TASSIE’S GOLDEN YEAR

State storms ahead as business booms

TASMANIA’S economy has ended the financial year in the best shape it’s been in for more than a decade.

The state’s economy is growing faster than the national average for the first time since 2008-2009, driven by a record surge in business investment plus population growth.

Treasurer Peter Gutwein said Tasmania had become the “hottest place on the planet” and now more than a beautiful place to live.

TASMANIA’S economy is in great shape, with some financial indicators the best they have been in more than a decade but our ageing demographic continues to take the shine off otherwise “golden times”.

Leading economist Saul Eslake, who has crunched Tasmania’s vital numbers for the Mercury, says if gross state product estimates prove correct the state’s economy will be growing faster than the national average for the first time since 2008-2009.

Treasury has estimated that Tasmania’s real GSP will grow by 3.5 per cent this calendar year, its best performance in 15 years.

Driving that growth is a 16.7 per cent real increase in business investment over the year to the March quarter.

The state’s population is growing, house prices and rents are going through the roof and business confidence is now higher than any other state except NSW.

Mr Eslake’s findings back Treasurer Peter Gutwein’s bullish post-budget statement last month that Tasmania was entering a “golden age”.

Mr Gutwein yesterday said Tasmania had become the “hottest place on the planet” and was now much more than a beautiful place to live.

He said a stronger economy meant Australia’s island state had the jobs and opportunities needed to retain its younger residents but also to bring others in.

But Mr Eslake said Tasmania needed to do more to take advantage of the good conditions to cushion itself from future shocks.

He said the latest financial numbers painted a rosy picture and the State Government was entitled to claim some credit for it.

“But we remain the poorest state in the country by a wide margin,” he said.

“That’s largely because our demographics are so awful … the rising proportion of our population who are over 65 is putting relentless and remorseless downward pressure on our employment-to-population ratio, which is one of the three main determinants of the difference in [material] living standards.”

He said poor demographics also contributed to the rising share of part-time rather than full-time jobs.

“So we have to peddle faster than the rest of the country on indicators like employment growth, housing approvals, retail sales and exports, merely in order to ‘stand still’ in terms of relative living standards,” Mr Eslake said.

“My main worry is that we’re not making as much of this period of comparatively good economic performance [by historical standards] to undertake more wide-ranging economic and social reforms to increase Tasmania’s resilience to future shocks, such as any changes to its GST revenue arrangements, and to set the state up for sustained faster economic growth over the longer term.

“Tasmania needs a government with a mandate to do more than simply ‘mind the store’, no matter how competently they are ‘ managing the store’.”

Mr Gutwein challenged Mr Eslake’s assessment, saying the State Government was not just “minding the store”.

“We are in fact building the supermarket,” Mr Gutwein said. “We are also driving reform in the education sector, with the extension of high schools to Year 12, in the health system where we now have one state body and we are reforming the payroll system.”

Labor MP Josh Willie said the Government could not take all the credit for the stronger economic indicators, saying economics conditions were also better on a national and global scale.

“There is a lot more to do. The Government needs to increase affordable housing, reduce youth unemployment and galvanise job pathways from school to industry,” Mr Willie said.

Visitor numbers to Tasmania in the year ending in March were up two per cent to a record 1.28 million while spending by those visitors rose by seven per cent. But Mr Eslake said the tourism growth rate appeared to be slowing.

Business confidence is higher than at any time since the Global Financial Crisis and higher than in any other state or territory except NSW.

Population growth rate has picked up to just over 0.9 per cent during the 2017-18 financial year (latest figures are for the end of March) – the strongest since March 2010.

The population is now growing at a faster rate than either SA (0.6 per cent), WA (0.8 per cent) or the NT (0.2 per cent). Net interstate migration to Tasmania is now running at its strongest level (almost 1900 per annum) since 2003-04, while net overseas migration to Tasmania has been running at over 2000 pa since 2016.

Mr Eslake said a lack of political will to “bite the bullet” on Tasmania’s failed college sys- tem will cause a lot of money to be wasted which could be spent in better ways.

“The Government is certainly getting two important things right – extending all high schools to Year 12 and increasing spending on productive infrastructure,” Mr Eslake said.

Residential property prices in Hobart have risen by 12.7 per cent over the 12 months to May – the best result for any state or territory capital.

“The downside of this buoyant property market performance is of course that rents have risen sharply,” Mr Eslake said.

Hobart is now the least affordable city for low-income rental households of any in Australia.

Mr Willie said the public housing waiting list had blown out to an average of 72 weeks, with many of those waiting for an affordable place to live on the high priority list.