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The next four years will be difficult for Tasmania

News, Tasmania | 27th March 2024

Op-ed in the Hobart Mercury newspaper, 27th March 2024

The Liberals were the biggest losers in Saturday’s election, as indicated by the 12 percentage point swing against them. But they still emerged with the largest number of seats, and provided they can persuade the two left-leaning independents and the Jacqui Lambie Network’s members (whoever they turn out to be) to provide guarantees regarding confidence and supply, they will be able to form a minority government. More on that in a moment.

But it was also a disastrous result for Labor. Out of a 12 percentage point swing away from their traditional opponent, they could only garner a 1 percentage point swing to them. There was so much material they could have deployed to their advantage – including the deteriorating outlook for the Tasmanian economy, the worsening condition of the state’s finances, and the biggest net exodus of people from Tasmania to the mainland in 24 years – but they said nothing about any of those. Instead, they tried to beat the Liberals at the populist game – promising to spend lots of money without, until the last minutes of the campaign, giving any indication as to where that money would come from (and even when they did, it was almost entirely without meaning or substance).

And the Greens didn’t do much better either. Their share of the vote went up by 1.5 percentage points, but fell short of what they had achieved at four of the past six elections. They will get at least two more seats, principally because of the lower quota.

The Jacqui Lambie Network’s candidates did well – and might have done even better had it not been for what appears to be an unusually high informal vote in the electorates where they did best, perhaps because some of those intending to vote for them didn’t realize that they had to indicate a 4th, 5th, 6th and 7th preference for their vote to count. Otherwise, independent candidates didn’t fare as well as opinion polls had suggested they might, especially in the northern electorates.

Contrary to what both of the major parties repeatedly said during the campaign, minority governments are not necessarily bad, or unstable. Two of Tasmania’s best governments, in my opinion – the government led by Michael Field (1989-1992) and the one led by Tony Rundle (1996-1998) – were minority governments; while Tasmania’s worst ever government (in terms of its legacy of financial mismanagement and social division), that led by Robin Gray (1982-1989) had a clear majority in the Lower House and, effectively, one in the Upper House as well.

But in Tasmania, minority governments usually end badly for the major party that forms them – as happened to Labor in 1992 and 2014, and the Liberals in 1998.

So from that perspective, last weekend’s election might have been a ‘good’ one for Labor to have lost, as the 2010 election turned out to be for the Liberals.

There’s actually a more important reason for that.

The next four years (or however long this Parliamentary term lasts) are going to be difficult for Tasmania, and for its government. Tasmania’s economy is no longer ‘leading the nation’, as it was on many indicators between 2017 and 2022.

On the contrary, employment in Tasmania has fallen (in trend terms) by 1.3% since the end of 2022, in contrast to a 3.2% increase nationally. Tasmania’s trend unemployment rate is half a percentage point above the national average. Tasmanian residential building approvals have fallen 29% in trend terms since December 2022, compared with a 14% fall nationally. Business investment has fallen 10% in Tasmania since the final quarter of 2022, as against an 8% increase nationally.

A good deal of this reflects the fact that (as happened for much of the 1990s and between 2010 and 2015) more people are leaving Tasmania for the mainland than moving in the opposite direction, so that Tasmania’s population growth rate has slowed to its lowest in eight years, while Australia’s is growing at its fastest since 1951.

In addition, Tasmania’s public finances are in a much worse condition than the Government would have you believe. According to the Pre-Election Economic and Fiscal Outlook published by State Treasury on 29th February, Tasmania’s non-financial public sector (that is, ‘core government departments and agencies plus the state’s GBEs) will incur cash deficits totalling $7.9 billion over the four years to 2026-27. As a percentage of gross state product that’s larger than Victoria. And that’s without adding on the $1.4 billion of completely unfunded spending that the Liberals promised during the campaign. PEFO also forecast that Tasmania’s non-financial public sector net financial liabilities (which includes unfunded superannuation liabilities) will jump from 38% of gross state product at June last year to 49% by June 2027. Again that’s much bigger than the corresponding figure for Victoria – which is widely perceived to be a financial ‘basket case’.

So the 2024-25 State Budget is going to be a ‘tough’ one. Indeed, not having to present that `Budget before the next election was ordinarily due may have been another reason for going early.

The prospects of undertaking the sorts of reforms that are necessary to narrow the widening gaps between Tasmania’s economic performance (and Tasmanians’ material living standards) and the rest of Australia – the sort of reforms that the Government should have undertaken when ‘the sun was shining’ on Tasmania and when it had a majority in the Parliament, but lacked the will to – look fairly bleak in the Parliament which the Tasmanian people have just elected. And those prospects haven’t been aided by the dismissive attitude the Liberals took to calls for reform – most notably of Tasmania’s under-performing education system – during the campaign.



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