Catallaxy Files

Wayne Swan was on Insiders yesterday saying that South Australia and Tasmania had good government and economic performance.

But in both premiers we’ve got premiers who have presided over a very good team when it comes to economic management. Their oppositions down there don’t have a clue. They’re the risky alternative.

The economic outcomes under Premier Bartlett and Premier Rann have been simply stunning for those states in terms of the recent history of the last 10 or 20 years. So they’re going to be tight races but I think that they have got a good economic record on their side.

I don’t think that’s quite right. Those two states are potentially economically disadvantaged compared to other states, but neither government has done enough to overcome that disadvantage. To get a feel for the economic performance of South Australia and Tasmania I had a look at the tax paid relative to welfare received by households within each state (all relative to total gross household income). Data are from the ABS. I would expect that as the economic performance of the state increased that the tax paid would increase and the welfare payments decrease.

To be fair, the events of the last year are somewhat beyond the state governments’ control – so we might expect to see an increase in welfare relative to tax paid. Each ALP government has been in since 2002. The relative performance of these two states has tracked the overall Australian performance, but there has been no real improvement. It is not good enough for a rising tide to raise all boats, the economic challenges facing these two states are formidable – especially Tasmania. I don’t think they have done enough on that front, and I don’t think the current Premiers have put in place economic plans to improve their situations either. Both should be thrown out of office and the other mob given a go.
Update: Andrew Leigh on economic conditions and state government elections.