Will Hodgman

Premier of Tasmania

CEDA State of the State address 2015

30th October 2015

Wrest Point, Hobart

I always welcome the opportunity to be at a CEDA event, and particularly to talk about the state of our state. It’s a good story to tell.

There is a new sense of confidence and optimism about the future of our state, and an excitement about our future.

More Tasmanians than ever before have a job; our economy is growing; and our Budget is back on track. Business confidence ranks amongst the highest in the nation.

We are not waiting to be discovered any more. We are taking Tasmania to the world.

We are giving the world every reason to come to us, and they’re coming in record numbers.

Just a month after delivering my first CEDA State of the State speech as Premier, last October, the President of China visited our state and the eyes of millions were watching.

In the past year we’ve welcomed a 73 per cent increase in Chinese visitors, who are intrigued by our island, its wilderness and produce.

1.1 million tourists visited in the past year, twice our population. Sure, Tasmania is at the bottom of the map, but we’re at the top of traveller’s must see lists.

While I am thoroughly energised by this resurgence, I want to make two things very clear.

Firstly, we are not complacent, there is so much more to do. But we are harnessing the momentum, to keep our state heading in the right direction.

And secondly, and as I consistently say, it is the enterprise of Tasmanians, and Tasmanian businesses, that are the driving force behind our economy.

It is the Government’s role to provide the right environment - the right policies - for business to have the confidence to invest, and to employ more Tasmanians.

So we were encouraged by the latest business survey – released by Sensis yesterday – which says;

“Support for the Tasmanian Government’s policies grew substantially from making it easily the most appreciated government in Australia. The primary appeal is that it is supportive and interested in small business, followed by getting the economy going and good government policies.”

The State of the Economy

But at the time we came into government our economy was in some difficulty.

We had the lowest number of jobs in the state since 2007, and the lowest labour force participation rate since 2005.

In the run-in to the election we declared our number one priority to be re-booting the economy to create more job opportunities for Tasmanians.

We set a target of bringing Tasmania's unemployment rate down to at least the national average within our first term of government.

Tasmania’s unemployment rate was then 7.9 per cent; 2.1 per cent above the national average.

Today the unemployment rate is 6.2 per cent, down 1.3 percentage points since the election, and now equal to the national average.

Tasmania’s unemployment rate is now better than South Australia's and Queensland's, and on par with Western Australia and Victoria.

There are 7 200 more people in work now than there were at time of the election. That is 12 more Tasmanians finding a job each and every day.

There are 242 000 Tasmanians in work - the highest number of jobs ever recorded in this state.

Our economy is growing.

Business investment is up six per cent, and private capital investment is up nine per cent.

Since the election, the total value of construction work commenced has increased by 35 per cent.

Retail trade is strong, and our population is growing again – this year’s March Quarter recording the biggest population rise since 2011.

And there are more visitors coming to Tasmania than ever before, staying longer and spending more.

So the State of the State is positive – we are heading in the right direction - and it’s our job to keep it that way.

Our Plan for a Brighter Future

Our Plan for the state is well underway, and we are seeing positive results

We are cutting red and green tape. We have removed around 40 pieces of it - releasing this handbrake on our economy – with more to come.

We removed the headworks charges that had been a handbrake on development, and this brought forward a doubling in private capital investment in our state within a matter of months.

We introduced a local benefits test, and within just eight months there has been a 55 per cent increase in the number of Tasmanian businesses able to win government contracts.

We have delivered a $315 million package in our last budget to encourage and support our small business sector to grow.

We are finishing off the state’s major dams and irrigation network - with the Federal Government and our farmers - to unlock Tasmania’s agricultural potential.

We are investing in strengthening biosecurity, our brand and our world class tourism industry to capitalise on our world class reputation.

And we have opened the eyes of the world to the possibilities of developing sensitive eco-tourism ventures in our parks and world heritage area – to leverage off what is one of our greatest assets, our precious environment.

We are building access capacity by air and by sea - to get more people in, and more of our products and services out, and investing in our road and rail networks.

And just this week we are very happy that our single state-wide planning scheme is now passing though the Parliament.

Once implemented, this new scheme will make us the only state in Australia with a consistent set of rules state-wide, and will provide 80 per cent consistency across the state. Currently it’s 15 per cent!

Our planning system will be faster, fairer, simpler and cheaper; meaning more confidence and capacity for development here.

The State of the Budget

And a central part – a critical part - of our Plan – is to get our Budget back under control, so that we can afford to sustainably invest in essential services into the future. And I’m pleased to report that we are delivering.

In little over a year, we have improved the budget outlook by $1.4 billion.

The $1.1 billion budget black hole we inherited on coming to government has been turned into cumulative surplus of over $310 million.

And rather than net debt forecast to reach $400 million, Tasmania will remain net debt free with cash and investments building up to $493 million over the forward estimates period.

The savings measures we implemented in the 2014-15 Budget have put us on a path back to surplus next year, three years ahead of schedule.

Spending growth has been restrained to a forecast 1.1 per cent, compared with 4.9 per cent for the eight years prior to us coming to office.

These savings measures were difficult, and were not supported by everyone. But it was absolutely necessary to rein in government expenditure and to us getting our state back into surplus sooner.

We fought hard in the national arena to secure our share of the GST, but without our budget savings measures we would still be looking at deficits each and every year until 2020.

We have delivered on our commitment to get the Budget back on track.

And the Treasurer’s Annual Financial Report released just this week is further evidence.

For the first time in a decade, the Government has spent less than it planned in its Budget - $37 million less, in fact. The deficit recorded by the Government in 2014-15 was $57 million; an improvement of $229 on the budget forecast in that year.

It will require ongoing discipline, but the result is that we able to re-invest the dividends of this good financial management into essential services and into improving the lives of Tasmanians.

In education, we are investing to give every Tasmanian greater opportunity. Our policy to deliver a high school education that finishes at year 12, not year 10 has already recorded a 38 per cent increase in enrollments; and now more schools than we expected want to get on board next year.

We have struck an exciting new partnership with the University of Tasmania to lift our educational attainment and capitalise their position as a leader in research, and as a destination for international students.

We are restoring police numbers cut by the former government, to make our communities even safer.

I’ve lead the development of a $26 million whole-of-government strategy to tackle family violence – which has been described by experts as nation-leading.

We have commenced a major rebuild of our health system, breaking down the geographical - and parochial - barriers that have held this necessary reform of our health system back for too long.

Our focus – and priority – is better health care for Tasmanians.

And we are taking a new, innovative approach to delivering better services for Tasmanians.

In health, for example, we are partnering with private hospitals – including some interstate – to use their capacity to treat Tasmanians sooner.

And we’ve released an innovative affordable housing strategy, engaging the community sector, to leverage off the titles of public housing assets to build new homes for vulnerable Tasmanians.

In both cases it shows a new government, with a new approach to dealing with old problems.

We are not ideologically constrained; and if the private or non-government sector can partner with us to find ways improve the lives of Tasmanians in need, we will embrace that opportunity.

We are a government that is open for business, and that is open to new ideas.

And we are a government that is ready to respond to new challenges and opportunities as they emerge. Like the sharing economy.

The sharing economy

Millions of consumers worldwide are using innovative new IT platforms to obtain a vast – seemingly limitless - range of services in the sharing economy.

It’s changing how we travel, where we stay, where we eat, how we borrow money, what we can hire, even where we board our pets.

The possibilities are endless, but they all have one thing in common - they give consumers more choice. And consumers like it.

But this innovation also benefits the broader economy.

The sharing economy offers greater competition, efficiency and lower transaction costs for consumers.

And it allows people to utilise their resources that would otherwise be idle, or used in a less productive way – leading to increased economic activity, and additional income for people.

The sharing economy has well and truly arrived - and it’s changing the world.

Uber has a million users every day around the world, and every year Airbnb has 37 million room nights booked.

Across Tasmania, Airbnb has around 1,400 properties listed and Stayz has more than 1,000. And incidentally, these properties are filling a shortage of beds available for the record number of tourists coming to Tasmania.

Tasmanians are also ready and waiting for Uber.

Around 1,000 people have registered as drivers, and Uber’s app has already been downloaded by 10,000 people in Tasmania.

Of course for some, its unwelcome competition; and ‘disruptive’ technology. For others, it’s greater choice.

So now we, as a Government, have our own choice.

Do you get with the program, or do you try to stop change?

Do you try to interrupt progress and innovation, or do you welcome the change, and seize the opportunities?

Well, my government has chosen to embrace it.

And we are the first Australian state to do so.

We will not go down the path that other places have taken; trying to kill off the sharing economy by heavy regulation, through legal action, or even to try to ban it - all with limited success.

Human ingenuity inevitably outsmarts the regulators.

People will ignore or work around the regulations because technology allows them to connect directly with their customer, and circumvent the system.

A Government will, in all likelihood, often know nothing about most transactions.

And even if the Government does manage to prosecute some, experience is showing that it won’t stop suppliers and customers choosing to do business together.

So our policy position is to accept the inevitability about the sharing economy, and embrace the opportunities.

It certainly does not mean that we won’t ensure there is adequate regulation in place to protect consumers and the broader public good.

But a model of minimal regulation is the course we will take.

We are embracing change, competition, and the view that it is the consumer who should determine the market – not government.

So we will not regulate to protect the market position of those established businesses.

But we will, of course, readily consult with key stakeholders, existing business, and those affected by this policy to manage the impacts and opportunities 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.

Yesterday I announced that we are developing a package of legislation for tabling in Parliament next year in relation to transport services within the sharing economy.

We will consult widely with all stakeholders, including existing operators.

Indeed, and with my Minister, yesterday I met with senior representatives of the taxi industry as part of this commitment to consult.

But we are prepared to lead the nation when it comes to embracing the sharing economy and the choice it offers.

Our new policy approach will be based on a number of Foundation Principles which the Government is releasing today.

In summary, they are that:

  • As a Liberal Government, we believe in free enterprise, competition and consumer choice. We will embrace the sharing economy.
  • It should be consumers who decide what services are best for them, not the Government.
  • We will not ban these new business models, instead we will encourage them and regulate them only to the extent required to protect consumers and the broader public interest;
  • The sharing economy will bring increased competition; we encourage this because it will bring wider benefits to the Tasmanian community;
  • We will review and adapt the existing regulatory framework to allow existing business models to respond to the new competition. The aim is regulatory neutrality.
  • And we understand that different business models in an industry may require different types of regulation. For instance, what’s appropriate for protecting consumers in a major hotel may not be appropriate for an Airbnb property, and vice versa.

These are the core policy principles that we will apply as we embrace the sharing economy.

We have no doubt that there will be challenges along the way.

Change brings challenge, but we are excited by it, not afraid of it.

And like the new innovations of the sharing economy, as a government we will also need to be nimble and responsive as we adapt or refine our regulatory environment where necessary.

For, as British political scientist, David Runcimen has observed:

“Technology moves faster than politics. When technology escapes from political control, politicians face a choice: do they adapt to the change, or do they insist that it adapts to them? In a democracy, politicians have no choice but to adapt.”

That’s what my Government is doing. That’s the choice we have taken, and we are embracing the change.