TASMANIA must have a plan to bring the State Budget into surplus ahead of the Commonwealth in 2015-16, to send a positive signal to business and the community.

The Tasmanian Chamber of Commerce and Industry (TCCI) says Tasmania now faces a $1.7 billion budget shortfall over the next four years.

TCCI chief economist Richard Dowling told a business breakfast in Launceston that the shortfall was made up of a $996 million write down in expected GST revenue, an estimated $500 million shortfall in State Taxation plus additional unplanned recurrent expenditure by the State Government in the order of $223 million.

Mr Dowling said the Budget operating deficit this year could be in the order of $270 million.

“The Government must put down a credible plan to restore the Budget to surplus.  The TCCI would like to send a positive signal and see the Tasmanian Budget return to surplus ahead of the Commonwealth Budget which is scheduled to return to surplus in 2015-16,” he said.

“The economic recovery cannot begin in Tasmania until the business community is convinced that the State has a plan to restore a sustainable budget position.”

Mr Dowling said the TCCI completely rejected any talk of increased or new taxes and it expected the Treasurer to keep his word on this commitment.

“The Government must educate the community about how serious the budget position is and that tough decisions will be required this year and for a number of years to come.

“The Government has an opportunity to take strong leadership and be remembered for taking Tasmania out of adversity.

“A broad-based redundancy program is inevitable. We have to cut the public sector workforce and it is likely to be a voluntary redundancy initially.

“This will not be a disaster because with the skill shortage many public servants will be taken up by the private sector.

Mr Dowling said the public payroll had grown by 50 per cent to about $2 billion a year over the past five years, and this had soaked up a skilled workforce, which the private sector badly needed.