Tasmanian economy: State secures unwanted record stretching back to pre-1990

Independent Tasmanian economist Saul Eslake says if the state government doesn’t turn around an economy that is grinding to a halt, we will be at risk of returning to brain-drain, the ultimate productivity killer.

Economist Saul Eslake at Hobart. Picture: Chris Kidd

The “underperformance” of the state’s economy could see Tasmanians leave for better opportunities interstate and fewer mainlanders coming here, a leading economist says.

Saul Eslake said the Tasmanian figures in the ABS state accounts data for 2022–23 released recently were “very disappointing”.

“It’s not cause for panic, but rather, in my view, a recognition that Tasmania is no longer ‘outperforming the nation’, that the tailwinds we had been enjoying in the years leading up to the onset of the pandemic and, in a different sense, during the pandemic itself, might now be turning into headwinds,” he said.

“There’s a risk – at this stage just a risk – of us repeating the historic pattern of economic underperformance leading to more working-age Tasmanians leaving in search of better opportunities on the mainland and fewer working-age mainlanders choosing to come to Tasmania – resulting in slower population growth which in turn, all else being equal, results in further economic underperformance relative to the rest of Australia.”

Mr Eslake said Tasmania’s real GSP (gross state product) grew by just 1.1 per cent in 2022–23, “the weakest of any state and well below the national average growth rate of 3 per cent.

“Tasmania’s 2022–23 growth rate was the lowest since 2012–13, apart from 2019–20 which was affected by the Covid-19 pandemic.

“Tasmania’s per capita GSP in 2022–23 was $26,600 or 27.3 per cent below the national average in 2022–23 - that’s the biggest ‘performance gap’ in the history of GSP estimates going back to 1990–91.”

However, Treasurer Michael Ferguson said he highlighted “incoming economic headwinds” back in May and the state was on target to reach a population of 650,000 by 2050.

Minister Michael Ferguson. Picture: Nikki Davis-Jones

“We now have 53,000 more Tasmanians in jobs than when we took office and we will continue to back the aspirational job-creating projects Tasmania needs,” he said.

“Our government has created the nation-leading business conditions as backed in by NAB data recently that shows our long-term plan is working.

“Unemployment is at 4.4 per cent – the lowest level in Tasmania’s history.”

Mr Eslake repeated calls for reform in education, local government and taxation and for Tasmania to lift productivity.

“To break this cycle – and to step away from our history – we need to lift the proportion of our population who have a job, increase the proportion of those jobs which are full rather than part-time, and increase the value of goods or services which each Tasmanian worker produces for each hour that he or she works,” he said.

“For each hour that they do work, Tasmanians produce almost 21 per cent less by way of dollar value of goods and services than the national average.”

The ABS data showed international exports fell by 2.8 per cent in contrast to a 6.5 per cent growth in national exports. The state’s population growth slowed in contrast to it growing nationally.