Mar 13, 2018

What can we learn from Tasmania’s surprise economic boom?

The success of Tasmania's economy, which has turned around from being one Australia's least impressive, could be self-perpetuating if state and federal governments can find a way not to screw it up.

Jason Murphy — Journalist and economist

Jason Murphy

Journalist and economist

I must confess to a mistake. A few years ago I wrote a couple of stories about Tasmania. They were negative — inflammatory even.

“Tasmania is struggling to keep up,” I wrote in 2013, before suggesting we kick them out of Australia’s currency union for their own good. “It’s clear Tasmania needs a kick up the bum,” I said.

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11 thoughts on “What can we learn from Tasmania’s surprise economic boom?

  1. DF

    A visit by Xi Jinping has been pretty useful in flogging Tassie to Chinese tourists, as will be the soon-to-be-scheduled direct flights from Hong Kong. Already the airport terminal has been upgraded, although they still make the punters disembark into the elements with no skybridges.

  2. Alex

    Some population growth demographics would help enormously to understand Tasmania’s situation. Jason wrote, “If Tasmania has figured out the recipe to turn a sluggish economy around, we need to know what it is.” and “If this is the explanation [cheap housing] then the trick Tasmania is pulling is one Australia is already trying: immigration.” What Jason seems to be saying is that Tasmania’s ‘trick’ was to make it a place that no younger locals wanted to live thus driving down property prices and driving up unemployment (don’t mention education levels). The less dense population levels, beautiful natural attractions and cheaper housing makes it a perfect place for retirees who want a quieter life; I know of plenty who have made, or are thinking of making, the move (and it will cheer-up Bernard who thinks they are “corrupt” because they live near the big cities). If the population growth and economic upturn is due, to a significant level, to retirees moving there then it is a very different phenomenon to the short sighted economic argument for international migration. If the trend continues Tasmania will, in time, become like many small mainland coastal communities which have been loved to death. The reason for moving there will be destroyed and we are back to square one only with a significantly damaged natural environment.

  3. citizen k

    Actually the most important thing Tassie has to do is to protect its assets – especially its wilderness areas and its built heritage – from over development. As is the case on the mainland, planning laws have changed in favour of developers, who are threatening the natural environment and the very quality of life that attracts tourists and tree changers alike. Oh – and building public housing for Tasmanians who have been displaced by rising house prices and rents is pretty essential too. Though the tourists won’t see them, there are people camping at the showgrounds for want of proper housing.

    1. mary wood

      Yes we hear reports that the economy is doing well, but is it? As stated housing for renters and young people is not available – surely housing is a human necessity, and should not be a casino. Then there is the total lack of investment in infrastructure – a drive to work from where I live beyond the airport (only about 20 k from the CBD) is now like the traffic in Melbourne from which I fled – there is no public transport, apart from an infrequent and expensive bus service. The education and health systems are in crisis, due to zero planning or investment. The tourist boom owes far more to the MONA effect than any government policy, and even then the politicians are incapable of delivering necessary infrastructure to upgrade dangerous narrow roads or accommodation. Sewage and water are non-existent in many areas – we rely on tanks, so when the electricity supply is interrupted you cannot even get a glass of water as there is no power to pump water from the tank. I see no evidence of a desire to tackle any of these issues. Politics is corrupt – no further evidence needed than the recent election which was won by Federal Hotels and other gambling interests.

  4. Max

    It’s only booming for some. Wages remain low, much more so toward the bottom end of the job market, while housing is experiencing unprecedented price growth. The rental market has contracted to 0.1% vacancy in some suburbs, people are seeing 25%, 30% price rises or simply non-renewal in favour of AirBNB (I’ve seen streets with 1 in 3 homes turned short term rental; an unassuming working class outer suburb has seen 94% growth in STRs year on year). Families are sleeping in tents at the Showgrounds caravan park in Hobart because there are literally no rental properties available. The influx of no-risk late career professionals with significant financial mobility has more or less collapsed the job market in many professions. All up for many people the situation has become a blazing inferno of insercure and under-employment, insecure housing and economic alienation from the very forces so lauded for the state’s transformation.
    The present government’s best economic action in office for the last term was its near complete lack of action. The state is riding on a global lift after the storms of the post-GFC recessions receded, and any one economic shock internationally could very easily bug-splat the recovering economy.

  5. AR

    I blame Rosehaven.
    Another series will be fatal to the Merkin Isle.

  6. CamCam

    Jason you say there have been great improvements in Tassie since you suggested they needed a kick up the backside five years ago. You mentioned a Boom. What boom? In Jan 2013 there were 151,300 in full time employment. In Jan 2018 there were 152,600. Hardly a boom? Tassie still has the lowest Employment to Population ratio of any state at 57.1 %.
    They still have the lowest median value housing of any state; 39% less than the national average, and they still have the lowest median earnings of any state. Don’t get me wrong, I love Tassie and Australia does need to protect its natural beauty. It is currently being subsidised in almost every way. With the Freight Equalization scheme, the rest of Australia pays to reduce the real cost of doing business in Tassie. The GST is the rest of Australia paying Tassie not to dig anything up. Lets face it, WA has 10.9% of Australia’s population and gets exactly the same amount of National GST $ as Tassie does with 2.1% of the population. That’s $878 for every person in WA to $4,601 for every person in Tassie! For every $ in GST Tassie generates, it gets $1.80. For every $ WA generates, it gets 34 cents. GST receipts represent about 43 per cent of Tasmanian government revenue. They cant take the moral high ground when claiming they are the only state in Oz that is carbon negative, when they survive off the GST from mining States. It is only right that the rest of Australia support Tassie. I’m happy to dig up WA and Qld in order to preserve the Tasmanian wilderness. Lets just be honest about it.

    1. mikeb

      WA has the benefit of being huge with lots of open areas that are available for mining. It’s only through circumstances that Western Australia got all that land when theoretically it could have been carved up into smaller packages. Ditto with Queensland. How would the package be if an area the size of Tassie surrounding Perth was declared a “state”. That’s why we are a COMMONWEALTH of Australia.

      1. CamCam

        Mikeb your right. But Tassie gets the same number of dollars as WA gets. Almost identical. WA has 1/3 of the landmass if Australia to service with 10.9% of the population. Tassie gets the same $ with only 2.2% of the population and a much smaller area to service. Where is the fairness in that.

  7. jmendelssohn

    Having both Hobart and Launceston are a strength, not a problem. It means people can live in cities on a human scale. One big issue that needs to be addressed is public transport. Once there was a flourishing rail network, now axed. It needs to be restored. The other issue is education. The University of Tasmania is going gangbusters, but there aren’t enough high schools (or a culture of children completing high school).

  8. mikeb

    Living in a “prestige” area that is being filled up by refugees from Sydney soaking up the airbnb bonanza I can verify some of this. Investors are paying over the odds for properties and pricing local people (especially young people) out. This is all very good for cashed up investors but the gap between rich and poor is accelerating at an alarming rate. Just google “Families forced to live in tents at Hobart Showgrounds” because rents are the highest in the county. That’s not an “economic boom”, that’s a travesty.

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