THE BARTLETT Government must continue its stringent management of public expenditure if it is to achieve its goal of returning the Budget to surplus in three years’ time.

It has taken the first steps delivering a Budget for the next financial year that will see a reduction of 800 public sector jobs, cuts in spending of some $760 million, no new taxes or tax increases other than inflationary movements, some payroll tax relief, coupled with a massive infrastructure spend designed to combat the worst of the impact of the global financial crisis.

The 2009-10 Budget delivered by Treasurer Michael Aird represents a responsible strategy to maintain our way of life in Tasmania.

But it is predicated on a world economic recovery next year and also the Government’s courage to resist pre-election spending and caving in to public sector wage demands over the next four years at least. And if the slowdown in economic activity is even marginally more than the Government predicts, Tasmania’s debt-free status as well as the predicted Budget outcome will be seriously at risk.

Chief economist with the State’s peak employer body, the Tasmanian Chamber of Commerce and Industry (TCCI), Richard Dowling said the Government should nevertheless, be commended for delivering a Budget that provided a clear and credible path to return to surplus by 2012-13 and for Tasmania to remain net debt free.

“This Budget will assist in restoring business confidence in Tasmania so that the economic recovery can occur,” Mr Dowling said.

The Government has maintained its commitment to remain net debt free and resisted the temptation to borrow to fund a pre-election splurge. While it will run Budget deficits for three years, its plan is to return to surplus in 2012-13.

“Being the only jurisdiction in surplus and net debt free in 2012-13 will be an important signal for investor confidence and has enabled Tasmania to maintain its credit rating,” Mr Dowling said.

“The business community welcomes the Government’s commitment to no increases in taxes including backdoor taxes like fees and charges.

“This Budget also goes a long way to countering the historic bias towards recurrent expenditure at the expense of vital infrastructure investment.”

Mr Dowling said the TCCI would be holding the Government to account on its Budget savings strategy including redundancies and a tough wages policy limiting public sector wage increases to 1 percent in 2010-11 and 2.5 percent beyond that.

“The Government has announced hard savings initiatives which will maintain the health of our Budget. Any breach of these savings across the forward estimates would seriously threaten our net debt free status.

“Strong surplus budgets and public sector productivity gains will be required if the fiscal strategy and unfunded superannuation target is to be achieved.”

The TCCI also congratulated the Government for adopting the employer body’s policy on using payroll tax rebates as a stimulus for employment.

“The payroll rebate on new jobs is a tangible and hugely symbolic concession of the direct link between payroll tax and jobs,” Mr Dowling said.

“This initiative will provide a strong incentive to employ new staff in a difficult economic climate.

“In the lead up to the Budget, the TCCI called for core services to be maintained while restoring the Budget to surplus over the forward estimates.

“The Government had committed to this and the Budget is entirely appropriate and responsible response to the difficult economic climate that we face.

“Core services in health and education will continue to be funded while areas that no longer generate appropriate social or economic returns will be sacrificed.”

Mr Dowling said the economic forecasts contained in the Budget documents also confirmed that Tasmania was still yet to feel the full consequences of the global recession.

“The forecasts suggest a recession in 2009-10 and unemployment peaking at 8.25 percent. But this is a relatively strong outcome when measured against previous recessions where unemployment reached 13 per cent.

“The real test will be the effectiveness of the Government is at implementing its $760 million Budget savings measures and its ability to withstand the urge to make unrealistic election promises and pander to public sector union demands.

“The business community will continue to hold the Government to account on these issues,” Mr Dowling said.