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Apple Isle the pick of the bunch -

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Apple Isle the pick of the bunch

The World Today - Thursday, 4 September , 2008 12:18:00

Reporter: Felicity Ogilvie

ELEANOR HALL: Tasmania may be a small island but the state has the fastest growing economy in the
nation. Yesterday's national accounts carried the surprise revelation that Tasmania's economy grew
by 1.4 per cent in the June quarter, making it the top performer in the country.

Economists say tourism and mining were the main drivers of growth with private investment rising
sharply.

And Tasmania's Treasurer says the State carries lessons for the rest of Australia.

In Hobart, Felicity Ogilvie reports.

FELICITY OGILVIE: Tasmania used to have $1.5 billion worth of Government debt. That's been wiped
and the Treasurer Michael Aird says Tasmania now has the strongest net debt position in Australia.

MICHAEL AIRD: Obviously we're performing very well and this shouldn't be a surprise to those who
have been observing economic development in Australia over the past years. The fact is that our
economy has been outperforming that recording nationally for the five consecutive quarters, and so
in trend terms we have been doing very well.

FELICITY OGILVIE: The Tasmanian economy has traditionally been driven by state funded projects like
hydro-electric dams, but according to the senior economist at the Tasmanian Chamber of Commerce and
Industry the economy is now booming thanks to private investment.

Richard Dowling says private investment is close to outstripping public investment.

RICHARD DOWLING: Just a couple of days ago we had a major announcement from Statewide Independent
Wholesalers, a food distribution company who are investing $106 million in a state of the art food
distribution centre in Launceston.

And previously we've heard that Cadbury, the international chocolate maker will be investing $53
million in a state of the art centre of excellence for block chocolate making. We've also heard
that Nyrstar, zinc works maker, will be looking at transferring their South Australian operations
to Tasmania.

Now, that example particularly is quite unheard of for Tasmania. So often Tasmania is losing out
their operations to more competitive mainland rivals, but now we're seeing Tasmania really
capitalise on its competitive advantages and attract industries here.

FELICITY OGILVIE: The Treasurer Michael Aird says some traditional industries are still big money
spinners.

MICHAEL AIRD: Tourism development investment is over a billion dollars going into the future and we
see that as a sector of the economy which is going to provide opportunities for further growth in
the future.

Our exports have been doing remarkably well. Our mineral exports, while we don't have the volume of
Queensland and Western Australia, with the commodity prices and the requirement to obviously China
and India, we have been doing quite well in that area as well.

FELICITY OGILVIE: Forestry has always been an important industry in Tasmania, so news that
Tasmania's biggest single private project, the Gunns pulp mill, is on the rocks, should be bad for
the tiny state.

The company announced last week that it might not be able to borrow the $2 billion needed to
finance the mill.

But the Treasurer is not concerned.

MICHAEL AIRD: I have said that we're not a one trick economy, that we are not relying on the pulp
mill. The pulp mill economically will provide a further lift to our economic development, but we're
not relying on it. Our unemployment rate is down to the national average. That's the first time in
30 years.

All this economic development, all the employment, 42,000 people now have jobs in Tasmania that
didn't have jobs ten years ago. All these things have occurred without a pulp mill. And so we're
not relying on a pulp mill. Yes, it will provide a further lift to the economy but we're not
relying on it.

FELICITY OGILVIE: The Tasmanian economy may be performing well but economist Richard Dowling says
that doesn't mean Tasmanians are benefiting.

RICHARD DOWLING: We should make no mistake that Tasmania still has enormous challenges ahead and
while it's great that we are growing fastest in the nation, it has to be recognised that we are
coming off a very low base.

Tasmanian standard of living is still approximately $12,000 below that of the national average, so
we still have to continue to make these gains if we're going to experience standards of living
equivalent with mainland states.

FELICITY OGILVIE: Tasmania's internet access is also lagging behind the rest of the country. The
Treasurer says millions of dollars worth of investment is being lost because internet connections
are too slow.

The Government is negotiating with a private company to use a fibre optic cable that crosses Bass
Strait to deliver faster broadband to Tasmania.

ELEANOR HALL: Felicity Ogilvie reporting.