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Compare the pair: politics and public policy in Tasmania and the ACT

By Brendan O'Reilly - posted Tuesday, 11 March 2014


It might seem like an odd comparison. There are, however, both striking similarities and contrasts between Tasmania and the Australian Capital Territory (ACT). Both illustrate what you can expect from a Greens/Labor Left dominated state/territory Government. The comparison also demonstrates just how much more favourably Australian Governments react to swinging electorates, especially where they return a high ratio of Senators per voter.

At a broad level, Tasmania and the ACT are the smallest two states/territories, the two coldest in winter, and, along with the Northern Territory, have the lowest populations. (Tasmania has about 513,000 inhabitants and the ACT about 383,000.) On the other hand, Tasmania is generally regarded as Australia's poorest state/territory (an economic "basket-case" some say), while the ACT (largely because it is the national capital) is the most affluent.

There are equivalent similarities and contrasts affecting their politics and public policies. The Labor Party in both Tasmania and the ACT is dominated by its Left faction. In addition. both Tasmania and the ACT in recent years have been unusual in having Labor/Greens state/territory governments. (This coalition was dissolved in Tasmania, when the election was called, and a heavy defeat for Labor is tipped at this weekend's election.) Both governments both started off as minority Labor with Green support, graduating to formal coalitions.

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In terms of federal seats, Tasmania has both much greater representation than the ACT and, more crucially, electorates that are politically more balanced and quite liable to swing. The result is that Tasmania has been regularly pork-barrelled by federal Governments, while the ACT is largely taken for granted and can be shafted with relative political impunity by either side of federal politics.

I must state my own interests. My principal residence has been in the ACT for some thirty years. I have visited Tasmania a number of times. I love its trout fishing (Hurray for The Hydro!) and am a fan of its produce, including its cheeses, wine, marine foods, and native timbers.

The greater political clout federally of Tasmania is easily illustrated. While Tasmania has only about one third more inhabitants, it has 12 Senators compared with the ACT's two, and 5 federal MPs compared with the ACT's two. (The ACT is bordering on entitlement to three federal MPs.)

The ACT's two lower house seats are considered very safe Labor, while its Senate seats have always returned one Labor and one Liberal Senator. In other words there are no swinging seats at all (federally) in the ACT, which explains why it tends to be relatively neglected by politicians during federal elections.

At the last federal election Tasmania returned three liberal MPs, one Labor and one Independent. In the election for half the Senate, Tasmania elected two Liberals, two Labor, and one each for the Greens and Palmer United. At the previous (2010) election, it had returned three Labor Senators, two Liberal Senators and one Green, while (for the House of Reps) Tasmania returned four Labor and one Independent. Labor actually won all five House of Representatives seats in Tasmania in the 2007 election.

In recent decades two Tasmanian Independents have played important roles in determining the balance of power in Federal Parliament. Andrew Wilkie MP played a key role in assisting the Gillard Government take power, while Senator Brian Harradine had often been key to passing Howard Government legislation.

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While Tasmania naturally benefits and the ACT loses from fiscal equalisation across the states/territories, this is to be expected under accepted policies to correct differing capacities to fund public services. More generous treatment for Tasmania, however, extends well beyond such policies. I can think of several special measures benefitting Tasmania that have not been extended elsewhere.

The federally funded Tasmanian Freight Equalisation Scheme (costing over $100 million annually) assists in alleviating the sea freight cost disadvantage incurred by shippers of eligible non-bulk goods moved to and from Tasmania by sea. [The issue with the scheme is that no equivalent measures are in place to assist other (arguably more) isolated parts of Australia, such as Western Australia and the Northern Territory.]

The Abbott Government's decision to provide chocolate company Cadbury with $16 million of taxpayers' money to help fund tours of its chocolate factory rather contrasts with its "hands'-off" approach to other requests for industry assistance (e.g. SPC Ardmona, car industry, Qantas). [While the assistance to Cadbury was dressed up as assistance for tourism rather than manufacturing, it seems clear that the Tasmanian location and impending elections were key considerations.]

The Tasmanian Forest Peace Deal is believed to have involved the Commonwealth in well over $100 million in assistance over recent years.

I could go on.

Apart from (substantial) benefits related to being the site of the national capital, the ACT receives little in the way special treatment from the federal Government. The ACT has benefitted from long term growth in the size of government. The quid pro quo is that, when the Australian Public Service (APS) suffers significant cutbacks, the ACT goes into recession. There was a deep recession in the ACT during the early years of the Fraser and Howard Governments (which turned around towards the end of their terms). Some expect the same for the next couple of years under Abbott.

The ACT never wanted self government, which was rejected in a 1978 referendum with 68 per cent of voters recording a 'No' vote. Despite this, the Hawke Government forced self-government on the Territory in 1988, presumably because Labor was expected to be the "natural" party to govern. Self-government is perceived by Canberrans as having resulted in higher taxes and lower quality services. There was a general feeling prior to self-government that the federal Government had used Canberra as a "showcase" for many types of services, and that this could not be kept up by a locally funded administration. Partly as an inheritance from the earlier era, the ACT currently has (for its size) the biggest public housing sector in the country, the biggest loss-making public bus company, and amongst the most expensive-to-run public schools and hospitals.

A stagnating state economy with high unemployment is said by some media to have generated a broad sense of despair in Tasmania. A particular issue is said to be the obsession of Tasmanian Labor and Greens with "progressive" policy priorities - same-sex marriage, euthanasia, animal welfare, light rail and removal of plastic bags from supermarkets, when "bread and butter" issues should be the priority.

To someone living in Canberra this sounds all too familiar.

The ACT Government last year went ahead with same-sex marriage legislation despite warnings that it would be over-ruled by the High Court. The ACT Greens and some within ACT Labor also have a euthanasia agenda, though this is currently also thwarted by Commonwealth legislation. The ACT Government also not long ago banned sow stalls and battery hen cages, in what it claims is the most far-reaching legislation in the country. [Given the ACT has no intensive pig farms nor battery egg farms, the measures seem somewhat redundant. The Pace Farm battery hen facility at Parkwood on the outskirts of Canberra had already been induced to convert to barn eggs following a $7.5 million deal with the ACT Government in July 2013.]

Both respective Labor-Greens administrations have flirted with light rail and introduced legislation discouraging disposable plastic bags.

The outgoing Tasmanian Government is proposing a light rail link from Franklin Square in Hobart, past Glenorchy to the Museum of Old and New Art. Stage One is estimated to cost $70 million to $100 million.

The ACT Government, on the other hand, is actually going ahead with its Capital Metro light rail link (running from Gungahlin to Civic) at a whopping $614 million cost. This is despite its ACTION bus network losing around $100 million a year, Canberra being too spread-out for effective public transport, and most Canberrans preferring to use their cars. While the Tasmanian light rail proposal is unlikely to survive past the election, there is a very real risk that the ACT's Metro might get built and be a financial millstone around the neck of ACT taxpayers for decades. If this happens, it might haunt ACT Labor in years to come.

South Australia was actually the first state/territory to pass legislation aimed at removing disposable plastic bags from retail outlets. It has now been followed by the ACT and Tasmania, which are both also promoting renewable energy. Last November the Tasmanian Government released a climate change strategy aimed at 100 percent renewable power usage by 2020. The ACT Government more recently announced a swath of new auctions for renewable energy projects involving wind farms and solar projects. The ACT will more than double the cap on large-scale feed-in projects to 550 megawatts, which is more energy than the city currently uses, and will allow the government to reach its target of 90 per cent of energy from renewable sources within six years (supposedly at no extra cost to consumers).

The ACT's main claim to fame in the area of renewable energy relates to the largesse of its household solar energy schemes. The most generous was its first scheme, which came into operation in 2009 paying 50.05c/kWh for systems up to 10kw capacity and 40.04c/kWh for up to 30kW capacity. (Later schemes paid lower but sill premium rates.) All contracts are valid for 20 years from their starting date. What was generous about the original ACT scheme is that it was a gross metered scheme (as opposed to much more common net-based schemes) meaning that owners got paid a premium rate for all electricity produced by their installation with their own usage being metered and charged separately at the retail rate. Currently ACT retail electricity prices are about 18.3 c/kWh and wholesale energy is worth about 7 cents.

Perhaps the main thing that both Labor/Greens governments have in common is that they like to spend.

It was recently announced that the ACT's budget deficit has blown out by another $107 million, takingthe deficit from $253.6 million to $360.6 million. If forecasts can be believed (despite continuing and deep cuts to the APS affecting the ACT economy), the outlook is supposed to improve from next year, with the budget deficit falling to $109.5 million, then to $20.5 million in 2015-16 and then a modest $11.2 million surplus in 2016-17.

Tasmania's Net Operating Balance has been progressively deteriorating since 2003-04. The recent mid-year financial report showed a deterioration since the Budget was handed down and that the budget forecast has taken a $450 million hit over the next four years. The Tasmanian Government has been forced to scrap plans to get the budget into surplus by 2016-17. The forecast deficit for this financial year of $267 million has blown out by more than $100 million. It is now expected to be at least $376 million, $50 million more than last year's deficit.

It can be argued that the future of the ACT economy will be determined more by decisions of the Australian Government than those of the Territory Government because of the dominance the APS bureaucracy in Territory employment. This may be just as well, given the current focus of the ACT Government on "progressive" issues. Also, given that ACT residents have the highest disposable incomes in the country, the Territory Government also has a better than average capacity to raise taxes.

Tasmania, being less affluent and dependent on the private sector for most of its economic activity, is in a different position. In the face of deteriorating market conditions for some of its traditional industries, Tasmania is said to have bred social attitudes that block many new development proposals that could help turn its economy around. Problems and challenges are said to get debated endlessly, with no resolution.

The ill-fated Gunn's Ltd pump mill proposal, which offered a higher value-added alternative to export wood chips, is illustrative. That proposal, as well as virtually any proposal involving Tasmanian timber, was targeted by the extreme Tasmanian Green movement. They seem to view eco-tourism and renewable energy (excepting a dam affecting the Franklin River) as the panacea for all the state's economic woes. It was not so much the opposition to building the pulp mill outside Launceston that damaged Tasmania's reputation. It was the determined opposition of these groups that it not be built anywhere in the State. Such extreme reaction, I believe, has left many business people unprepared to invest even two bob in Tasmania.

If Tasmania is to raise itself from the bottom of the economic and social league tables, its Government needs to seek out and embrace its development opportunities, and can't afford to be overly choosy in this regard. This looks likely to happen via a change in Government, which might also induce Tasmanian Labor to reinvent itself.

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About the Author

Brendan O’Reilly is a retired commonwealth public servant with a background in economics and accounting. He is currently pursuing private business interests.

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