treasurer is promising peak net debt.

This budget includes $244 million worth of election commitments from last year's snap state election, which was deemed more restrained than usual.

How much will the next one cost and will it be any different from the previous spend-a-thons?

The treasurer indicated in the budget lock-up that the message had sunk in.

He said there was an "absolute determination" to meet those targets.

Former treasurers have stood there before and promised a surplus was on the way, for it to never eventuate.

Will this time be any different?