Et in Arcadia ego: Tasmania’s rotten economic apple
Oct 04, 2012 12:10PM |EMAIL|PRINT
Most bank managers will tell you that before they can help you, you should get your mind and your house in order. That’s the challenge facing Tasmania.
Imagine: you visit your bank manager to explain you would like a loan to continue to run the family farm but you have chosen to excise half of your land and forests for their intrinsic biological values. That, of course, impacts your ability to develop fully the business potential of your property so you are only earning half what you might. As a result you have a fantastic lifestyle, many want to come and stay at your place for the weekend (but not forever) and play in your forests, you’re as poor as a church mouse and you’re getting deeper in debt.
The manager tells you that your loan interest rate will have to go up substantially unless you maximise the potential of your property to run the business profitably. ”I might like to do that,” you respond, “but I own the property in partnership with some colleagues who actually want to lock more of it up.”
The bank manager, Moody’s, downgrades your creditworthiness and you have to pay more for your loan. Another bank manager, Standard & Poor’s, offers the same rate. It’s higher than the neighbouring farms have to pay, but then they are running real businesses.
This is the position in which Tasmania finds itself today. The Giddings government, reliant on the Greens for its survival, gives every impression of trying to run the state like a commune and the banks are jacking up, the credit rating agencies are jacking up and the neighbours, the other states in the federation, shake their heads.
They are disbelieving because, through the Grants Commission’s repayment to the states of GST collected, they underwrite the budget of the commune.
Under the concept of horizontal fiscal equalisation, which means an equal share for equal effort, the Tasmanian government receives 160% of the GST that Tasmanians pay. About $1.8 billion a year, it forms about 30% of the state budget. Meanwhile WA gets back only 55% of the GST that its taxpayers fork out in GST. WA and Queensland lead the rich states’ campaign to end the subsidised lifestyle in the Tasmanian mendicant commune.
TheAustralian, in its editorials back to the days when Frank Devine was its editor, describes Tasmania as Arcadia, a reference to a wilderness region in Greece, with quite deliberate overtones of fairies, glades, streams and waterfalls, a lack of reality and Nicolas Poussin’s depiction of simple life, Et in Arcadia ego.
In a recent editorial, TheSydney Morning Herald took a different view, posing the question whether Tasmania is, in fact, Australia’s version of Greece in the federation, non-performing and in danger of going belly up.
Meanwhile, the government here concerns itself with matters of greater moment to the commune, matters such as same-s-x marriage, doomed to defeat if not declared unconstitutional by the High Court. It was only ever a distraction, a diversion, from the more important matters at hand.
TheAustralian’s George Megalogenis has been the latest of a string of sages to visit the island in recent times to pore over the same entrails as Moody’s did to diagnose the problem, if not to offer a cure.
Megalogenis brought the news that Tasmania is, effectively, a culture removed from the rest of the nation. Where about 26% of today’s Australians were born overseas, the Tasmanian figure is 13%; where nearly half of Australian families had at least one parent born overseas, the Tasmanian figure is half that. Unlike the rest of Australia, the British still form the greatest migrant component on the island. We are not getting fresh blood and therefore fresh ideas.
If you sense I am coming to a conclusion that Tasmania has to start pulling its weight, you are wrong. Rather, Tasmania has to work out its identity, what its future is. If it wants to continue to appeal as an Arcadian wonderland where industrial development, mining and forestry are deterred rather than encouraged, but where it can well be argued that here is how life was meant to be, then it must be prepared to pay the cost of having this lifestyle. The other states will not continue to subsidise it and the banks and credit rating agencies will increase the relative cost of money here. Tasmanians will have to do it for themselves.
If they do want to change, a fundamental issue is whether the electoral system that delivered the partnership that runs the commune is sustainable in the 21st century. Most say Hare-Clark has had its day, that it was not intended for three-party systems, that it will regularly deliver hung parliaments that give undue prominence to minorities holding the balance of power.
That is simplistic. Hare-Clark is the world’s most democratic voting system. If voters can see harm in hung parliaments it is within their power to ensure that an election does not return hung parliaments. The only problem with Hare-Clark at the moment is that 25 members in the house of government is too few. Cabinet government does not work without a backbench. A House of Assembly of 35 has to be reinstated after the 2014 election.
Most bank managers will tell you that before they can help you, you should get your mind and your house in order. It’s not happening here yet.
*Bruce Montgomery, formerly with The Australian, is a freelance journalist in Hobart