Liberal Treasurer Michael Ferguson on Thursday handed down the 2022/23 budget, his first in the role since replacing former premier Peter Gutwein, who quit politics in early April.
He also implored federal Labor to handle national inflationary pressures and extend the no-worse-off GST guarantee, a position long held by the state Liberals.
The budget included $538 million over four years for affordable housing and homelessness initiatives.
The government says it is on track to construct 1500 homes by June next year as part of an ambitious $1.5 billion plan to build or acquire 10,000 houses by 2032.
"While our economy is strong, we also know that many Tasmanians are doing it tough," Mr Ferguson said.
"(The government) is implementing the most comprehensive and ambitious affordable housing strategy in Tasmania's history."
The state government has extended the $30,000 first home owners grant to June 2023 and increased the stamp duty threshold to $600,000 to reflect property prices.
It has also doubled the amount of funding available for the residential land rebate to $30 million.
Tasmania is slated to have a $475 million deficit in 2022/23. A return to surplus in 2023/24 is predicted but the figure forecast last year has dropped from $39 million to $19 million.
The state's net debt, which has risen from $1.5 billion in 2021/22 to $3 billion in 2022/23, is expected to reach more than $5.2 billion in 2025/26.
The island state was net debt free in 2019/20 before the COVID-19 pandemic struck.
Mr Ferguson said the level of debt was manageable and the government had no immediate plans for tax reform but could consider "pragmatic" options in future.
"The bulk of that borrowing is to reflect our infrastructure program ... about $1.5 billion of the $5 billion is directly attributable to COVID," he said.
Mr Ferguson said he had asked treasury to provide advice on strategies to ensure debt remains within "manageable limits".
Labor opposition MP Shane Broad said it was an admission the budget was "out of control ... and that can only mean cuts, new taxes, or both".
Vice-president of credit rating agency Moody's Investors Service, John Manning, said the state's ability to deliver on its budgeted infrastructure spending, against rising capacity constraints, will ultimately determine the size of its projected debt burden.
Budget papers note revenue risks in 2027/28 after the no-worse-off GST guarantee expires.
Tasmania relies heavily on the GST, with almost 40 per cent of the state's forecast $7.8 billion of revenue in 2022/23 coming from the tax.
"As a small state we should not be losing out to other states that are swimming in mining royalties and posting multi-billion-dollar surpluses," Mr Ferguson said.
"This will be a test of the new federal government and whether they will govern for all."
The budget warns interest rate rises could "adversely impact key fiscal measures".
"We need the federal government to really own the problem of inflation nationally and to assist us as a government to assist those on lower incomes," Mr Ferguson said.
There is $39 million over four years for water and sewerage bill concessions and $186 million to help concession card holders to manage power costs.
Other funding includes more than $150 million over four years to upgrade digital health infrastructure and $36 million for child safety measures.
Public service wage negotiations this year could negatively impact the budget bottom line if increases are above an indexed level of 2.5 per cent over forward estimates.
TASMANIA BUDGET 2022/23:
* Deficit: $475 million
* Revenue: $7.8 billion
* Expenditure: $8.3 billion
* Net debt: $3 billion
* GST revenue: $3.1 billion
* Unemployment (March 2022): 4.5 per cent
* Economic growth (2021/22): 3.75 per cent
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