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UTAS Conversations: Saul Eslake’s TCCI Tasmania Report 2016 paints clear picture of our economy

Professor Richard Ecclestone

We owe a small debt of gratitude to Saul Eslake in this new era of post-truth politics.

The second annual TCCI Tasmania Report provides a systematic and evidence-based assessment of Tasmania’s economic and social health, free from the spin and hyperbole which dominates contemporary political debate.

At times it’s a sobering read. Tasmania’s economic growth rate, at 1.6%, was only a little over half the national average and the second worst in the nation ahead of Queensland. Business investment has declined by over 7% over the year just gone and employment has fallen over the last 12 months with 4300 fewer Tasmanians in work than in September 2015 (although employment remains above mid-2013 lows).

The story at this point is depressingly familiar. Below average growth, employment and productivity result in output per capita which is $18,500 or 27% below the national average. Fortunately we are part of a federation which, unlike the United States, has a strong national welfare system and an equalisation regime between states which ensures Tasmanians have a much higher standard of living than would be otherwise be the case.

There are some bright spots. The state’s weak economic performance in 2015-16 can in part be explained by the drought and energy crisis of last summer, and as the rains return economic growth should follow. In Eslake’s words, it is reasonable to ‘expect that Tasmania’s economy will record a somewhat faster growth rate in the current financial year and 2017-18 than it did in 2015-16.’ Other sources of optimism include tourism, retail, agriculture and international education which underpinned a 20.2% increase in international exports. Clearly the Tasmanian economy is changing.

There has been much talk about Tasmania’s ‘two-speed economy’ with a Mona-fuelled Hobart powering ahead leaving the rest of the state in its wake. Interestingly, Eslake’s detailed regional analysis suggests that the North-West was the only region in the state where employment has increased over the past two years (3,900 net increase), while both employment and participation rates in greater Hobart have declined in recent times and are now below pre-financial crisis levels. Evidently public sector budget cuts are taking their toll.

However, as Eslake points out, our community is much more than economic metrics and the vast majority of Tasmanians who enjoy a reasonable standard of living have access to an enviable lifestyle and environment, which if nurtured and promoted has the potential to drive inward migration and much needed population growth.

Yet we can’t be complacent. Eslake’s analysis when combined with an increasingly volatile global outlook suggests that more ambitious leadership and reform is required if Tasmania is going to realise its potential.

What are some of the big ideas we should be considering?

Eslake has long argued that education is best path to prosperity in an increasingly volatile knowledge economy. While there is growing awareness of the education challenge Tasmania is facing and modest reforms are being implemented, as a community we need to be more ambitious. Structural reforms, such as fully integrating public colleges into existing high schools, will help but above all we need to work together to create an inclusive culture which promotes and celebrates education.

The state government has rightly developed a population strategy but, as Lisa Denny argues, now we need to implement and resource it as a priority. Tasmania is a safe, affordable, tolerant and inclusive community which has the potential to attract a wide range of migrants in an increasingly intolerant and polarised world. In terms of humanitarian migration, the generous welcome we offered the first intake of Syrian refugees this week shows what is possible.

A third strategy might focus on ramping up investment in new infrastructure to transform education, tourism and communities. Eslake argues that increasing public borrowing may be difficult given the state’s large (approaching $10 billion) unfunded superannuation, unless the state government has the courage to privatise assets. However, if the proceeds from selling government businesses were reinvested in an iconic project such as Mona’s Macquarie Point proposal it would be a case of privatisation with a purpose which may win the hearts and minds of a broad cross-section of Tasmanians.

It is evident that neither naïve optimism nor partisan sloganeering will resulting in a more prosperous and inclusive Tasmania. We need ambitious and collaborative leadership committed to practical action to address the long term social and economic challenges facing our island state.

The precise focus and form of the reforms required to achieve a better future for Tasmanians are open for debate. What is clear is that Saul Eslake’s TCCI Tasmania Report provides a measure against which policy proposals advanced before the next state election and beyond should be judged.

Professor Richard Eccleston is Director of the Institute for the Study of Social Change at the University of Tasmania

Published on: 19 Dec 2016 2:01pm