The Parlous State

Treasurer Wayne Swann

• David Obendorf: Tasmania: ‘basket case’ in State of the State report April 2013

The Tasmanian economy is in such trouble that the state has been ranked the lowest in the country in all but one area of the latest State of the State’s assessment of the nation’s economy.

Tasmania has the nation’s lowest population growth, economic growth and retail spending.

The economies of the states and territories were assessed on eight key indicators and Tasmania ranks last in all but one area.

Savanth Sabastian, CommSec Economist: [i]‘South Australia and Tasmania are really finding conditions difficult. Especially Tasmania where weaknesses are quite paramount across the differing indicators with economic growth going backwards. The one area of strength for Taswegians which is the pick-up in real wage growth and housing affordability which is relatively solid and have seen a modest increase in house prices.’[/i]

http://www.investing.commsec.com.au/media/114450/e130422.pdf

The stand-out result is that two economies are out-performing: Western Australia and the Northern Territory. And two economies are under-performing: Tasmania and South Australia. Arguably the size of the gap between Western Australia and Tasmania can’t get any greater.

Tasmania remains locked at the bottom of the Australian economic performance table. Tasmania lags all other economies on seven of the eight indicators and is second weakest on the other indicator. A joint effort is required from the Federal and State governments to lift the performance of the economy.

[b]Economic growth[/b]: At the other end of the scale, economic activity in Tasmania in the December quarter was just 3.4 per cent above its decade average while South Australian activity was up almost 10 per cent on its “normal” or average output over the past decade. Northern Territory and Western Australia are growing at 44% and 37% respectively of their decade-level of output.

The weakest trend economic growth rate was recorded in Tasmania (-3.3%) followed by South Australia (-1.2%) and Victoria (0.2%).

[b]Retail Trade[/b]: Tasmania has the weakest result on retail spending, up just 1.4% on the decade average, below South Australia with growth of 7.4%.

[b]Equipment Investment[/b]: Equipment spending in South Australia was 2.0% above its decade-average while Tasmania had business investment 1.3% above its longer-term average in the December quarter.

[b]Unemployment[/b]: In Tasmania where the trend jobless rate is the highest in the nation at 21.3% above its decade average.

[b]Construction work[/b]: In terms of annual growth rates, NSW is second to the Northern Territory, up 13.1% on a year ago, followed by Tasmania (up 9.3%), Queensland (up 8.7%) and Western Australia (up 7.9%) over the year.

[b]Population Growth[/b]: At the other end of the leader-board is Tasmania where the annual population growth of 0.11% is the weakest in over 11 years and a massive 87% below the decade average rate of 0.80%.

[b]Housing Finance[/b]: Tasmania is the weakest economy for housing finance with trend commitments 32.0% lower than its decade average, but encouragingly commitments were only 0.4 per cent lower than a year ago. Next weakest was South Australia with trend commitments down 25.7% on the decade average.

[b]Dwelling starts[/b]: At the other end of the scale, Tasmanian dwelling starts were 31.8% below decade averages, while starts in the December quarter were 20% down on a year earlier.

[b]Other Indicators[/b]: Real wages were positive in all economies in the December quarter. Strongest growth occurred in the ACT (2.6%). Next strongest real wage growth was in Tasmania at 2.3%, followed by Western Australia (2.2%).

Encouragingly Taswegians are benefitting from higher real wage growth and improving housing affordability. Further, home prices have lifted solidly in four of the past five months, boosting wealth levels and potentially retail spending in coming months.

Craig James, Senior Economist with CommSec: [i]‘The Aussie dollar is high which is bad news for the manufacturing sector, bad news for the tourism sector and also for the export sector for agriculture, so there’s not too much else in Tasmania’s favour. And the problem is when you do have substandard economic performance compared with the other states then businesses are more reluctant to come to Tasmania.’[/i]

• Deloitte Business Outlook Extract: Tasmania’s economy is struggling – population growth has stalled, jobs are being lost, and baby boomers are retiring, with that mix leaving the demand for and supply of workers all too weak. Lower interest rates will help retail, but it may be a long year for Tasmania’s businesses.

• Christine Milne: Revenue collapse means mining tax must be fixed

The Grattan Institute report released last night shows that if Australia is to avoid a national revenue crisis the Gillard Government must fix the mining tax immediately and stop handing over billions in fossil fuel subsidies to Australia’s biggest and wealthiest mining companies.

“Labor needs to come clean on why it won’t fix the mining tax and why it is handing over billions of dollars in fossil fuel subsidies to people like Gina Rinehart and Clive Palmer when we are facing both ongoing deficits and a national revenue collapse,” Australian Greens Leader Senator Christine Milne said.

“Closing the loopholes in the mining tax and scrapping $13.8 billion in fossil fuel subsidies would help fund important initiatives like the Gonski school funding reforms and the National Disability Insurance Scheme.

“Clearly, Labor does not have the courage to take on the big mining companies, particularly in an election year.

“The Greens are the only party who have put costed revenue raising proposals on the table that would boost government coffers by tens of billions of dollars.

“The Grattan Institute supports what the Greens have been saying for a long time – that the accelerated depreciation rate for mining companies is sucking billions out of the budget that should be going to single parents, public schools and health care.

“Julia Gillard and Tony Abbott cannot afford to keep squandering the benefits of the resources boom while single parents are struggling to survive and our schools miss out.

“Just as the Greens have said, the report shows a race to a budget surplus is poor economic management and cutting government services is not the best way back to a balanced budget.

“The report also exposes the Coalition’s fiscally reckless economic management with Tony Abbott proposing to burn a $11 billion hole in the budget by 2020 with uncosted policies such as paid parental leave and Direct Action, while abolishing effective and important revenue raising measures such as the mining tax and carbon price.

“The Grattan Institute says that fixing the budget will require more tax, increased savings and some tough political choices.

“So my question to the Prime Minister and Tony Abbott is – do we keep giving billions of dollars in tax concessions to big mining companies or is it time to help Australians by funding better education, improved healthcare and lifting people out of poverty?

“Only the Greens can be trusted to stand up to the big mining companies and deliver revenue-raising measures that won’t hurt Australia’s most vulnerable.

“This report also shows that you need the Greens in the balance of power to stop Tony Abbott’s wrecking ball economics.”

• ABC: Tasmania bottom of the economic pile

• Christine Milne press conference – Audio

Australian Greens Leader Senator Christine Milne held a press conference in Hobart today (Mon) to call on the Gillard Government to fix the mining tax and scrap the multi-billion dollar fossil fuel subsidies to big mining companies to help ease Australia’s looming national revenue collapse, which was highlighted in the Grattan Institute report released last night.

Christine Milne also answered questions on other issues of the day, including the Gonski school funding reforms, the Tasmanian economy, the possibility that children may be detained in the Curtin immigration detention centre, speculation that John Howard could be appointed Governor General, and Christopher Pyne’s suggestion that the Coalition would change the national history curriculum if elected.

Please follow link for audio:

http://greensmps.org.au/content/audio/christine-milne-press-conference-grattan-institute-report

• The Grattan Report, Download Here

• Gravelly Beach evacuation timely reminder of pulp mill danger to public health