Tasmanian Government to slash ICT programs

GFC-influenced shortfall in GST revenues to blame, new Premier says

The Tasmanian Government has signalled that it could cut as much as $3.9 million from its 2010-11 and 2011-12 budgets in an effort to address a GFC-influenced GST revenue shortfall.

In its 2010-11 Mid Year Financial Report (PDF) the Tasmanian Department of Treasury and Finance said there were a number of ICT-related programs which could face the axe immediately in order to rein in spending.

These include Connected Classrooms at a price of $1 million, a Digital Pavilion Experience Centre costing $0.5 million, the extension of the Wireless Waterfront Initiative at $0.8 million, a smart grid trial and a virtual in-home healthcare demonstration trial, both costing $1 million.

All of the projects axed were originally announced as part of the 2010-2011 budget. Those digital economy initiatives remaining including the $2.85 million digital futures strategy, the $1 million digital futures development fund and the $500,000 Aurora National Broadband Network Skills Centre.

The report blamed a a shortfall in estimated revenues from the GST, higher-than-expected expenses and increased need for stimulus measures as some of the factors prompting a re-evaluation of the state’s fiscal outlook. Though the government expects a net operating surplus of $11 million over the forward estimates outlined in the 2010-2011 budget last year, it maintained a fiscal deficit of $402 million would result in the current financial year, alleviating to an $151 million deficit in the 2013-2014 financial year.

“While the Government will be taking a range of actions to achieve significant Budget savings over the medium-term, it is also important that action be taken to immediately deliver Budget savings,” the report reads. “These savings will be critical to improving the Government’s financial position in the short-term while longer-term structural action is being taken.

According to the report, the suite of information technology initiatives funded in the 2010-11 Budget will now not be progressed, except for the Digital Futures Development Fund.

“The Government will use the Fund to reassess its approach to IT development,” the report reads.

The Tasmanian 2010-11 Budget states that funding for the Digital Futures Development Fund is $1 million.

However, the government had flagged up to $3.6 million in funding for a Digital Futures Capital Fund in its Tasmania’s Innovation Strategy report, designed to encourage further digital content, applications and services.

The funding, to be spent on the state’s digital economy over the 2010-11, 2011-12 years appears to remain untouched. The funding is to be used to focus on educating about and establishing business opportunities under the National Broadband Network and encourage Government 2.0-style communication with the public.

David O’Byrne, who took over former Premier David Bartlett’s ministerial position at Infrastructure, Development and Innovation did not return requests for comment.

Commenting on the need for the budget cuts, Tasmanian Premier and Treasurer, Lara Giddings, said the measures were needed to ensure the Government did not return to the net debt of the mid-1990s.

“The report shows we have been hit hard by falling GST revenue and other income,” Giddings said in a statement. “Over the course of the current Forward Estimates, Tasmania has lost almost $200 million in GST revenue from the Commonwealth.

“When added to previous reductions in GST income, the State Budget is $800 million worse off compared with pre-GFC growth levels.

"There is now no more hay left in the barn. We are living beyond our means and spending must be cut in line with our reduced income so we do not go back into net debt."

Additional reporting by James Hutchinson

Follow Tim Lohman on Twitter: @tlohman

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