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I think it is time to make one of those “emperor has no clothes” statements, one that will probably attract some flak from the commentariat, but so be it.
The last few weeks have seen the delivery of both state and federal budgets, accompanied by usual responses to Tasmania’s economic plight of low growth, high unemployment, etc and an ongoing ruckus over disproportionate GST payments to the state. The usual political response is to seek a ‘Tasmanian Special Assistance Package’ from the federal government, a grab-bag or cure-all of goodies that is supposed to suddenly stimulate our economy to overcome its inherent ills.
That ploy is as old as the hills. Some of you will recall Labor premier Bill Neilson going to Canberra in the mid-70s, cap in hand, to see the then Prime Minister, Malcolm Fraser, with a 24-point plan for Tasmania’s salvation.
Simon Crean, the federal Minister for Regional Australia, is the latest prophet of regional largesse in times of stress. It is part of the Gillard Government’s response to the so-called two-speed or patchwork economy that we have – boom mining states on the one hand and the economic slow-coaches on the other.
Mr Crean has been making regular visits, promising millions on the back of the unfulfilled intergovernmental forest agreement. The trouble with that is, if the Tasmanian parliament fails to approve the agreement, much of the money will fail to materialise. And, in any case, there is a real debate yet to be had about whether the millions on offer are actually fair recompense for the billions in economic activity being sacrificed – but that is a whole other discussion.
So back to the point.
What is the track record for deliberate regional development programs actually achieving what they set out to do? Unfortunately, the evidence overwhelmingly indicates that politically-driven regional development programs rarely work.
Last year, the Grattan Institute had a look and came to the conclusion that this approach simply doesn’t work. It doesn’t work in Australia and it doesn’t work in other parts of the world. Its researchers said that regional planning still fails to “make economic water flow uphill”.
A commentary in The Weekend Australian at the time read:
“Administrative elites have always been convinced they know better than ordinary folk how cities must look and in which areas urban and regional development should take place.
“The fight between the lofty ambitions of planners and the cold hard reality of economics still rages. Politicians and planners still believe that they know better. Yet despite all their efforts they regularly fail to suspend the laws of geography and economics.”
The Grattan study estimated that Australian governments spend $2 billion of taxpayers’ money each year to promote regional economic growth – yet the results are consistently disappointing. If a factory or industry closes, and I am thinking of forestry here, local jobs markets do not recover any faster with structural adjustment assistance.
Politicians may get a warm inner glow from handing out publicly funded largesse and from short term commentary around the possible positive impacts that will flow from this funding – but we rarely see any analysis later of what the actual on-ground outcomes were. How many times have we heard of this or that project being awarded grant funds to create tens or even hundreds of jobs – but we rarely see a follow up report documenting what actually happened after the funds were expended.
Increasingly, the evidence shows this strategy results in a fragmented approach to regional development, and one which is dominated by the politics of regionalism rather than a systematic concern with addressing spatial inequalities and improving the quality of life of all Australians.
The Grattan research concluded that ad-hoc funding of regional growth programs has been an enormous waste of money and was not the solution. What is?
According to the Centre for Independent Studies, the answer is economic geography. In lay terms, that means doing what you are good at, doing what your geography and climate are suited to, doing what the population is comfortable with and is qualified to do.
In Tasmania, our obvious advantages are in agriculture – and forestry.
Some may argue that irrigation has been a form of regional development; but it is the farmers within these schemes who have made them the success they already are. Without them, without their considerable financial contribution, the schemes would not be built, and the economic benefits would not flow.
Farmers put their money in because they understand economic geography.
The moral of this story is that we need to stop looking for silver bullet solutions to complex problems, particularly when these are politically driven, and play to our natural strengths.
• Tasmanian farmers accuse governments of letting down exporters
Tasmanian farmers are outraged that $5.5 million of a $20 million special assistance package intended for local exporters has been diverted by the federal and Tasmanian governments. It was announced earlier today that $4 million will be used to improve port facilities at Burnie; and a further $1.5 million to establish a freight logistics co-ordination team.
“That money was never intended to be used to improve port infrastructure anywhere, or to set up yet another bureaucracy,” chief executive of the Tasmanian Farmers and Graziers Association Jan Davis said today. “It was meant to assist those Tasmanian businesses that were facing serious and ongoing disadvantages in export markets.”
She said the money was meant to offset the fact that Tasmania no longer has a direct overseas shipping link, the Port of Melbourne has hiked its charges and there is to be no carbon tax exemption for shipping fuel. These things all increase the disadvantage Tasmanian farmers (and other exporters) face as a result of our island isolation.
“How the two governments can say that spending this money on other matters addresses these immediate problems is beyond me,” Ms Davis said.
“Infrastructure improvements are clearly needed at Burnie, Bell Bay and Hobart. But these should be addressed through normal infrastructure funding processes, not from the very small sum allocated to address the continuing competitive disadvantages facing Tasmanian exporters.
“Department of Infrastructure officials told the Senate last night that they did not know how the $20 million was being dispersed, yet the next morning their minister, Anthony Albanese. announces the deal has been done and $4 million is being diverted to the port of Burnie, in the electorate of his colleague, Parliamentary Secretary for Agriculture, Sid Sidebottom.
“I know that the Tasmanian Freight Logistics Council shares farmers’ concerns,” Ms Davis said. “It is not good enough for Mr Albanese to say nobody should criticise money going to the port of Burnie to improve its facilities. That’s not the point and he knows it.
“We say that the entire $20 million special assistance package to exporters should be returned to the pool and be provided to those for whom it was intended. Furthermore, there needs to be rapid action to develop a plan going forward to address the impacts of the upcoming carbon tax on Tasmanian exporters.”
