Will Hodgman

Premier of Tasmania

CEDA State of the State address

31 October 2014

Hobart

I'm delighted to be here today to deliver my first State of the State Address to CEDA, as Premier of Tasmania.     

Premier of a government elected two hundred and thirty days ago. At a State Election in which Tasmanians voted resoundingly for change; for a majority government, and with a clear mandate to deliver that change.

So we are now getting on with the job of delivering our Plan.

We started work immediately - the very day after the election – with our number one priority to stimulate the economy and return a sense of confidence to the community.

In the first 100 days of government we acted swiftly to remove head-works charges, which have deterred development and investment. We moved to extend payroll tax relief to help create new jobs. 

We implemented a 'buy local policy', to help Tasmanian business better compete for government work.

We have protected Tasmanian, jobs by beating the challenge from other states to secure Qantas' call centre operations here in Hobart.

And after seven long years we facilitated the start of construction work on the hole in the heart of Hobart, at the Myer site.

We've commenced our long-term plan to extend high schools to year 11 and 12, to improve our education results, and lift the productivity of our state.

We've re-set the business model for the TT-Line to increasing passenger numbers to support our tourism industry, which the Minister reported this week is happening, and which cleared the way for the private sector to help address the freight challenge, which has happened.

And we have launched what the tourism industry has called a "game changer" in our call to the world for ideas from investors and tourism operators to offer new exciting and unique experiences in our World Heritage Area and National Parks.

These are all things we done in just the first 100 days of government.

In the first two hundred and thirty days we have also released our first Budget.

The Budget contains each of the commitments we took to the election - commitments Tasmanians expect us to deliver, and which we will.

Though it's true to say it is a challenging task, and you simply can't turn things around overnight, but we are getting on with the job.

And, as I have said before, we're not here just to clean up the mess - our job is bigger than that.

Our job is not just to fix what was bad; it's to build something better. And that is our vision for a brighter future.

And behind every vision you must have a plan to deliver it, and I have been speaking about our plan for a long time.

Our plan in Government is the plan we developed in Opposition.

A plan to build a modern economy and create jobs by backing our competitive strengths - in agriculture, aquaculture, forestry, mining, and tourism.

A plan to back business - by cutting red and Green tape, by delivering a single state-wide planning scheme and by restoring an international shipping service.

A plan to rebuild essential services – more police; more nurses; a better education for our kids.

And importantly, plan to deliver strong, stable majority government - to get things done.

A plan to fix the budget, by cutting waste and making the public service more efficient.

And the reason why this is so important is so that we can afford to invest in the essential services Tasmanians need now, and into the future.

As a new Government, we were confronted with very difficult, very pressing budget conditions.

$1.1 billion in forecast accumulated deficits and net debt heading towards $400 million.

That is what we inherited.

Just before the election this year, Moody's reported 'an ongoing deterioration in Tasmania's financial performance, including persistent deficits, which are expected to continue widening as expenditures outpace revenue' and they revised Tasmania's rating to 'negative watch'.

After coming to Government, Treasury provided us with a Budget Risks report which highlighted that government expenditure has not been consistent with savings strategies set in previous Budgets, compounding the problem.

For the period 2011-12 to 2013-14, revenue was $171 million more than budgeted, while over the same period expenditure was $751 million higher than budgeted.

So it falls to us to repair the State's financial position, and if we don't start straight away, the job will become harder and harder.

Our plan contains a commitment to rein in government expenditure, and includes a reduction in the size of the public sector.

We have already started on that process with a significant number of public servants expressing interest in voluntary redundancy.

However, the task was made harder when our proposal to apply a temporary public sector pay freeze was not accepted by the Opposition parties, the unions, or the Legislative Council.

The pay freeze would have delivered savings to the Budget of around $50 million in a full year and a total of $178 million over the Budget and Forward Estimates.

Those are savings that were embedded in the Budget; a Budget which passed through Parliament.

But while the budget was passed, our plan to save a total of $178 million over forward estimates in that budget was rejected.

Over some time we explained the situation very clearly: we need to save $50 million a year, either through a temporary pay freeze, or through reducing the size of the public sector.

When the pay freeze was rejected, that left us needing to take the only alternative - to further reduce the size of the public sector.

A last minute backflip by the unions proposing a half-baked pay freeze simply would not deliver the savings required.  

Treasury has calculated that the unions' proposal would deliver just $17 million in total savings, leaving more than a $160 million shortfall in the Budget over four years.

As the Treasurer highlighted this week, their proposal was for a once-off saving in 2014-15, but then be followed by two pay increases next financial year, which would totally wipe out any savings made this year.

And it also contained a condition that the Government commit to no additional reduction in full time equivalent public sector positions.

It simply did not add-up - leaving more than a $160 million shortfall - and it would not put the budget on a sustainable pathway.

This is why we could not, and we did not accept the union proposal.

We are serious about fixing the budget, and we need to implement measures that are serious to do it.

But the pay freeze proposal was also very important because it would address another issue - significant growth in public sector wages that has occurred over the last decade.

The Treasurer this week highlighted the fact that public sector wages have increased by an average of 5.7 per cent per year over the past decade, while the average annual growth in the Hobart Consumer Price Index was just 2.6 per cent. Public sector wages were increasing, on average, at twice the rate.

And while the former state government nominally had a wages policy of increases of no more than two percent per year, through a lack of fiscal discipline, over the past six years the total wage increase for some Tasmanian public sector employees actually ranged from 26 per cent to 42 per cent.

And as a proportion of Gross State Product, employee expenses in Tasmania are significantly higher than the national average. In 2012–13, Tasmania had the second highest level of employee expenses as a percent of Gross State Product of all states and territories, behind only the Northern Territory.

So another important benefit of a pay freeze was to now apply some restraint, some discipline.

But by opposing the pay freeze proposal, structural reform of the spiralling public sector wages bill was also opposed.

I say very clearly, that we do greatly regret the need for further job losses from the public sector, but we were left with no alternative.

But we will approach this very difficult task sensitively, and despite the inflammatory reaction of our political opponents, we will not employ forced redundancies and we will strategically allocate savings across agencies that balance the areas of highest priority, the need to minimise impacts on the frontline, and the ability of agencies to deliver higher levels of efficiency.

It is a fact that the new Government inherited an unsustainable budget position. We must take urgent and necessary steps to fix it, and that is what we are determined to do. What past governments have not  been prepared to do, we must, and we will.

But I want to also remind Tasmanians that the reasons it is necessary, and so important, is so that we can invest in essential frontline services they need and deserve.

We are employing 108 extra police, to make our communities safer.

We are investing an additional $76 million to deliver more hospital surgeries for Tasmanians.

We are investing a record $1.4 billion investment in education this year to improve results, and to extend our high schools through to year 12.

Ladies and gentlemen, on the subject of education, it is a centrepiece of our Plan, and at the heart of my vision for Tasmania.

My vision is a Tasmania that is at or above the national average in every NAPLAN measurement, and where we meet national benchmarks in reading, writing, maths and science.

A Tasmania where our greatest asset, our young people, are able to achieve their potential and write their own life story. Because a better education usually means better health, and positive outcomes in family life and community participation.

And a much better chance of getting a good job.                               

And it's a vision of a Tasmania that is more economically productive and prosperous as a result.

But currently, Tasmania is around ten per cent less productive than the rest of the country. Many Tasmanian students are leaving school too early, or without the qualifications they need to get a good job.  This has to change.

Tasmanian students consistently perform below the national average and the national minimum standard in most areas, particularly in years 7 and 9, in literacy and numeracy.

The proportion of students who go on to complete year 12 is 68.4% in Tasmania compared to 74.8%. Only 47% of Tasmanian students actually complete year 12 and achieve a Tasmanian Certificate of Education.

The Australian Chamber of Commerce predicts that 25% of people without at least a Certificate 3 qualification will never have a job.

This has to change.

Our bold plan for education and a strong commitment to create a job-ready generation includes extending schools to Years 11 and 12, and introducing more literacy and numeracy specialist teachers in schools, and a focus on early learning – all with a record budget investment in education.

We are moving to ensure we have a contemporary and cohesive legislative framework for education to give every Tasmanian student a stronger chance of completing their education through to year 12, and we have commenced what will be a challenging conversation about school starting and leaving ages. Challenging discussions we must have, if we are to make a difference.

And we will work with all sectors of the education community, including closely with the University of Tasmania on an evidence-based approach to education policy that leads to improving education outcomes to give every young Tasmanian their best shot in life, and to lift our State as well.

This is central to my vision for our State.

But ladies and gentlemen, despite some difficult challenges, there is much to be excited about. Our State has a very bright future.

There is are exciting new and emerging opportunities in our economy – in agriculture, aquaculture, energy and tourism, international education, research and Antarctic affairs.

As a government, we will always look for new opportunities, but without ever turning our back on the things we already do well.

We must back our competitive strengths – which includes our established, traditional industries where we also have advantage – forestry and mining - and support them to also invest, diversify and expand.

As a Liberal Government, we will strongly support our small business sector, and we are investing more in programs to support our small businesses – to help them to innovate and be more competitive.  

And, as a centrepiece of our Plan, we are reducing the cost of business and cutting red and green tape to encourage investment.

This week, the Planning Minister introduced legislation as the next step in reforming our planning system – to make it simpler, cheaper, faster and fairer with a single statewide planning scheme; to make it more effective in processing development proposals; and to change the culture in this state where too often we 'no' to development when we can, and should, be saying 'yes'.

And the last, but not least part of our Plan – is to provide strong, stable majority government. 

Unity, stability and strength of purpose was a hallmark in Opposition, it will be in government too.   

We are determined, in government, to deliver the plan we developed over long years in Opposition.

It's a plan that contains many policy commitments – which we took to the election and are expected us to deliver - and we will.

We won't start abandoning policies, as our opponents suggest, as that only undermines our Plan.

It's a plan that includes some tough decisions, which we have needed to make. Not all our decisions will be popular, but we will make decisions, and stick by them.

As I have often said, there are no silver bullets, or easy fixes, but our Plan was not just for the election, or for this year, or even the next four. It's a blueprint for the long-term future of our state.

And importantly, it's a Plan to achieve the vision of a proud, confident Tasmania.

Where you have the opportunity to get a job, raise a family, get quality healthcare and education.

A Tasmania where the state of our economy, and the opportunities available for young people, are as attractive as our magnificent natural environment and enviable lifestyle.

It's early days, and there is a lot to be done, but there are some very encouraging signs for the future.

Around 2000 new jobs have been created since the election in March, and the participation rate in our labour force has increased to its highest level in over three years.

Our goal is to bring down the unemployment rate to at least the national average, and while there's still a long way to go, the gap is now the smallest it's been since 2011.

Business confidence is returning; retail turnover is up, and well above the national rate of growth.

Tourism is buzzing with the number of visitors and their spending far outstripping the national rate.

And this week we were delighted to confirm that President of the People's Republic of China, His Excellency Xi Jinping, will visit Tasmania next month.

One of my first tasks as Premier was to travel to China to hand-deliver a personal invitation to the President to visit our State.

His doing so next month will present unparalleled opportunities to promote our state to the world and to further strengthen the economic and cultural ties between China and Tasmania.

During the week of the President's visit we will also host a first of its kind investment forum – TasInvest 2014 - which will showcase the best of Tasmania's investment opportunities in agriculture, aquaculture, resources, tourism, education and Antarctic affairs.

Already there has been very strong interest, including more than eighty  Chinese and international delegates registering, including a number of Fortune 500 companies.

Our growing profile as a must-see tourism destination will also gain an gigantic boost with the visit of Chinese President, and will coincide beautifully when our state will be on show and the world arrives to sample the very best we have to offer at Restaurant Australia's Invite the World to Dinner event at MONA next month.

Around 80 of the world's most influential food and wine personalities will be joining us for dinner, and they will share their experience with a global audience of more than 400 million.

This is an incredible opportunity to showcase everything our state is renowned for - fresh produce, pristine surrounds and the world's friendliest people.

It is little wonder Tasmania has just been ranked by Lonely Planet as the fourth ranked must-see destination in the world. The only question is who on earth could have beaten us!

Ladies and gentlemen, the signs are very positive for Tasmania.

We are a Government that recognises that it is not just government which best achieves these things, but it's through our whole community, working together.

As a government, we will strive to encourage and build this renewed confidence, this optimism, and hope for a brighter future.