Post pandemic recovery is strong but

Damien Bones and Hamish Burrell say Tasmania’s economy is tracking well but there are some challenges ahead

THE pandemic has been a challenging time for Tasmanians. Jobs were lost and the state’s growth sectors were thrown into turmoil. But our economy has recovered remarkably thanks to strong virus control and effective government support.

How remarkably? We estimate Tassie’s economy is already 9 per cent larger than it was pre-pandemic. That’s better than any other state or territory, with 2021 having the fastest economic growth our state has recorded.

But it’s not all plain sailing. New year, new challenges, with a surge in Covid cases hitting spending by families and the confidence of businesses. And like the rest of the country, the conversation has turned to the cost of living.

Tasmania’s higher-thanaverage import share of fuel and materials has resulted in a steep jump in the price we pay for some key essentials. Coupled with still buoyant house prices and a tight rental market, price pressures will continue.

Yet there’s still plenty of good news. Booming commodity prices continue to provide the state with export windfalls, while our job levels remain near record highs. Even better, the underemployment rate (those workers who would like to work more hours) sits near a decade low.

But our momentum may run out of steam. After the initial Omicron rebound, we expect gains in living standards and in jobs to trail the national average over the next few years.

The reason? Tasmania has a range of structural issues that haven’t gone away – and tackling these remains key to unlocking Tasmania’s real potential.

Federal Treasury notes that an economy’s potential depends on the 3Ps of population, participation and productivity, but we have the lowest employment-to-population ratio in the nation (fewer Tasmanians are engaged in work), close to the lowest labour productivity (we produce less per hour worked) and, for the better part of our history, low population growth.

That’s a challenging report card.

Tasmanians are also older, with more than one in every five Tasmanians over the age of 65. This creates a greater dependency on our younger workers.

Prior to Covid, higher overseas migration provided the state with direct access to new (and in many cases highly skilled) workers. Many were relatively young as well. But moves to and from other states can be a fragile source of population growth and workers, and more recently people have been leaving Tasmania.

There are ways we can reshape our future, with a balance needed between bringing additional people into our state and doing so without overheating parts of the economy.

We have a smaller share of