The daily newspapers; social media and just about every press release refers to the State’s economic malaise, with most blaming the Labor/Green Government.
Here’s a summary of the problems we face:
1. Modest (or absent) economic growth
2. High unemployment
3. Low labour force participation
4. A decline in full-time jobs and an increase in part-time work, with little change in employment numbers
5. Relatively low earnings of those in full-time work
6. Falling levels of investment
7. Higher than average reliance on the Government as a source of income; and
8. A declining population caused by strong interstate out-migration
All are serious, and despite rhetoric to the contrary, fixing the first point won’t solve the other issues. Tasmania has embedded social and cultural attributes which cause, or are a major contributor to at least five on the list.
Yet that summary isn’t drawn from contemporary documents; it’s extracted from the 1998/99 Budget Papers, and I suspect a study of the economy going back decades would identify similar causes for repeated economic underperformance.
It’s worth copying more words from that Budget:
“One of the key reasons for Tasmania’s poor economic performance during the 1990s is the structure of the State’s economy with its relatively narrow industrial base and heavy dependence on sectors that have not shown major growth, such as agriculture and natural resources. These weaknesses have been exacerbated by the continual cuts to the public sector in recent years combined with the lack of a comprehensive strategy to increase jobs in the private sector.”
It should also be noted by those pushing for Liberal Government that their favoured party held office in all but three years between 1982 and 1998, and one day must take the blame for the economic collapse of Tasmania during that period. Prior to that, the Liberals had just a three-year term since before the war. World War 1 that is.
So what has 15 years of Labor given Tasmania? Well 40,000 more people have jobs, which is a massive positive. There’s been a cultural renaissance or sorts, although until David Walsh speni his gambling gains in Hobart’s northern suburbs, it hadn’t travelled much beyond Salamanca. And the continued flow of Federal money has made some people rich; some businesses happy, and left plenty of individuals in much the same predicament they faced in 1998; barriers to employment, limited access to housing and compared to the National average, the chance of an early, illness-plagued death.
In coming days I’ll argue Tasmania’s economy has only survived thanks to interstate migration, unexpected GST revenue growth, and most importantly, pork barrelling and industry handouts out of all proportion to economic necessity.
When Tasmania’s next Budget is released in a few weeks, it will face the same sisyphian challenges the inaugural Labor Government faced 15 years ago. But now, the headwinds are even stronger.
Rather than GST revenues growing at 8 per cent each year, Tasmania is staring down the barrel of an Abbott Government likely to punish our State. Migration of the economically useful kind, has disappeared. And I suspect the loggers, farmers and miners won’t be drinking from the Federal trough for an electoral cycle or three.
More to following, including a preview to the State Budget, an analysis of the State Budget and an Alternative Budget.
Tom Ellison is a financial analyst and author, and the General Manager of Wills Financial Group, an independent, ethical financial services company.