Like most economists, I am a believer in competition and I abhor monopolies. And as Tasmanian, I regret as much as any other Tasmanian the indifference or contempt with which Tasmania’s economy is treated by most mainland-based commentators (in much the same way as Tasmania’s aspirations to play football at the highest level are treated with contempt by the AFL).
Hence I get mildly annoyed when I read journalists or others writing, as they so often do, that New South Wales or South Australia has the highest, lowest, fastest, or slowest value of some indicator for “any mainland State”, which in effect says that it’s actually Tasmania which has the highest, lowest, fastest, or slowest whatever, but for some reason the journalist concerned either doesn’t care or thinks Tasmania doesn’t count.
So, although I think it is incorrect to argue, as Greg Barns did in Crikey yesterday, that I have some kind of “monopoly” over analysis of the Tasmanian economy or the Tasmanian Government’s finances — Chris Richardson of Access Economics and Stephen Halmarick of Citigroup, to name two, also look in detail at Tasmania from time to time — I would be delighted to see other economists taking an informed interest in what is happening in Tasmania, and contributing to public debate about what is happening and what should happen. I wish there were more. I certainly don’t claim that I “get it right all the time” — about Tasmania’s economy or about anything else — and I take no exception to anyone (including Greg Barns) saying so.
I’m sure Greg Barns didn’t mean to suggest that my analyses of the Tasmanian economy, or of Tasmanian Government finances, have been in any way influenced by the fact that I’ve been appointed to a couple of board positions by the Tasmanian Government. But I would be disturbed to think that any readers of his comments yesterday were to draw that inference. Never, in some 30 years of commenting on Tasmanian affairs, have I ever been intimidated from saying what I thought needed to be said by the thought of how a Government might react. I’ve been called an “amateur pr–k” by a former Tasmanian Premier, and a “traitor to Tasmania” by others who have taken offence at things which I have said about particular policy decisions by previous Tasmanian Governments. I wear such epithets as a badge of honour.
Any reader of my commentaries on the Tasmanian economy, or on successive Tasmanian Budgets would be well aware that I have long sought to highlight Tasmania’s below average household incomes, Tasmania’s poor levels of productivity relative to other States, the below-average levels of educational participation and attainment by Tasmanian students and adults, and the consequences of the poor policy choices made by previous Tasmanian Governments.
I have also been critical of the historically poor levels of disclosure of important financial information in the Tasmanian State Budget Papers, information which has been readily available in the Budget Papers of other States; but, equally, I have been more than willing to give credit to the current Tasmanian Treasurer, and to Treasury officials, for the way in which they have responded to that criticism, by producing a set of Budget Papers which now rival those of Western Australia as the most complete and transparent of any State.
I have never supported assertions — by the current Tasmanian Government (if indeed they have made them, as Greg Barns asserts) or by anyone else — that Tasmania is “an economic powerhouse”. But I would seek to refute the assertion (which Greg Barns makes explicitly, and which Sinclair Davidson and Julie Novak make rather more obliquely) that Tasmania is “fundamentally an economic basket case”.
How can such an assertion be justified when Tasmania’s per capita economic growth rate has so far this decade exceeded the national average by almost 0.5 of a percentage point per annum, equalled that of Queensland and exceeded that of every other State or Territory except Western Australia — a fact which Sinclair Davidson and Julie Novak completely ignore? That is what I meant when I said, on the ABC’s Stateline program last Friday, that the only way Davidson and Novak could have justified the assertions which they made in their report for the Tasmanian Chamber of Commerce and Industry was “by holding the charts upside down”. Stateline edited out my more detailed dissection of the figures, which is their right (it hardly makes riveting viewing), but I readily stand by my intentionally colourful summation of their work.
How can such an assertion be justified when, as highlighted by the labour force figures released yesterday, Tasmania’s trend unemployment rate is 0.6 of a percentage point below the national average, and lower than any other State except Queensland and WA? (Again something which Davidson and Novak do not refer to at all.) And while it is true that Tasmania has historically had a labour force participation rate well below the national average, and hence a higher level of “hidden unemployment” than other States, how can anyone who asserts that Tasmania is “a basket case” ignore the fact that Tasmania’s trend participation rate is now higher than South Australia’s, having risen by 3.6 percentage points over the past two years, during which the national average participation rate has risen by only 0.5 percentage points?
How can the assertion that Tasmania is a “basket case” be justified when, according to the most recent round of State Budgets, Tasmania will by 2011-12 have, on every indicator except unfunded superannuation liabilities, the strongest general government financial position of any State or Territory (again an aspect to which Davidson and Novak make absolutely no reference at all)?
Surely, if any State deserves the label “basket case”, it is New South Wales, not Tasmania.
Davidson’s and Novak’s report displays a woeful ignorance of the processes by which the Commonwealth Grants Commission arrives at its recommendations for the distribution of GST revenues among the States and Territories. Up to a point, perhaps, they can be excused for that — those processes are understood by very few, outside of State Treasuries and the Grants Commission itself.
But for a report which — at the very least implicitly — lends support to the arguments repeatedly put by the NSW and Victorian Treasuries for the abandonment of those processes in favour of an equal per capita distribution of GST revenues, something which would have a massive negative impact on the Tasmanian Government’s budgetary position, it is surely not unreasonable to have expected Davidson and Novak to have put some effort into understanding them.
Instead, they continue to assert that Tasmania is “over-taxed” — even though the only table which they present in their report actually shows that, using the Grants Commission’s methodology, Tasmania’s State tax burden is 4.5% below the average for all States and Territories. That’s something which would be totally unsustainable if the present basis for distributing GST revenues among the States and Territories were to be materially altered.
The Tasmanian Chamber of Commerce and Industry has been an important contributor to debates about Tasmania’s economic performance and prospects, and a source of constructive suggestions as to what might be done to improve those prospects over time. Their objective in commissioning the Davidson-Novak report, as a spark for further debate, was an entirely worthy one. They were hoping, I am sure, for an incisive, rigorously researched analysis which highlighted the ways in which Tasmania still lagged behind other States, and national averages, but which also acknowledged that in many fields.
Tasmania has been making at least some progress over the past decade. Sadly, what they got was a regurgitation of the views expressed by another associate of the Institute of Public Affairs five years ago, which was barely accurate then and is even less so in 2008.
It was, as I said on Stateline last Friday and I say again now, a “shoddy piece of work”. With all due respect to Greg Barns, that’s not a “dummy spit”; it’s fair comment.