Cafe Society: UTAS economist Paul Blacklow explains why now is the right time to keep spending

Don’t get spooked by hard times, keep on spending, suggests a UTAS economist.

Economist Paul Blacklow says we need to better play to our strengths. Picture: LUKE BOWDEN

AS the national and world economies slow, Dr Paul Blacklow sees our financial horizon dimming too. Before this afternoon’s State Budget release, though, the University of Tasmania economist warns against cutting vital spending in response.

“When we do go through the dark time, we must not be tempted to cut expenditure,” he says. “We’ve just had our golden age. We should have been storing some of our nuts away for the winter.”

Paul, right, speaks as if we are already in deep autumn, but says to hoard now in fear of the future would risk pushing the state economy into recession and reverse health and education gains.

Treasurer Peter Gutwein has already foreshadowed a solid infrastructure spend.

After poring over Infrastructure Tasmania’s list of projects, Paul thinks we’re on the right track there.

“There is no need to cut sensible infrastructure spending [especially as] the cost of financing infrastructure is at an all-time low,” he says.

“I went through the list of 247 projects. It’s hard to see any that should be scrapped, though there’s a few that could possibly be delayed.”

He wants see more resources allocated to improving water quality testing and sewerage treatment after the dirty Derwent summer of 2018-19, with bad bacteria closing beaches, including Blackmans Bay, for swimming. As for Tuesday’s news that $40 million for new affordable housing would be brought forward, bringing the spend up to $68 million, it makes absolute sense. “It is a response to a real need,” he says.

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Like fellow Tassie economist Saul Eslake and UTAS housing and community research unit director Keith Jacobs in this column previously, Paul is calling for the introduction of a broad-based land tax. And he wants to abolish stamp duty.

“A lot of Tasmanians don’t directly contribute to State Government revenue,” he says. “But not much can be done until the Commonwealth gives states taxation powers.”

Meanwhile, he says brace for the effects of a predicted $10 billion plunge in GST revenues over the four years to 2022-23, meaning less for all states. Every treasurer likes to crow about achieving budget surplus and Mr Gutwein is no different, but does it really mean much, I ask Paul when we meet at Brew Cafe on Sandy Bay Rd, not far from where he lectures at the School of Business and Economics.

Not as much as keeping money moving in the economy by keeping up sensible spending, he says.

Don’t default to automatically thinking “deficit bad, surplus good,” he says.

“In the past I’ve advocated not going for surplus because we were in bad times, but I think this time it’s a good outcome given we have had good times. “[Given the forecast] it’s good to spend now to stimulate the economy.”

When the Budget is released today, Paul will be looking for meaningful money for preventive health care, including mental health care, and a focus on youth and senior needs.

He also wants preventive environmental action supported, included decent funding for managed wilderness burn-offs following devastating bushfires last summer including the Gell River blaze, which burned through 35,000ha.

A numbers man he may be, but Paul expects a lot more from state government than bland economic management. He thinks we are squandering opportunities by only partially playing to our strengths.

Take clean, green imaging as an international tourism drawcard. We need to either ditch it as a marketing focus or get better at it. We’re not exactly working a Sweden and Norway vibe right now. Seriously, would you think “pristine” driving in to Hobart from your flight, he asks.

We joke that some extra sniffer dogs, possibly untrained, but cute and great for key messaging, could set the tone at the airport. And he likes the idea of signage with a “hey, don’t litter, you’re in Tasmania now” vibe. As in “things are different here”.

On the same front, he is calling for the Government to make more of the state’s strong sustainable energy credentials by going 100 per cent renewable. Already 90 per cent of our energy is provided by clean hydro.

Let’s get behind wave power, too (for which an $8 million wave power trial is taking place this year off King Island), he says.

Wind power? Great stuff. (And just quietly, we could draw a bit of back-up power through the Basslink interconnector, strictly when needed).

Let’s rev up energy tourism, too. Plenty of power boffins out there would love a gawk at renewable energy plants or wind farms.

No cable car, though. As we gaze across Sandy Bay Rd and up the mountain from our front bench seats, Paul shares his concerns about such a tourist mover on kunanyi/Mt Wellington.

“That’s a 17th century technology,” he says, with a laugh.

“In 10 or 15 years people could be whizzing up in a drone. We need to be aware of the impacts and opportunities of technology.”