Oct 4, 2012

Et in Arcadia ego: Tasmania’s rotten economic apple

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. The Australian, 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, The Sydney 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. The Australian’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

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9 thoughts on “Et in Arcadia ego: Tasmania’s rotten economic apple

  1. klewso

    Who and why cut it back from 35 to 25 – reaping this sort of “reward for effort”?
    The major parties – trying to marginalise the little bloke?

  2. John Bennetts

    OK, now that you have trotted out the percentage of remaining forest that Moodies or whoever demand that Tas opens to the plow, how about giving us another figure?

    How much of the ORIGINAL forest lands in Tasmania remain as forest? And, how much of that is still old growth, ie not regrowth and certainly not private woodlot?

    To say that a percentage of the remaining forest must be cut down is to propose the death of a thousand cuts, as year after year a percentage of the remaining stock is done away with.

    For comparison purposes, I suggest that you also quote the equivalent percentages of Australia’s ten largest trading partners. One of these is Japan, about which I have seen written that 100% of the original forest area remains forested, due to a strict policy of forest replacement. I may well be wrong in this, so I invite correction.

    Come on, Mr Bruce Montgomery. Give us the necessary perspective, before recommending that we start blindly chopping. My guess is that only 25% or 30% of the original forests remain.

    Do you recommend that we should stop cutting at 15%?


    Who should decide? Moodies?

  3. David R

    Increasing the number of lower house seats from 25 to 35 would be a useful reform. However, I think it would be better to reform the upper house which operates on some weird electoral cycle with mostly independent members.

  4. zut alors

    Banks fail to grasp the concept that a protected tree can have value beyond money.

  5. Robert Brown

    Hopefully the author isn’t suggesting that we (Tasmanians, Australians) value things in the world same as ratings agencies do?!?!? That would be a terrible world to live in!

    Isn’t it possible to get Tassie’s wonderful wilderness areas “onto the balance sheet” is some acceptable manner? And for the matter, the rest of Australia too.

  6. klewso

    So may things seem to have greater value “dead”?

  7. AR

    If Tas achieves nothing else, retaining GM status will serve it well for generations to come. In the meantime, half a million people on rich island with moderate climate about the size of Ireland could easily become self sufficient if they adopt, early & voluntarily the less wasteful & energy intensive lifestyle that will become the norm within a generation.

  8. dirt armature

    The choice posed by Bruce Montgomery is between a Green arcadia and a mining, agricultural amd forestry industrial economy. False dichotomy. Why can’t we have a Green industrial economy?

  9. Kevin Tyerman

    Yeah, who needs the environment when you’ve got a farm…. oh, umm, wait!

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