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Posted: 2024-09-08 23:24:51

Tasmanian Treasurer Michael Ferguson has announced a record spend on infrastructure will be in this year's budget, despite a debt warning from an independent review of the state's finances.

In the budget, to be handed down on Thursday, $5.1 billion will be allocated to the state's infrastructure and capital program over the next four years — up from just under $5 billion in last year's budget.

Mr Ferguson said the government was taking a "balanced approach".

"We believe we need to still be strong in this space, because to turn back and to dial down the capital program too quickly during this period of national economic slowdown would be a mistake," he said.

The grey 2024 state budget book sits on a timbre desk next to a pair of reading glasses

The 2024 budget will be released against a backdrop of a slowing economy and a dire economic outlook foreseen by a top economist. (ABC News)

Last month, economist Saul Eslake released a heavily critical review of the state's finances and the infrastructure program.

He found that over the next three years, Tasmania would be running the nation's largest public sector infrastructure program relative to its size.

"The question is whether Tasmania can afford such an ambitious infrastructure investment program," he wrote.

Mr Eslake recommended scaling it back from just under 7 per cent of gross state product (the value of all goods and services produced in the state), to around 4 per cent.

Mr Ferguson said this was not the time to be "winding down a key stimulus for the economic health of the state".

"We need to maintain that pipeline of works — it supports jobs for men and women across civil, commercial, domestic, residential sectors right around the state," the treasurer said.

He said he had opted not to pursue revenue-raising measures suggested by Mr Eslake in his review, such as replacing stamp duty with land tax, or broadening the payroll tax base — and that the government would provide a full response to the review later in the year. 

Mr Ferguson said the budget would also have a focus on public services and cost of living relief.

Aerial view of a bridge construction project.

The new Bridgewater Bridge in Tasmania's south is currently the state's largest transport and infrastructure project. (Tasmanian government)

Spending an 'investment in the economy'

Construction industry stakeholders joined Mr Ferguson for Sunday's announcement, agreeing the state could build its way to economic growth.

Master Builders Tasmania CEO David Clerk said there was a "softness" in the residential building market, and certainty would encourage larger companies to invest.

"Looking at supplementing and increasing, or I guess, underpinning the spend in the commercial and civil sectors is a really good thing for building confidence," Mr Clerk said.

Andrew Winch from the Civil Contractors Federation said the money was an "investment in the economy".

"All the dollars spent on investment in infrastructure ends up in cafes and service stations, and shopping centres, and anywhere else around Tasmania, [it] supports small business — I think is the point that's lost," Mr Winch said.

A female paramedic walks past an ambulance parked outside the Royal Hobart Hospital.

Shadow Treasurer Josh Willie says public services are at "breaking point". ( ABC News: Luke Bowden )

Opposition warn of 'flatlining' public services

Labor warn they do not believe the budget will be good for public services — pointing to the precarious budget position, and the "efficiency dividend", which asks departments to find 60 cents of savings per $100.

"This government has nothing to show for record deficit and debt, apart from an economy that is flatlining public services that are at breaking point," Shadow Treasurer Josh Willie said.

The recent Preliminary Outcomes Report shows Tasmania's net debt was at $3.5 billion at the end of 2023-24.

A woman with blonde hair stands in a room and reads from a lectern

Greens leader Rosalie Woodruff says public service jobs are under threat from the government's efficiency dividend. (ABC News: Maren Preuss)

Greens leader Rosalie Woodruff lamented the government "doubling down" on infrastructure spending while also implementing the efficiency dividend.

"Those Liberals are saying that they're spending more on workers — at the same time in the back end, they've been cutting jobs steadily for months now," she said.

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