Is Tassie a leach on our teat?

There was a charming exchange in the Parliament today.

TASMANIA is a “leach on the teat” of the Australian economy, a West Australian Liberal MP has claimed.

Don Randall’s charge, against a state where the Liberals hold no Lower House seats, came during debate on health and hospitals funding today.

The Opposition wants to defer, and Western Australia has rejected, the Government’s proposal to retain some of the state and territories’ GST to fund its health reforms.

Mr Randall’s outburst came after Tasmanian Labor MP Sid Sidebottom said the Opposition was only about obstruction, deferral and delay and its lead speaker, Treasury spokesman Joe Hockey, talked nothing but waffle.

Mr Sidebottom also spoke glowingly of how Tasmania had benefited from federal health reforms.

Mr Randall, the next speaker, retorted that Tasmania was “a leach on the teat” of the Australian economy, and especially minerals-rich Western Australia.

He said he was sick and tired of “mendicant states” like Tasmania.

Mr Randall said Western Australia might be out of sight and out of mind so far as the rest of Australia was concerned, but it contributed a massive and disproportionate amount to Commonwealth revenue.

Ouch. Them’s fighting words. But more or less true. The Tasmanian economy is facing serious challenges but, with some honourable exceptions, policy elites in that State have been in denial for a long time. When I last looked at it Tasmanian own state tax revenue was less than 40 percent. Tasmanians, on average, receive more in welfare than they pay in taxation (source).

In other words, we on the mainland are not just paying for their health, education, and what-not, very often we’re paying for the food on their tables and the clothes on their backs.

Name calling isn’t going to change that situation anytime soon, but some radical thinking is required. This is just one example. Here is a link to part of some work Julie Novak and I did for the TCCI a couple of years ago.

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43 Responses to Is Tassie a leach on our teat?

  1. JC

    Goodness me, it that big a welfare leech?

    So I guess eco-tourism, the grand strategy of turning logging truckies into waiters at vegan restaurants hasn’t turned out exactly as planned.

    The state is essentially captured territory for labor so there no way they will letting these dependents go without a fight.

  2. Peter Whiteford

    Sinclair

    Do you include GST?

    Also to the extent that people from other states retire to Tasmania then a point in time comparison might not be comprehensive. (Of course there may be more retired Tasmanians in Queensland than vice versa.)

  3. Andrew Worthington

    Hmmm, this is the counter to the earlier discussion on WA secession Sinclair. May it not be appropriate on efficiency grounds for the other states to forcibly expel Tasmania from our cosy federation as it has failed (and probably always will) parity in fiscal capacity?

  4. Sinclair Davidson

    I include whatever the ABS include in their measure ‘other current taxes on income, wealth etc.’. The Tassie population is old but I don’t think that’s due to retirees going to Tassie, rather young people leaving. One of the radical ideas is to emphasise the climate in northern Tassie and the airports to promote retirement to the region. (I don’t know how good an idea that is, but it is an idea).

  5. Sinclair Davidson

    Andrew – yes. In an unconstrained world Tasmania would be better off in the long-run by being independent and having their own monetary policy (right now high interest rates and the dollar are a huge problem for them).

  6. daddy dave

    Based on recent decisions, Tasmania seems to be strongly anti-development. For example, earlier this year they killed off a $300 million development at Ralph Bay, that would have been a huge boost to the Tasmanian economy. Too “commercial” I guess. On the other hand, they allowed a $45 million developmenmt on the Hobart waterfront at Sullivan’s Bay – because it was for the University of Tasmania to set up an “Institute for Marine and Antarctic Studies” in a scenic location.

  7. JC

    Sinc:

    Or they could adjust internally by having a more open labor market and allowing adjustments to take place that way.

    A lot of this is to do with the policies they have adopted particularly in the environmental area where they simply want to become a giant national park.

    If they really want to do that they ought to leave the pace en mass instead of leaching off the rest of the country.

  8. daddy dave

    A lot of this is to do with the policies they have adopted particularly in the environmental area where they simply want to become a giant national park

    They’ve pretty much succeeded in that, haven’t they? The war’s over and the greenies won. That’s why the trend line for their economy will continue to go downwards.

  9. Sinclair Davidson

    JC – labour market is a federal government affair. The Tassie government has too few policy options available to it for internal adjustment to be viable.

  10. dover_beach

    If you want to know what the Greens can do to an economy look at Tasmania. It’s tragic.

  11. JC

    DB:

    Not to them it isn’t. They don’t really give a shit in terms of our standards.

    Look at it from their point of view, not from a normal sane person’s point.
    They basically met their objectives and have a whole bunch of people living off others and these underemployed people are not creating any emissions.

    greens are as happy as pigs in shit.

  12. Andrew Reynolds

    Easy – have the Feds and the States swap tax regimes. The Feds get the GST (let’s see if they can keep going with 10%) and the States get income taxes back. A little bit of competition here would be interesting.
    Having the Feds not use the corporations power for other areas would get rid of many of the other issues.

  13. CuChullain

    A lot of this is to do with the policies they have adopted particularly in the environmental area where they simply want to become a giant national park

    They’ve pretty much succeeded in that, haven’t they? The war’s over and the greenies won.

    Oh, I do like a bit of hyperbole; can I join in?

    At least now they’ll have some old-growth trees left and, as an added bonus, it’ll give the Mainlanders somewhere nice to go for their hols….

  14. JC

    Love or hate Kevin Andrews and I don’t care about him, his recent foray into describing the Greens philosophy and their agenda is pretty good and well worth a read.

  15. JC

    Oh the old growth.. OmG you have old growth trees? quick call the travel agent honey, as someone is telling me they have old growth trees down there and I can’t wait to get down and become an eco-tourist.

  16. Rococo Liberal

    Andrew

    Your plan is a good one, and a return to the early days of Federation when the only income the Feds had was from an indirect tax, i.e. customs duty.

  17. Infidel Tiger

    At least now they’ll have some old-growth trees left and, as an added bonus, it’ll give the Mainlanders somewhere nice to go for their hols….

    Statistics show that no one is going to Tasmania for their holidays either. If I want to go to a dreary, leftist hell hole, where the gene pool has been drained at one end, I’ll go to NZ where at least it’s cheap.

  18. FDB

    “leach on the teat”

    An awful mixed metaphor, half of which is spelt wrong.

  19. boy on a bike

    I’ve been to Tassie and I’ve seen the trees. They block the views – some of them need to be cut down.

    Face it pal – after you’ve seen one tree, you’ve seen them all.

    If you want to look at old things, go to a nursing home and spend some time looking after the dribblers. I don’t see anything special about a tree being old. What I care about is whether it’s straight – that way, it will make nice floor boards.

  20. CuChullain

    Statistics show that no one is going to Tasmania for their holidays either. If I want to go to a dreary, leftist hell hole, where the gene pool has been drained at one end, I’ll go to NZ where at least it’s cheap.

    And I’m sure they’d be happy to have you.

  21. Andrew Reynolds

    FDB,
    If you knew Don you would know that he is very good at mental imagery so the mixed metaphor is probably his. The spelling, though, would be the journalist’s.

  22. Infidel Tiger

    And I’m sure they’d be happy to have you.

    Nah. I’d be stabbed first day for telling them that the All Blacks are cheating poofs.

  23. FDB

    The subbie should be taken out back and shot.

  24. JC

    FDB in Tassie banging on the slow drums.

  25. FDB

    Joe on reading about Tena’s new mens’ range.

  26. rog

    Well Randall can say what he likes but WA has not always been a boom town and many times has lived off the eastern states.

  27. Bryn

    I would be interested in seeing the info on WA over the last 50 (or 110) years in terms of federal pending vs income- I suspect they haven’t caught up from “past debt” and should shut the hell up.

  28. Entropy

    That’s true Rog. It was once the case, but not for a long time. Tassie on the other hand, as no excuse, and the gripping hand is that it has adopted policies which make it even more dependent on the other states, and is unlikely to want to change.

  29. Andrew Reynolds

    rog,
    Bollocks. The only time WA has not done well since Federation is when the Feds have either or both of:
    1. Banned or highly taxed WA exports;
    2. Banned or highly taxed WA imports.
    Check the historical record.

  30. Mother Hubbard's Dog

    Give Tassie to New Zealand, and raise the average IQ of both NZ and Australia.

  31. daddy dave

    At least now they’ll have some old-growth trees left and, as an added bonus, it’ll give the Mainlanders somewhere nice to go for their hols

    I have to admit that Tassie is on my wish-list of holiday destinations. However they could probably maintain the same tourist industry or more with a fraction of the wilderness and a bit more development (ie industrialised). But also, their tourism industry isn’t big enough income to justify shutting down everything else.

  32. entropy

    it’s a once only visit.
    The beaches were only good for looking at, as any other activity resulted in chilblains, and every native appeared to have the same ruddy cheeks and a snub nose.

  33. TerjeP

    Andrew – yes. In an unconstrained world Tasmania would be better off in the long-run by being independent and having their own monetary policy (right now high interest rates and the dollar are a huge problem for them).

    In favour of this argument is the fact that New Zealand manages to pay for it’s own food. Although there are more New Zealanders in Australia than in the South Island so there is something not quite right there either. Scale of economy and location is probably a very significant factor. Still I’d like to see how New Zealand went if it adopted Hong Kongs tax code.

  34. JC

    Terje:

    Not for nothing but it was only a few months ago, just before you were claiming the euro to be a success, that you were also enthusing over New Zealand and Australia forming monetary union.

    Now you’re saying that it would be better if Tasmania had its own monetary policy/ currency

    So, if I’m following your line of “thought” I presume you’d still be in favor of a monetary union with Zealand while having Tasmania a separate currency zone.

    This makes perfect sense to you, yea?

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  36. daddy dave

    You know it’s staggering that one department – centrelink – spends more in Tasmania than the entire government gets in income tax receipts from that state. The Commonwealth obviously spends a lot of other money on the state, not counted in that ledger, in the form of federal infrastructure. So the balance sheet is very lopsided indeed.

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  38. TerjeP

    Now you’re saying that it would be better if Tasmania had its own monetary policy/ currency

    I offered something in favour of Sinclairs argument. I didn’t say I accepted or agreed with Sinclairs argument.

    To be specific I don’t think Tasmania should have a separate currency and I think there is merit in New Zealand adopting the Aussie dollar.

  39. JC

    I offered something in favour of Sinclairs argument. I didn’t say I accepted or agreed with Sinclairs argument.

    In favour of this argument …..

    Which argument?

    In an unconstrained world Tasmania would be better off in the long-run by being independent and having their own monetary policy (right now high interest rates and the dollar are a huge problem for them).

  40. TerjeP

    The ACT is only 130,000 people smaller than Tasmania. Maybe we could move the ACT to Tasmania. Then if things don’t improve we could sink it. 😉

  41. TerjeP

    JC – yes that was the one.

    Against Sinclairs argument is the fact that inflation in Tasmania is now around 3%, so suggestions that they need loser monetary policy needs some justification. Does Sinclair think the primary objective of monetary policy is something other than price stability?

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  43. KS

    This recent post at Core Economics is also relevant to Tasmania’s position as it clearly gives them outsized political power in the federation constitutionally protected. This as much as the independents influenced the outcome of the last Federal election.

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