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.

I am pleased to announce that Tasmania has since applied that kick to itself. Radical measures were not required. In fact, the Tasmania story is a thing of beauty. It’s a redemption tale the equal of anything you might see in the cinema. In 2013 Tasmania’s economy was a disgrace. It had the worst unemployment in the nation, at 8%. Since then, the Apple Isle has got its act together. It overtook the mining states as they slumped, and more recently it pipped Victoria too.

Tasmanian employment is now second to NSW alone.

This is not the only sign of economic strength.

  • Housing prices are growing more strongly in Hobart than anywhere else in the nation, at 17.3% over the year.
  • State final demand grew at 1.3% in the most recent quarter. Best of all the states and pipped only by the ACT.
  • The number of businesses in operation in Tasmania was shrinking as recently as 2015. In 2017 that number grew by 1.8%.
  • Average total earnings are rising consistently after several years of wavering.

If Tasmania has figured out the recipe to turn a sluggish economy around, we need to know what it is. The rest of the country could use it. The Tasmanian government will want to take credit for what has happened, and so will MONA. But the answer could well be something else. What we see in the last few years is that Tasmania turned around its population problems. Instead of seeing people trickle out, there is now net inflow of Australians moving to Tassie.

House prices are a possible explanation for this flow of people. The median dwelling price in Tasmania is the lowest in the country at $370,000. You can still pick up a large and beautiful heritage home in Hobart for under a million dollars. You can buy an ornate gothic mansion pretty reasonably too. If the choice is between living on Sydney’s far western fringe or ten minutes from town in Hobart, I can see why people might be keen to move.

If this is the explanation then the trick Tasmania is pulling is one Australia is already trying: immigration. Australia uses its wiles to attract people and prop up the economy, and Tasmania is doing the same, using what it offers best, which is affordable real estate.

Tasmania’s problem has long been a sense of decay and decline. Falling population, falling government revenue and falling GST share all buttressed each other. A booming Tassie comes with optimism that can, if the federal and state governments don’t screw it up, be self-perpetuating.

Tasmania has a couple of things it should do to keep the party going. Foremost is to get a bigger slice of Australia’s booming international tourism market. International visitation to Tasmania is barely ahead of the ACT. For such a beautiful state blessed with World Heritage Areas, this must change. One suggestion would be to reduce reliance on that slow and expensive passenger ship and instead encourage more passenger flights, more cheaply. International visitors don’t bring their own cars anyway and they are the growth market.

The second thing for Tasmania to do is put all its eggs in one basket. No other Australian state has two comparatively large cities as Tasmania does with Launceston and Hobart. With cities, scale matters, and modern services economies are driven by cities of scale. Politics means Tasmania can’t ignore its south at the expense of its north, or vice-versa. But imagine how broken SA would be if Woomera and Adelaide had half the population each. A big advantage of MONA has been to clearly mark Hobart as Tassie’s vital epicentre. Betting more on Hobart won’t hurt.

So, Tasmania, I apologise for being so rude five years ago. You had more guts and pluck than I expected. Tasmania has a huge future, not least as one of Australia’s most temperate places in an era of climate change. Here’s to more success in future.

Peter Fray

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