The Tasmanian Treasurer and Premier Lara Giddings has released the latest Progress Report on the Government’s savings strategies.

 

Ms Giddings said the report showed Government was making strong progress towards its overall savings target of $289.7 million for 2011-12 as part of a $1.4 billion reduction in spending over four years.

 

Ms Giddings said implementation of a range of measures, including the State Service Wage Policy, increased dividends from GBEs, and changes to State taxation, were progressing well although GBE profitability and tax revenue had been eroded due to the current financial climate.

 

“Tasmania has now lost $1.9 billion in GST and State tax revenue since the start of the Global Financial Crisis and we have no choice but to reduce government spending in response,” Ms Giddings said.

 

“I take no pleasure in making these savings, particularly when they affect services in key areas like health, education and police.

 

“But as the Progress Report shows, where possible we are reducing costs like phones, travel and cars, and cutting the bureaucracy.

 

“In DHHS, for example, we have reduced middle management positions and announced a restructure to cut departmental staff by 150 Full Time Equivalents (FTEs).

 

“As at 10 December 2011, DHHS had achieved a reduction of 84 corporate administration positions.”

 

Ms Giddings said most agencies were on track to achieve their savings targets for 2011-12.

 

“I thank all staff for their diligence in achieving efficiencies and delivering better value for money for taxpayers.

 

“Across the public service an overall reduction of more than 800 FTEs had been achieved as at December, while attempting to minimise the impact on frontline services and without the need for involuntary redundancies.

 

“Politicians are bearing their share of the cuts.

 

“The Report shows Ministerial and Parliamentary Support staffing has fallen by almost 8 per cent (12 out of 151) since June 2011 and 17 per cent (29 out of 168) since I became Premier in January 2011, but we still need to do more to meet our savings targets.

 

“In comparison, DHHS has lost less than 3.8 per cent of its staff (375 out of 9879) and Police and Emergency Management has been reduced by 2 per cent (34 out of 1611).

 

“Achieving the required savings in health remains the biggest challenge due to a delayed start and the long lead-in time required before some reforms start to deliver results, but as at the end of December DHHS had achieved savings of more than $40 million with six months to go in 2011-12.

 

“The Department of Justice has made good progress on its savings measures, however unforseen cost pressures in the Prison Service have required an additional allocation of $2 million for 2011-12."

 

Also releasing the Mid Year Financial Repor, Miss Giddings said the Government remained on track to avoid going into net debt.

However, further falls in GST and State taxation revenue meant a return to a Budget surplus would take longer than first expected and the Net Operating Deficit would rise to $246 million for 2011-12.

 

Ms Giddings said that while the 2010-11 Mid Year Financial Report was virtually a ‘mini-budget’ due to the urgent need to rein in spending, this year’s report contained no new savings or revenue measures.

 

“This report shows the Government needs to maintain the strong fiscal discipline we began 12-months ago and I am determined to ensure that we do so,” Ms Giddings said.

 

“Tasmania has now lost $1.9 billion in GST and State tax revenue in the wake of the Global Financial Crisis.

 

“There has been no change in our savings targets and the policies we have put in place to achieve them will remain.

 

“The Report warns that the unfolding European debt crisis remains a risk to the Tasmanian economy while the high Australian dollar continues to weaken demand for our exports and tourism sector.

 

“In these difficult times, the best thing the Government can do to support our economy is reduce spending in line with falling revenue to avoid net debt.

 

“Going into debt would mean funds that should be spent on services would instead be wasted paying bank interest, and fragile business and consumer confidence would be further eroded.

 

“Due to the long lead time for the Department of Health and Human Services to realise its $100 million savings target the report shows health is currently $25 million short of being on budget.

 

“It is vital that our health system reduces costs and operates more efficiently, particularly in light of the national health reforms starting on 1 July.

 

“But achieving the full savings required in 2011-12 would mean deeper and faster cuts than we have already made with a greater impact on services, and I do not believe that is justified simply to meet the arbitrary deadline of the end of this financial year.”

 

Ms Giddings said that despite the need for reduced Government spending and risks from the global financial uncertainty, there was still cause for optimism about the Tasmanian economy.

 

“It is encouraging that the Report forecasts continued growth in employment and unemployment predicted to remain below six per cent.

 

“The Budget has lost $26.6 million in revenue from duty on conveyances due to the weaker property market but a rise of $9.8 million in payroll tax reflects ongoing strength in our labour market.

 

“The Report also points to growing private business investment and a positive outlook due to large investments in dairy, irrigation and Hydro’s $400 million Musselroe wind farm.

 

“Despite the high dollar and challenging global market, our international exports have been growing and Tasmania’s Gross State Product is still expected to rise by 1.5 per cent in 2011-12.

 

“Population growth is expected to remain around the 0.6 per cent trend rate despite some migration of workers to booming resource-rich States.

 

“Tasmania is not alone in facing challenging times and my Government is determined to keeping making the strong decisions needed to position the State for a better future,” Ms Giddings said.