Welcome to our new series of bite-sized reports on how Tasmania and Tasmanian businesses are responding to today’s most pressing issues, The Tasmanian Approach.

Sharing our new series of bite-sized reports on how Tasmania and Tasmanian businesses are responding to today’s most pressing issues. Today, we’re looking at how Tasmanians are responding to the recently announced State Budget for Tasmania for 2024-2025.

The Facts:

• Infrastructure, healthcare, education and cost-of-living relief were the government’s stated priorities for the budget
• Where Australia’s various state budget updates have generally forecast surpluses or reduced debts in 2024, Tasmania’s government has decided to increase debt to drive what it says are essential investments
• Criticism has mostly been directed toward the government’s decisions to ignore economist Saul Eslake’s commissioned report on the state’s economy, increase cuts to government departments, and allegedly sidestep election promises

Paul Sloan, Head of Research and Development at the Project Lab commented, “There are certainly mixed feelings in the business sectors across the state. Conversations have been around cuts and debt - but also around several positive developments showcased by the budget.

“For example, we’re seeing low unemployment and growing Gross Domestic Product (GDP). The government is still investing in the development and modernisation of the state, diversifying our economy into new areas alongside the more traditional agriculture and mining sectors," said Sloan.

While Tasmania’s approach to debt has been a focus of much media conversation, the state government’s decision to prioritise investment over debt reduction may actually be reflective of Australia’s evolving attitudes toward government spending.

From 2016 to 2021, for example, Australian attitudes to government debt changed significantly. In 2016, roughly half of Australians polled believed a government’s main economic priority should be reducing the deficit. In 2021, only 1 in 10 Australians polled said the same.

Notably, in the latter poll, most Australians said they preferred governments invest in public services instead of reducing debt or cutting taxes. A 2024 report found that, for over 80% of today’s Australians, the main purpose of government is to ‘ensure [everybody’s] wellbeing’.

Yet, in 2024, Tasmania is one of the only state governments to actually prioritise spending over debt reduction. Aside from the Northern Territory and Australian Capital Territory, every other state government has promised debt reduction or surplus.

In fact, economists from The Australia Institute thinktank suggested in March 2024 that the Tasmanian government’s then-apparent focus on debt reduction would only hurt the state.

For now, it looks like The Tasmanian Approach is different: weather the debt, invest in the future.

For Tasmanian business leaders, this approach presents a unique opportunity to innovate, expand, and contribute to the state's economic growth. By embracing the government's investment priorities and identifying emerging needs, businesses can position themselves to thrive in the evolving Tasmanian landscape.

Should you wish to discuss the impact of the State Budget for Tasmania on your business, feel free to reach out direct to Jack Marston or call us on 1300 293 763.

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Next issue: A State of Support: Tasmania’s Push for Health and Community Welfare