Tasmanian government looks to revenue raising and state business cutbacks to fund Hobart stadium
The letter describes the economic benefits of the stadium as "difficult to quantify". (ABC News: Ebony ten Broeke)
In short:
Tasmania's premier and treasurer have agreed to reduce borrowings for government businesses in an effort to accommodate more debt for the Hobart AFL stadium.
The commitment was part of a series of promises to get the support of a key independent for the stadium.
What's next?
The stadium is likely to pass parliament later on Thursday.
Borrowings by Tasmanian government businesses will be reduced by $500 million over the coming three years to accommodate the debt needed for the Macquarie Point stadium in Hobart.
Premier Jeremy Rockliff and Treasurer Eric Abetz confirmed the reduction in a letter to independent Dean Harriss, along with an agreement to find "additional revenues" ahead of the May budget.
Mr Harriss interpreted this as meaning that "state taxes and charges will increase", and used the commitment as a basis for his support for the stadium.
Eric Abetz says the stadium would provide income for the budget, offsetting the operational expense — but the extent of the income has not been modelled. (ABC News: Maren Preuss)
In the letter, the government commits to reducing public non-financial corporation (PNFC) net borrowings by $500 million — "broadly equating" to the $490.7 million in borrowing required by the Macquarie Point Development Corporation (MPDC) for the stadium.
PFNCs include entities such as Homes Tasmania — which delivers public and social housing — and government-owned businesses Hydro Tasmania, Spirit of Tasmania operator TT-Line and TasNetworks, among others.
In last month's state budget, it was noted that Homes Tasmania was " increasingly reliant on borrowings to achieve its policy objectives", forecast to exceed $1 billion in 2029, while TT-Line was expected to require additional government bailouts to address its long-term financial issues.
A stadium on Hobart's waterfront has gained enough support to pass parliament, after key independents declared on Wednesday they would support the contentious project. (Supplied: MPDC)
Hydro has also faced a downturn in its profitability, which it says is partly due to reduced rainfall.
The letter describes the economic benefits of the stadium as "difficult to quantify", but states the government has "heard from many" about growth in several sectors of the economy.
It restates Treasury advice that the budget is "unsustainable and requires immediate and sustained repair", which the government puts down to COVID spending and "global economic insecurities".
"We have this challenge before us, regardless of whether we build a stadium," Mr Rockliff and Mr Abetz told Mr Harriss.
"We acknowledge that the debt-servicing costs for the stadium will need to be met but this addition to the task is more than justified by the social and economic benefits that the stadium and AFL teams will deliver."
While committing to finding additional "own-source revenue", the letter reaffirmed the government's decision not to accept a recommendation in a report by economist Saul Eslake for "new and increased taxes".
Debate on the stadium will continue today, but will pass later in the day — likely by 9 votes to 5.
Stadium to have funding cap
In gaining the support of independent Bec Thomas, the government promised to cap its overall spend at $875 million, which includes the $490.7 million in borrowing for the MPDC, and the previously promised $375 million.
It means that cost blowouts will require either additional funding from the Commonwealth, AFL or private sector, or another vote in parliament to release more state funding.
Another option was to reduce the "scale" of the stadium.
The government also promised Mr Harriss that funding for the Integrity Commission would increase by $500,000 per year, and resourcing for the Tasmania Audit Office would be reviewed.
The government has just increased TT-Line's borrowing capacity by $400 million and given it a $75 million equity injection. (Supplied: Spirit of Tasmania)
Mr Harriss said he believed the government's promised measures would help to address state debt, while attempting to accommodate more debt for the stadium.
"We finally have both an acknowledgement of the extent of the problem, and a statement of real intent to do something about it, other than simply adding billions of dollars a year to state debt," Mr Harriss told parliament.
"The fudging and the pretence is gone. We are back in the real world."
The government estimates that debt-servicing costs for the $490.7 million will be $91.8 million from 2028 to 2032, with future years not yet accounted for.
Tasmania's net debt is forecast to reach $10.4 billion in 2028-29.
In delivering the state budget last month, Mr Abetz said the upcoming May budget would include tough decisions, with the government looking to reduce the size of the public service by about 2,800 people.
"Sometimes when you 'right-size' there will be discomfort occasioned to people, which will not necessarily provide accolades for the government," he said.
"But nevertheless, it's the right thing do and it's what we'll be doing."