Confidence, like respect, doesn’t just happen – it must be earnt

The Tasmanian economy is flatlining.  Statistics released by the ABS last week for the 2010-11 financial year show a rate of growth for Gross State Product for Tasmania of 0.8%, compared to the national growth in GDP of 2.1%.

As a state, we are continuing to fall behind the rest of the country.  This situation was recognised back in August*, when it was said that Tasmania was at real risk of becoming an aged care facility in a national park.  Unfortunately, nothing seems to have changed.

No matter what the field of economic endeavour, the typical experience is of extraordinary delays in gaining approvals to move projects forward.  Whether it be a rural subdivision, a mining exploration licence, or building a commercial building, all suffer from being bogged down in a slow and cumbersome bureaucratic process.

This has - inevitably - led to Tasmania getting a reputation that it is too hard to do business here, and so projects that could occur do not attract the capital necessary to make it work.

Some may argue that this is a good thing.  There are those who want Tasmania to stay as it is.  However, times do change, and so doing nothing actually means going backwards.  Time is a critical element in determining where money is going to be spent, and if it is too hard to do it here, then it will be spent somewhere else.

And this then reflects on investment levels, employment levels and participation rates.  Opportunities pass us by, our employable youth leave to find work elsewhere, and we slide into a most unenviable position of despair and social disintegration.

The Pennicott experience at Bruny Island is a classic case in point.  A successful and award-winning business entrepreneur, the benefits of his enterprise (Bruny Island Cruises) flow on to other businesses in the area, and to the good name of the State as an eco-tourism destination.  He is endeavouring to expand his business, and readily acknowledges he is putting a strain on existing infrastructure.  However, opponents of his expansion have taken their opposition to the Appeals Tribunal, and to date Pennicott has spent over $200,000 responding to this opposition.  What a waste of time and money, which could have been much better spent in expanding his business and the infrastructure necessary to sustain it.

The Clarence reuse water development supplies grey water from treatment plants at Rosny and Rokeby to the Coal River for use as irrigation water.  It is a sound project.  However, the infrastructure at Rosny is such that saltwater from the river floods in at high tide making that water unusable.  And at Rokeby, a disagreement between Southern Water and the EPA (the EPA insisting on unrealistic outcomes regarding supply levels and monitoring) has meant no water is being accessed.  The water still has to be treated, but goes into the Derwent instead.  The remaining infrastructure is underutilized, the aboriginal assessment issues over the holding dam are still not resolved three years after investigations commenced and water supply to the Coal River is unreliable.  The result: a large number of irrigation projects remain in the planning stage, pricing issues still need clarification and investment still needs to occur so that wealth and new jobs can be created.  The State desperately needs both.

The $100m building development project at Parliament Square remains unresolved due to long-running planning appeals delays, despite it being selected as the preferred option by the public, being approved twice by the Heritage Council and the Sullivans Cove Waterfront Authority and by the independent umpire RMPAT.  Tourism projects such as Crescent Bay remain unresolved.  As detailed in these pages many times less patient developers have simply walked away altogether rather than bear the ongoing cost of this sort of delay.

These three examples show that decisions by government are critical to making things happen, and it is not just about money.

 The approach of the government has been to talk of trimming the budget, but only that.  It is though the budget has become the sole focus of the government.   The approach by the government to become a “budget cuts” only government is taking its toll on the economic fabric of this state, and on its own electoral prospects.   

The budget is only one of a number of tools in the government’s toolbox, a tool available to the government to parade what it stands for, what its priorities are and where it is leading us.  Which begs the question – what does it stand for?

It stands to reason that we must cut the cloth to suit the circumstance, but the circumstance should not be haunted by bureaucratic ineptitude, a hidebound ideology of “delivering a surplus” at any cost and regulatory complications.  At such a time, it is essential that these constraints be removed and that people who wish to invest be encouraged to do so.

The government must start talking up the economy, it must present a vision of growth, and an enthusiasm for investment.  Yet we hear nothing about vision, or of purpose, or of future directions, emanating from government spokespeople.  In fact just the opposite is true.

There are opportunities for the State to engage with the Commonwealth to get a better financial deal.  It requires a negotiation, hard-nosed, as distinct from the price-taker mentality that has recently been displayed, such as with the GST receipts, health payments or forestry arrangements.   

And such discussions should occur now, before a fall in Federal receipts becomes an issue.  The Federal Government has made two significant policy commitments, with far-reaching ramifications to their own bottom line.

Receipts from the MMRT (the mining tax) are dependent on continuing high commodity prices for iron ore and coal.  But these prices are not assured longterm.  Yet longterm spending commitments are being made in areas such as tax reform and superannuation payments.  A significant exposure.

And the carbon tax, which is enabling tax breaks across the board is also dependent on a viable carbon market.  Yet such a market has collapsed in Europe, and shows no signs of getting up in the US.  As Bob Cotgrove exposed in the Mercury last Saturday, the tax will have absolutely no effect on climate.  However, the move to more expensive energy options will have a significant longterm detrimental effect on our manufacturing capability and our future prosperity.

A weaker economy overall, a challenge indeed for Tasmania.

It is imperative that the government changes its narrative immediately, from cutting expenditure to opening up opportunities.  The future of our State depends upon it.