Building new Spirit of Tasmania ferries onshore a ‘Trumpian’ idea – and a bad one
Taxpayers and consumers will be hit in the hip pocket if the new Spirit of Tasmania ferries are built onshore in a misguided attempt at ‘self-reliance’, warns Greg Barns.
Opinion
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ONE of the most dangerous parts of the pandemic is the willingness of politicians and some media to unwind economic globalisation and return to discredited protectionist policies styled as “self reliance”.
The losers from such a regressive stance will be taxpayers and the consumer.
In Tasmania, this trend is manifest in the decision to abandon building ships for TT-Line in Europe and instead splurge taxpayer funds on producing the craft here.
The decision is a Trumpian one.
Trump has notoriously threatened companies that move production offshore, provided incentives for businesses to relocate back to the US, and imposed tariffs on foreign suppliers of goods and services such as China.
Trump would congratulate the Gutwein government on its mercantilist folly.
And a folly it is, except there should be no humour about this populist initiative because the TT-Line business will suffer and the taxpayers of this state will be saddled with the bill for expensive domestic production being pursued.
Economist Saul Eslake, fresh from his revelations about the opaqueness of Tasmanian Budget information, has published a report. “Choices and consequences: replacing TT-Line’s Spirits of Tasmania”.
The analysis of the decision by the Gutwein government overriding the commercially rational decision of the TT-Line board to commission the building of ships in Europe, was commissioned by the state ALP. But Mr Eslake could not be accused of partisanship given the report praises the Gutwein government for its fiscal prowess in recent years, and the author was a member of the Commission of Audit established by the Liberal government of Jeff Kennett in Victoria in 1993.
The analysis by Eslake is alarming.
He makes the point that Austal Ships, a company which has been hawking its credentials around the island as the shipbuilder of choice, has not manufactured a “steel monohull before”.
Further, little manufacturing would be done in Tasmania other than the fit out. By overriding the TT-Line board’s decision the Gutwein government is ensuring taxpayers and the local economy both take a hit.
As Eslake explains, if Austal, “or any other Australian company or consortium were to be awarded this work, there would appear to be a high probability that the ships would cost more, take longer to build, and/or would prove less capable and reliable than the ones which TT-Line had intended to have built in Europe.”
He argues that “each year’s delay in the delivery of the replacements for the Spirits of Tasmania, compared with TT-Line’s original intentions, means up to 184,200 fewer visitors to Tasmania each peak season, which in turn implies potential losses of the order of $350 million per annum to the Tasmanian economy — losses disproportionately incurred by businesses and communities on the North-West Coast.”
The magnitude of the cost of the Gutwein government’s foray into economic nationalism is such that Eslake compares it to the rejection by premier Robin Gray in 1983 of $500m from prime minister Malcolm Fraser, not to build the Franklin dam.
“Having regard to the size of the investment involved — of the order of $850 million according the TT-Line proposal which was overturned by the Tasmanian government, and possibly more if the ships end up being built ‘in Australia’ — this decision could turn out to be the most financially ill-advised decision taken by any Tasmanian government since January 1983, when then Premier Robin Gray rejected then Prime Minister Malcolm Fraser’s offer of $500 million not to proceed with the proposed Gordon-below-Franklin dam (despite being advised by his own Department that it was a ‘good offer’), only for the subsequently-elected Hawke government to prevent the dam from being constructed anyway, and to give Tasmania $235 million less (equivalent to $795 million in today’s dollars) by way of compensation than Malcolm Fraser had offered,” Eslake argues.
Is the Gutwein government listening?
The minister in charge of this Trumpian populism, Michael Ferguson, dismissed the report with the lazy line used by governments when confronted with their own stupidity. Ferguson said Eslake’s report is outdated and based on rumour and assumption.
The Gutwein government thinks it is OK to override the most important decision of a GBE board about its future operations. The idea of establishing GBEs is to keep politicians’ meddling at bay. One wonders why the TT-Line board did not resign en masse. After all, they have been made to look irrelevant.
Greg Barns SC is a human rights lawyer and former adviser to state and federal Liberal governments.
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