Economic Future of Tasmania is Up For Grabs

Latest figures from the Australian Bureau of Statistics show that Tasmania now has the second highest unemployment rate in Australia. Of even more concern is the state’s slow growth in replacing jobs shed during the pandemic – September quarter labour statistics show the state’s unemployment rate rose 1.3% last month, twice the rate of any other state in Australia – including Victoria.

New research by the Australia Institute’s Centre for Future Work analyses the economic effects of COVID-19 on Tasmania, and suggests how Tasmania can ‘build back better’ out of the COVID-19 crisis, making key recommendations to help Tasmania avoid the mistakes made at the Federal level. Ahead of Tasmania’s state Budget, set to be delivered on 12 November 2020, the Centre for Future Work has explored what the shape of Tasmania’s economy could look like, and how it can overcome its geographical difficulties and previous policy failures.

Key findings

• Tasmania’s state public sector is the largest employer in the state, employing almost 32,000 people as of June 2020
• The State Government committed in its stimulus plans to building 1000 new social housing units, however, there are 3373 applications on the social housing register as of June 2020. The social housing investment needs to be expanded
• While the Tasmanian Government’s fiscal response to the COVID-19 crisis was substantial, over a longer period, Tasmania’s economic development has been limited by political decisions made both within and beyond Tasmania
• Tasmania has key strengths such as an abundance of renewable energy and a vibrant arts sector which should be capitalised on in the post-COVID reconstruction
• The report recommends:
  • the Tasmanian Government make a larger investment in public housing
  • the State Government also expand public sector investment into the health, aged and disability care sectors
  • outsourced public sector functions should be returned to direct provision by Government wherever possible, to improve cost, accountability and quality
    • Doing so will also provide the State Government with a lever to improve wages and conditions across the economy, especially in sectors dominated by women
  • the State Government should also support and co-invest in several strategic industries, including manufacturing and renewable manufacturing, tourism and hospitality, arts and entertainment, food production, and higher education.

“Tasmania should not replicate the mistake that the Federal Government is making in withdrawing effective stimulus dangerously quickly. Austerity in any form would be a backwards step, mute Tasmania’s economic recovery, and needlessly waste human potential. Now is the time to invest—the cost of borrowing for government will remain at historically low levels for some time to come,” said Dan Nahum, economist at the Australia Institute’s Centre for Future Work.

“On a range of measures, the Tasmanian labour market is more precarious than most of Australia’s, which makes a proactive, decisive, and ongoing fiscal response to the downturn all the more important. Given the important role the household sector plays in the Tasmanian economy, the State Government must target household demand in its reconstruction effort.”

“Tasmania can build a more resilient, diverse, and equitable economy than the one that existed before COVID-19,” Nahum said.

“It is time for Tasmania to move from an emergency response to a reconstruction stage. The State Government is ideally placed to play a hands-on, leading role in job creation, investment and income generation. It will need to borrow to do so, but this should be celebrated, not feared – now is the ideal time to borrow to make a public investment in Tasmania’s economic and social future,” said Jessica Munday, Secretary of Unions Tasmania.

“Workers have told us they support investment in public services, a multi-faceted recovery plan and job creation in new industries with well paid, secure jobs at the centre. Tasmania is well-placed to push itself forward into the next stage of its economic development. Otherwise, it could spiral into depression that will take more years than necessary from which to recover,” Munday said.

See the full report here.