Five years ago, recently departed Treasurer Michael Aird told a Legislative Council estimates committee that Tasmania’s massive unfunded superannuation debt was nothing to worry about. Like a parent telling a three-year-old child that there are no monsters under the bed, Aird, with the nodding acknowledgement of Don Challen, argued $2 billion wasn’t a debt, just a liability.
As an observer in the public gallery, protocol prevented me from interjecting. But I kept thinking about the words of National Australia Bank trader Dave Bullen when queried about a $300 million forex trade gone sour. Reflecting his newly-found Buddhist philosophy, Bullen sanguinely explained that the money wasn’t lost at all; it was just that somebody else now had it.
Five years ago, Tasmania was on the verge of boom times. Quite politically appropriately, both Michael Aird and former Premier Paul Lennon took any opportunity to spruik the economic miracle.
Now all three have gone. Lennon, Aird, and the economic dream.
Lennon was never particularly personable, although a quiet chat over a few beers sometimes revealed a depth of character and humour betrayed by his florid complexion and abrupt manner.
In contrast, Michael Aird’s public persona has always been pretty likeable. But I suspect in a few years history may judge his performance as Treasurer even more harshly than Lennon’s Premiership.
The Aird/Challen combination has rarely been effectively challenged. But it’s not difficult to get away with economic malpractice when confronted with a dysfunctional Opposition, an inept media contingent and a complacent, compliant public.
Within two years, Tasmania will be broke. Ignore the current Budget forecasts - a quick glance at the last decade explains why. The Treasurer, and indeed Treasury haven’t drafted an accurate forecast for over a decade. They’ve failed to predict every financial challenge. Each year, costs are hugely understated. Each year, the State’s financial position has been rescued by unanticipated windfall gains.
Tasmania had a golden opportunity a few years ago. A chance to profit from some of our island’s unique attributes. Instead, unaccustomed to having surplus funds, Labor went on a spending binge that continues to this day, leaving us with an unwieldy public sector, a string of loss-making Government Business Enterprises run by political cronies and an economy firmly rooted in the dying industries of the last century.
By the time June 2012 arrives, Tasmania will be facing a deficit of $1 billion or more. No level of Lara Giddings’ rhetoric will explain that away, no matter what salaries the Government Media Unit offer by then. The only way to avoid economic collapse will be to embark on a massive borrowing program, accompanied by the sacking of around 8,000 public servants.
Doubters could discuss that suggestion with an economics undergraduate familiar with ABS data. Any student capable of passing Economics 101 will confirm that retail spending, capital investment and business confidence are all on the slide. In Tasmania at least. Other parts of the country are more buoyant, although business and political leaders from those districts may be reluctant to keep bailing out a small State with a Government seemingly determined to destroy what’s left of the economy.
Only the public sector is booming in Tasmania. No doubt various forestry types are clinging to the pulp mill dream, but even Treasury has distanced itself from the golden age promised by Gunns and Paul Lennon. The much-hyped forestry rescue package might inject a few dollars into the local economy, as would another Federal stimulus package. That won’t be enough.
As an analyst, I try to look beyond the artificial impact of changing accounting standards, instead looking for trends. In Tasmania’s accounts, there are many trends, and all are negative. Sadly, most will be revealed in time, and probably covered up by a range of explanations all connected to external influences. The blame game will continue.
Today’s comments from the new Treasurer about the lack of hay in barns say a lot about her capacity to manage Tasmania’s books. Aird may have been incompetent in many ways, but he was predictable - he always smiled when telling fibs.
Lara smiles regardless of the circumstances.
Much more to follow.
(What started as Robin Gray’s biography has now morphed into a book addressing governance, government and forestry in Tasmania over the past three decades. Coming soon to a bookstore near you, while Jarvis hides in Burgundy for a while).
No hay left in ‘budget barn’ warns Treasurer
Tasmania’s new Treasurer says it is vital action is taken to avert a further downturn in the state economy.
The Deputy Premier, Lara Giddings, has delivered her first major speech in the role to a gathering of business leaders in Hobart.
She told them business investment has dropped 35 per cent since the global financial crisis (GFC).
Ms Giddings admits Government belt-tightening is needed if the state’s finances are to be rebuilt.
Tasmanian Times writers Jarvis Cocker and John Lawrence have long predicted tough times ahead for Tasmania: