INTRODUCTION
I welcome the opportunity to speak to CEDA. I’m very pleased to be able to report that our Budget, and the State’s economy, are both back on track.
But as I told Parliament last week, we are certainly not getting complacent. There’s more we need to do to sustain this economic growth, to support the creation of more job opportunities for Tasmanians, and to deliver the standard of services Tasmanians need, and deserve.
But when we came to Government just two and a half years ago we said our first task was to kick start the economy, and to fix a budget mess.
The State Budget is now back in surplus – back in the black – for the first time in six years.
And in the last year our economy has grown at its fastest rate in six years, and Tasmania has been described by Michael Pascoe as the unlikely star of the national economy, enjoying a purple patch with some of the strongest growth indicators in Australia.
It hasn’t just happened by chance, and nor has it been easy - especially when you consider it’s been a year not without significant challenges for our island state.
A YEAR OF CHALLENGES
Earlier this year around nineteen-hundred lightning strikes in a single day sparked wildfires across the state, and more than 300 fires burned 120,000 hectares over a record 15 total fire ban days in one of the longest and worst fire seasons in recent years.
These fires have cost the state $52.9 million, but thankfully, and remarkably, given the scale and scope of these fires, not a single life or property was lost.
We’ve endured one of the most significant energy security challenges in the state’s history as a result of the lowest spring rainfall and the hottest summer in the state’s history - combined with the first ever extended outage of the Basslink cable, which has been described by Hydro Tasmania as a 1 in 3000 year event.
In response my Government implemented an Energy Supply Plan which was successful in delivering our key objectives of maintaining energy security, avoiding forced power rationing, protecting jobs and the economy, keeping power prices as low as possible.
As a consequence of recent rains and the successful implementation of the Plan we are now in a much stronger position, however we still face ongoing challenges which require a continued focus on careful and prudent management.
So we have established an Energy Security Taskforce to identify ways to help future-proof Tasmania from the types of energy security challenges that we experienced this year.
Then in June we suffered catastrophic flooding which was declared a national natural disaster.
Tragically, these floods claimed the lives of two Tasmanians, and one person is still missing.
There was a devastating impact on rural properties, livestock, homes and businesses, state and private infrastructure with numerous road and rail bridges destroyed, with a massive debris clean-up.
The floods have had a huge social and economic impact across 19 Local Government Areas. The total damages bill has been estimated at $180 million, including $80 million damage to infrastructure alone. 144 businesses were affected, approximately 130 houses were evacuated due to inundation and 68 remain uninhabited.
We have commenced an independent review to consider all aspects of the flood event, community preparation, resilience and awareness, the effectiveness our response and recovery, to learn from this catastrophic event.
These events – this set of unprecedented challenges - remind us of our vulnerabilities as a small, island state. We responded to these challenges with a steady hand, and a measured, responsible approach alongside our emergency services, state, local and federal governments, volunteers, community and private sector organisations.
Yes, there are lessons to be learned and we will act to make sure our state is better equipped to deal with such challenges into the future.
A key part of our plan is to determine how, as best we can, to future-proof Tasmania.
THE BUDGET
One of the most important things we can do is to ensure that our Budget is on a sound footing, because getting the budget back on track means we can better invest in essential services, as well as weather unexpected challenges into the future.
We must continue to properly manage our expenditure wisely, and future-proof our Budget against future risks as well
This year, for instance, we suffered a write down in GST receipts of over $500 million. A shock we are able to endure because we have the Budget back on track.
It isn’t easy, and it certainly doesn’t happen by chance. It requires some difficult decisions, and discipline.
We’ve resisted the temptation and the invitations from some to spend previous GST windfalls on recurrent expenditure, an unsustainable proposition.
We’ve kept spending growth to 1.7 per cent compared to 4.8 per cent under the last eight years of the former Government.
We have a policy to cap public sector wages at 2 per cent per annum for three years, which will still provide a wage increase in real terms and is nearly twice as fast as inflation. Most importantly, it is affordable.
And we’ve made difficult savings decisions, not always popular, but necessary to get the budget back on track. And without the savings measures we implemented, the Budget would still have been heading to deficits until at least 2020.
The Preliminary Outcomes Report 2015-16 shows that last year we delivered an estimated surplus of over $60 million - the best result since 2005-06.
This is a $270 million turnaround, compared to the dire forecasts contained in a report from Treasury we received upon coming to Government.
This current budget year, we are budgeting for a surplus of $77.3 million, and across the four years forward estimates, a cumulative surplus of nearly $50m.
Contrast this with the $1.1 billion of accumulated deficits we inherited and net debt projected to reach $400 million. Cash and assets are now expected to be around $300 million as at 30 June 2017.
This has all been achieved by controlling expenditures, and by a modest increase in revenues as a result of a strengthening economy.
We haven’t introduced or increased a single tax. Not one. In fact, we have reduced a few, and lowered the cost of living and doing business. Which demonstrates that you can undertake successful budget repair without increasing taxes.
And the dividend of this – a Budget back on track – is that we are now better able to invest into the core services of government.
HEALTH
In health on coming into government we immediately invested an additional $76 million into addressing what were then the longest elective surgery waiting lists in the country.
Combined with an additional $25 million in elective surgery funding we secured from the Federal Government, elective surgery waiting lists in Tasmania are now the shortest they have ever been.
We’ve also employed around 100 new nurses, and opened more than 70 additional hospital beds.
But the health budget is an ongoing challenge to any government, and will continue to be into the future, as our population ages, and health costs continue to escalate over and above the rate of general inflation. So we also have to fix a health system that was broken.
That is why we're making difficult but important changes to design a more unified, efficient heath system.
For instance, we have re-focussed the Mersey Community Hospital to be a dedicated elective surgery centre, which will in turn free up beds for other patients at our other major hospitals. This is a necessary but difficult change which has been talked about for decade, but it’s taken my Government to implement.
EDUCATION
We have made consecutive record investments in education and training, now eclipsing $6 billion over the forward estimates.
This includes a commitment to the “full Gonski”, which has enabled us to invest in improving the quality of our teachers and support staff – including new literacy and numeracy, maths and science specialists and school nurses.
But, if were just about money we might have fixed our education system by now. We haven’t. We have to fix a system that’s broken.
And it’s simply not good enough that we have around 2,000 young Tasmanians not completing year 12 who should be. Or that we are below the national average in a range of key numeracy and literacy measures.
So we are fixing a system that was broken.
We are changing the age at which students can start school, and when they finish.
As it currently stands, Tasmanians can walk out of school with as much as two years less education than their interstate counterparts.
Our policy to extend high school to year 12 is getting results, with a 57 per cent increase in enrolments in the first 12 participating schools, from the 2014 year.
We are closing the gap on national retention rates and the most recent NAPLAN results also show Tasmanian students improving when compared to the 2015 results.
And we are lowering the starting age for Prep by six months to give parents the option to access free education earlier, wherever they live.
The truth is, if we keep doing the same things we will keep getting the same results. And they simply aren’t good enough.
We are determined to do what we can to improve the performance of our education system, and to give young Tasmanians their best shot in life.
SUPPORTING VULNERABLE TASMANIANS
A centrepiece of our agenda is to provide more support to vulnerable Tasmanians.
A nation-leading $26 million Family Violence Action Plan; the implementation of the National Disability Scheme in Tasmania; a $20 million redesign of our child protection system; an Affordable Housing Action Plan to deliver around 900 new homes for Tasmanians needing a roof over their head.
THE ECONOMY
As I mentioned at the start, our economy is in good shape and certainly better than when we came into Government.
Last year, our economy grew at its fastest rate in six years.
The latest State Final Demand figures show that we are containing that momentum, with Tasmania’s SFD for the June quarter the third fastest growing state in the country
Retail trade has the strongest growth rate of any state; business investment in new capital grew at the second fastest rate in the nation; the number of housing finance commitments grew at three times the national rate, compared with the previous year;
The number of tourists is up big time, and they are spending more. Our population is growing at the fastest rate in four years.
And the state’s unemployment now stands at 6.7 percent, which is a decline of .8 per cent since the election.
Now, this hasn’t all happened by accident. And of course, the key drivers of economic growth and jobs are businesses, industry and private enterprise. But the Government has an important role to provide the right environment for business to prosper.
And we have taken deliberate and targeted policy decisions since coming to government to kick-start the economy that had fallen into recession under the previous government.
We immediately abolished headworks charges on new developments, which underpinned a massive increase of 83 per cent in new applications, and brought forward investments like the $35 million Mac One hotel development.
We provided the support necessary to revive the Hobart Myer and breathe new life into our capital city’s CBD.
We implemented a buy local policy, which has seen a 25 percent increase in the value of contracts awarded to Tasmanian businesses, with the latest quarterly data showing 93 percent of the total value of contacts awarded went to Tasmanian businesses.
We are implementing a single state-wide planning scheme.
We have extended the First Home Builders Boost to $20,000 to stimulate the home-building construction sector.
Our Budget contains over $425 million in initiatives to support industry and job creation as part of an overall $1.8 billion infrastructure investment.
We have refurbished the Spirits of Tasmania, and put on more sailings, which has resulted in a 26 per cent increase in total passengers.
We’ve increased our engagement in countries where we have growing market opportunities – through trade missions to China, India, Sri Lanka, Singapore and Indonesia, and our export sector is also the fastest growing in the nation, rising 8.4 percent in the past year, compared to negative four percent nationally.
And we have partnered with the Federal Government and farmers to deliver the next tranche of major irrigation projects to turbo charge agriculture.
This is just a sample of around 160 specific policies and initiatives currently underway, and detailed in a Jobs and Economic Update we are releasing today.
These initiatives are targeted and in line with our plan we took to the election and into government to; kick start our economy and build confidence, which now ranks amongst the highest in the country; to back our competitive strengths; to back Tasmanian business; to fix the budget; and to deliver strong, stable majority government
THE TWO-SPEED ECONOMY
But as I readily acknowledge, there is still a lot more to be done.
While the unemployment rate has declined, we want it to be lower.
For some time now, it has been clear that Tasmania is experiencing a two-speed economy. Hobart is moving head strongly, the North West is holding up but, the North is doing it tougher.
According to the most recent ABS data, the unemployment rate in Hobart and the South East was estimated to be 6.2 per cent; the unemployment rate in the West and North West had fallen to 5.9 per cent in the year to July 2016, and employment levels on the North West reached an all-time high in June. Worryingly, however, the unemployment rate in the Northern region is considerably higher than the other regions, currently estimated at 7.7 per cent.
A major factor for this difference across the state is that the Hobart and South East region has seen a high number of high value construction projects, particularly in the Hobart area, which has not been replicated in the north. Some of these have been driven by Government investment (such as the Royal Hobart Hospital project); but most by the private sector, particularly the number of new hotels under development and construction.
We have been aware of this issue for some time, which is why our Budget committed extra funds to the “Northern Cities” project – now $90 million – to support the relocation of the UTAS campuses in Launceston and Burnie, and a Regional Events Start-Up Fund to Events Tasmania's Regional Events Start-up to encourage new events that add to our exciting events calendar.
But more needs to be done, and tomorrow we will be announcing new, specific and targeted measures to try and stimulate new economic activity in the State’s north.
This will be a significant package which will underpin and bring forward economic activity valued at in excess of $100 million. It will be focussed on capital infrastructure projects in – schools, tourism, affordable housing, roads and bridges, and an innovative new approach to partnering with local government to bring forward works programs, with more jobs attached.
THE SHARING ECONOMY
In conclusion, I would just like to touch on an issue that I spoke about at CEDA last year – the sharing economy. I said then that the sharing economy has well and truly arrived and it offers greater competition, lower transaction costs and choice for consumers.
So now we, as a Government, have our own choice. And we have chosen to embrace the sharing economy, and seize the opportunities it presents
I announced that we would be the first state to legislate to legalise ride-sharing, and I’m very pleased to confirm that last month this legislation passed our Parliament. As a result, Uber has publicly indicated that they intend to commence operations in Tasmania this summer.
I have always acknowledged that we are largely entering unchartered territory, so it’s important that we consult with key stakeholders, existing business, and those affected by this policy to manage the opportunities and the impacts presented by the sharing economy.
As a government that strongly supports and values the small business sector, part of the challenge is to work with existing operators to adapt to the change as well. That’s why, as part of this consultation, we have also agreed that no new taxi licences will be issued for the next three years, to support our taxi industry to adjust to the entrance into the market of ride-sharing.
And with a booming tourism industry, it has become even more important that we embrace the sharing economy. Indeed, it is a fact that without the sharing economy and companies like Airbnb and Stayz, Tasmania would have a serious accommodation shortage.
Across Tasmania, Airbnb has around 2,000 active listings, and Stayz has more than 1,000. There are around 124,0000 Airbnb users. Close to 10 per cent of our visitors use Airbnb.
As with ride-sharing, the challenge is to strike the right balance between the competing interests of existing businesses and those in the sharing economy, and to provide a level playing field for all. We have sought to strike the right balance by extensively consulting, and assessing what happens in other jurisdictions.
In the home-sharing market we put a stake in the ground and proposed that a property owner be able to rent their property for up to 42 nights without a permit. This was a starting position for all those with an interest in this space to consider, and provide feedback on.
A 42 day permit free period is in fact is a significant reduction in red tape, as currently if you want to participate in this market you need a planning permit from day one, right across the state.
Appropriately the Tasmanian Planning Commission is conducting its process independently, and the Government is also engaging all stakeholders and canvassing a variety of views and perspectives. I am confident we will be able to land a position that strikes the right balance, and which puts Tasmania at the front of the pack in the sharing economy.
CONCLUSION
We have come a long way, and we have faced some unprecedented challenges along the way.
But we are heading in the right direction.
The Budget is back on track, and our economy is growing. It’s our job to keep it that way.
My commitment, again, to the people of Tasmania is that your Government will continue to work hard to capitalise on the true potential of our great state.