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TAS

May 18, 2012

Tassie budget: Lara's theme is austerity and the writing's on the wall

There is tangible despair in Hobbit Town today as the full impact of Premier Lara Giddings’ austere budget reveals itself, writes Bruce Montgomery, a freelance journalist in Hobart.

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There used to be graffiti scrawled on a wall in Hobart’s Liverpool Street. It read: “Gray Days in Hobbit Town”. It referred to the writer’s despair in left-leaning West Hobart at having Robin Gray as the then pugnacious, pro-development, cranes-in-the-sky Liberal premier. The only better example of local political graffiti I had read was when low-profile Frank Wilkes was opposition leader in Victoria. A graffiti artist commented on the side of an overpass in St Kilda: “Frank, the Ghost who Wilkes”.

There is tangible despair in Hobbit Town today as the full impact of Premier Lara Giddings’ austere budget reveals itself to those still reading newspapers. The state is going into deficit for the first time in eight years, falling further behind the other states, one fears.

Already the rich states, led by WA, complain bitterly at the deal Tasmania gets from federal GST revenues through horizontal fiscal equalisation (HFE). Under HFE, WA taxpayers get back 55% of the GST they pay while Tasmanian taxpayers get back 160%, reinforcing WA Premier Colin Barnett’s notion that the rich states are artificially supporting the “mendicant” states, notably, Tasmania.

One reads in the world news pages of the newspaper that Greece finds itself between a rock and a hard place as its European partners seek to impose austerity on the Greek economy while those tipped to win the next election there are resolved to ignore the threat of excommunication from the EU. Excommunication for Tasmania is not on the agenda; austerity is.

In the Gray Days in Hobbit Town of the 1980s there was no government reluctance to spend. That left the Labor government of Michael Field to fix the problem of overspending from 1989-1992.

Giddings comes from the Field school of budgetary responsibility, in which austerity is a necessary evil. It hits her government at a time when Labor is at its nadir, an unbelievable 17% popularity, no better than the Greens.

The first glow of the coming election, due in 2014, looms on the horizon. Giddings’ saving grace is that there is an undecided vote approaching 30%. Unless the Liberals, led by Will Hodgman, score at least 48% of the vote statewide at the poll, they are unlikely to win the election under Tasmania’s Hare-Clark voting system. Logic suggests the Liberals have to win 13 of the 25 seats outright; Labor and the Greens have only to win 13 between them.

The view of Tasmania from the mainland is probably schizophrenic. On the one hand, it is seen as the runt of the litter; on the other, it is a nirvana of arts, haute cuisine and some of the world’s best cool-climate wines. That is epitomised by the trade in Hobart’s leading restaurants; up to 80% of bookings at two them are from mainland visitors, here to eat and go to MONA, the Museum of Old and New Art.

So, these are two Tasmanias: the MONA Tasmania and the Tasmania where life is getting tougher, where unemployment is the nation’s highest, those on welfare are the most numerous per capita and where population health is a growing problem.

While Tasmania is a magnet for those who don’t live here, the locals are footing the austerity bill for economic survival through higher power charges, motor taxes and fewer public sector job opportunities while they wait for farmers, miners, niche producers and MONA to drive the economy now that forestry is all but dead.

A state of 500,000 people finds itself accumulating another $300 million in public sector debt this year, about the same next year and the hope, many see as forlorn, that the budget will go back into the black in 2013-14.

In her speech, Giddings said: “Despite the difficult challenges we currently face, Tasmanians have every reason to be optimistic and hopeful. We are in the right part of the world at the right time.”

“Right time” is stretching the imagination somewhat.

*Bruce Montgomery is a former Tasmanian correspondent of The Australian and adviser to Tasmanian Labor and federal coalition governments

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