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The Coalition's discussion paper on building a strong, prosperous Tasmania



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The Coalition’s Discussion Paper on Building a Strong, Prosperous Tasmania

The Coalition’s Discussion Paper on Building a Strong, Prosperous Tasmania May 2013

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The Coalition’s Discussion Paper on Building a Strong, Prosperous Tasmania We believe that Tasmania needs a plan to restore economic growth and kickstart job generation.

Since the election of the Rudd/Gillard government, not a single net new additional job has been created in Tasmania. Under the Rudd/Gillard Government, one in ten full time jobs have been lost.

The Coalition’s Discussion Paper: Building a Strong, Prosperous Tasmania is seeking community comment on proposals that could generate real improvements and growth across the Tasmanian economy. These include:

• Better balancing of environmental outcomes and economic costs of the proposed Inter-Governmental Agreement.

• Scopefor changesto State or Federal regulatory arrangements to encourageenvironmentally responsible development, without compromising natural heritage.

• Review of the competitive structure and functioning of the Tasmania-mainland corridor and the Tasmanian intrastate freight network, to include consideration of the Tasmanian Freight Equalisation Scheme and the Bass Strait Passenger Vehicle Equalisation Scheme.

• Potential mechanisms to promote further private sector investment, job creation and competitiveness in international shipping to and from Tasmania.

• Inclusion of issues of relevance to Tasmania as part of the comprehensive ‘root and branch’ review of national competition laws and competition frameworks.

• Adoption of irrigation proposals outlined by Tasmanian Irrigation, including consideration of projects that deliver the most economic return to Tasmania.

• Increasing Tasmania’s agricultural output, making the most of the State’s potential for high-quality, high value food production.

• Consideration of options for the building of new dams in Tasmania, including potential locations and the impact on local communities, the environment and the broader economy.

• Establishment and funding for a new Centre for Antarctic and Ocean Research in Hobart.

• Promote further private sector investment, job creation and competitiveness in Defence-related Tasmanian industries.

The Coalition’s Discussion Paper is the result of extensive consultation with the Tasmanian community by the four Liberal Senators for Tasmania.

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The release of the Coalition’s Discussion Paper: Building a Strong, Prosperous Tasmania comes on top of existing announcements to provide $400 million to get the duplication of the Midland Highway between Hobart and Launceston done; a commitment to protect the Tasmanian GST share from any detrimental changes; and our commitment to scrap the carbon tax.

The Coalition will release a comprehensive policy to encourage economic growth in Tasmania before the next election. The policy will be fully costed and funded.

The Coalition’s position on the distribution of GST to the States is clear: we will not support any proposal that disadvantages Tasmania.

Ending the economic decline of Tasmania that has occurred under the Labor/Green government is part of our Plan for a strong, prosperous economy and a safe, secure Australia.

The Coalition encourages industry, the community and interested parties to contribute to our discussion paper on Building a Strong, Prosperous Tasmania.

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Introduction The economic course of Tasmania can be reset to one of growth, jobs and rising living standards.

As a State with abundant natural resources, a conducive climate and extraordinary natural attractions, Tasmania ought to boast a vibrant and growing economy. It should be a high-productivity economy making the most of its opportunities in agriculture, tourism and a range of high value-added niche sectors, a leader in innovation, and a drawcard for domestic and foreign direct investment.

The State’s geographic separation from the mainland and its small local market size and population need not be hindrances to economic growth nor pre-determinants of lacklustre economic performance. Tasmania’s geographic and market conditions should, in fact, have given it an impetus to be more competitive and productive than other States or Territories.

But by any measure, this is not the case.

Tasmania’s recent economic performance has been at best lacklustre and at worst going backward.

The State has the lowest gross state product per capita in Australia, the nation’s highest unemployment rate, the nation’s lowest life expectancy, the highest standardised death rate due to suicide, the lowest proportion of adults in the nation who have attained a year 12

of people without superannuation coverage.

Tasmania’s socio-economic indicators paint a consistently unsatisfactory picture.

But this is a function of the choices that State and Federal governments have made - and it need not be the case.

The Tasmanian economy has drifted and declined under the policies of Federal and State Labor/Green governments.

The Tasmanian Chamber of Commerce and Industry has described Tasmania’s economic performance as “anaemic” and noted that:

government...deeper reforms, strong commitments to good policy and resource security and tight budget management will be key foundations for longer-term growth.1

Labor’s economic mismanagement has delivered low growth, the loss of employment and the steady decline of Tasmania’s competitiveness.

It does not have to be this way.

1. Tasmanian Chamber of Commerce and Industry, media release, 11 February 2013.

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A 2008 study by the Bureau of Infrastructure, Transport and Regional Economics found, for example, some improvement to Tasmania’s economic performance during the second half of the Howard Government:

The economic data for the 1990s reveals a slow and poor performing economy. The Tasmanian proportion of the national economy declined from a high of 2.2 per cent in 1991-92 to a low of 1.8 per cent in 2000-01. However, Tasmania has improved its economic performance this decade [the 2000s] by growing at an average annual rate of 3.7 per cent from 2000-01 to 2005-06, exceeding the national rate of 3.3 per cent.2

As this period under the Howard Government demonstrates, there is no reason why Tasmania, given the right governance framework and market incentives, cannot be at the forefront of Australia’s economic growth.

History demonstrates that island states can be economically vibrant and capable of delivering substantial annual growth in income and living standards, provided that public policy works to harness natural endowments, build on strengths, and promote investment, productivity and job creation.

Tasmania faces a choice - whether to become an economic backwater or to restore prosperity and, with it, opportunities for the future generations of Tasmanians.

settings. As the Bureau of Infrastructure, Transport and Regional Economics has argued:

Importantly for regional economies, poor government policy choices can destroy growth, while effective policies are conducive to but do not guarantee economic growth.3

Our discussion paper on ‘Building a Strong, Prosperous Tasmania’ seeks to encourage ‘Building a Strong, Prosperous Tasmania’ investment, restore economic growth and create jobs. Our approach seeks to draw on Tasmania’s traditional and natural strengths - forestry, agriculture, mining, tourism and niche research - and remove unnecessary impediments to building a stronger economy in Tasmania.

With the right governance framework, and by removing the anti-business approach of Federal

stronger, more vibrant and more resilient economy, underpinned by robust and sustainable industries - delivering more jobs and a higher standard of living.

2. Bureau of Infrastructure, Transport and Regional Economics, ‘A Regional Economy: A Case Study of Tasmania,’ Report 116, p.xix.

3. Bureau of Infrastructure, Transport and Regional Economics, ‘A Regional Economy: A Case Study of Tasmania,’ Report 116, p.xxiii.

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Background Tasmania is a small economy with a population of approximately 512,000.

The island State has many natural advantages, despite its geographic isolation from the mainland. It has abundant rainfall, a range of known mineral deposits, rich agricultural land,

also manufactures a wide variety of quality products and has the potential to attract high value-added industries. The State has, in other words, resources that the world wants and the potential to use those resources to its advantage.

The State has been an important contributor to Australia’s development.

Nevertheless, Tasmania has largely underperformed the broader economy.

As the Bureau of Infrastructure, Transport and Regional Economics notes:

From Federation to the late 1990s, over 75 reports into Tasmania have been conducted with the overwhelming conclusion that Tasmania’s economic performance has generally lagged behind the other States…A major feature of Tasmania’s economic performance was that it has consistently lagged behind other States and Territories over a long period. The underperformance was clear in a number of economic indicators, such as employment, participation rates, human capital and business investment.4

Apparent improvements to Tasmania’s economic performance under the Howard Government have been replaced by lacklustre and declining performance under Labor - see Box 1 overleaf.

The Gross State Product per capita in Tasmania is the lowest of any state or territory, having

stagnant over 2011 and contracted by 4.6 per cent over 2012. Tasmania was the only State or Territory to report a decline in real gross State income per capita in 2011-12.

Under the Rudd/Gillard Government no additional new jobs have been created in Tasmania - in fact, one in ten full time jobs have been lost.

Under Labor, unemployment has steadily risen in Tasmania - see Table 1 overleaf. The number of unemployed has risen by 5,300 in Tasmania since November 2007, compared to a 10,000 decrease in unemployment under the Howard Government.5

Moreoever, the increase in unemployment under Labor has occurred despite increasing out migration from Tasmania to other States, largely to seek work elsewhere because of poor job prospects in the State; and despite a decline in the participation rate among

of out migration to other states, if the participation rate remained the same as it was under the Howard Government, then the unemployment rate in Tasmania would now be around 9 per cent in trend terms.

4. Bureau of Infrastructure, Transport and Regional Economics, ‘A Regional Economy: A Case Study of Tasmania,’ Report 116, pp. 3 and 18.

5. The Tasmanian Treasury has noted there can be volatility in data “especially for a small economy such as Tasmania” and that dat a for

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Box 1: Comparative Measures of Tasmania’s Recent Performance

Tasmania has the lowest Gross State Product per capita in Australia.

Tasmania has the highest unemployment rate of any State, standing at almost two percentage

Tasmania has the lowest workforce participation rate of any state in Australia and the lowest average weekly earnings in Australia.

projected for 2012-13.

Tasmania has the lowest proportion of adults in Australia that have attained a year 12

The State has the lowest life expectancy and the highest standardised death rate in Australia.

For the past three years retail sales in Tasmania have only increased in one month out of every three. Retail sales in the state fell by almost 3 per cent over 2012, compared with growth of over 3 per cent nationwide.

Over 60 per cent of the State Government’s revenue comes from grant funding.

GST distribution is the State Government’s largest single source of income.

Tasmania (%) Australia (%)

March 1996 10.3 8.4

November 2007 5.4 4.3

August 2010 5.9 5.2

April 2013 7.4 5.5

and future productive capacity, almost doubled in Tasmania under the Howard Government, but has gone backwards in recent years under Labor - see Table 2 below.

The State Government has increased a range of taxes, including increases to taxes on light vehicles. State level taxation per person increased by 20 per cent between 2006-07 and 2011-12, the second highest rate of increase after Victoria.

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Tasmania

March quarter 1996 556

December quarter 2007 1,152

September quarter 2010 1,020

December quarter 2012 974

Source: ABS 5206.0 Australian National Accounts: National Income, Expenditure and Product.

Over 60 per cent of the State Government’s revenue comes from grant funding and GST distribution is the State Government’s largest single source of income.

The overall picture for Tasmania is of a State that is failing to encourage growth or build a hopeful future for the generations to come. It is a State that appears to be reducing opportunities for Tasmanians not expanding them.

This needs to change.

Tasmanians deserve a government that has a positive vision for the State and the nation.

Release of a discussion paper

In response to a growing recognition of Tasmania’s lacklustre socio-economic performance under Labor, the Leader of the Opposition, the Hon Tony Abbott MP, established a Working Group to develop proposals to encourage investment, restore economic growth and create jobs in Tasmania.

The Working Group consists of the four Liberal Senators for Tasmania, Senator the Hon Eric Abetz, Senator the Hon Richard Colbeck, Senator Stephen Parry and Senator David Bushby.

The Coalition believes that positive, constructive and effective policies can only be developed through meaningful and genuine public consultation. It is critical that any policy decisions on Tasmania are well thought through, practical, achievable and likely to promote the State’s economic development.

The Working Group has consulted with business leaders, investors, community leaders, academics, local government and the community. Many ideas have been put forward to the

Tasmania and the Sense-T project at the University of Tasmania.

As a result of this consultation, the Working group has developed a discussion paper on Building a Strong, Prosperous Tasmania.

Our discussion paper on Building a Strong, Prosperous Tasmania is aimed at stimulating debate and attracting constructive input and feedback. Consultation will help shape a formal Coalition blueprint for the economic development of Tasmania.

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Contributing to the discussion paper on Building a Strong, Prosperous Tasmania

The Coalition encourages industry, the community and interested parties to contribute to our discussion paper on Building a Strong, Prosperous Tasmania.

Written submissions are invited by 28 June 2013 and can be sent electronically to senator.abetz@aph.gov.au or by mail to:

Senator the Hon Eric Abetz Growing Tasmania Input 136 Davey Street HOBART TAS 7000

If interested parties have any questions or need any further information, they should not hesitate to contact Senator Abetz at the email address above or any Tasmanian Liberal Senator.

The Coalition’s discussion paper on Building a Strong, Prosperous Tasmania is only the beginning of an ongoing dialogue on the best way forward to restore hope, reward and opportunity for Tasmania.

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Policy issues The fundamental task of government is to put in place policies that maximise the economic and social outcomes for individuals, organisations and the broader community.

Government works best when it limits itself to providing and enforcing the right institutional

Government works best when it acknowledges that in most circumstances the private sector

the centralised hand of government.

The challenge for government is to implement public policies that create incentives for investment, job creation, innovation, and productivity growth. By doing so, governments will provide the conditions for sustainable real wage growth, higher national income and improved standards of living.

There are, of course, situations where the overall public good, including non economic costs

governments that become too focussed on opposing development and closing off economic opportunities end up, in the long run, damaging not only their economies but also the other key social or non economic indicators they claim to be concerned about.

Stronger economic growth is not an end in itself - but it is the necessary foundation for the better services, cleaner environment and modern infrastructure that everyone wants.

Policies that discourage or distort markets should generally be rejected because they undermine the incentives necessary for individuals to act in ways that optimise economic and social outcomes. Policies that remove market failures should be favoured over short-term political ‘solutions’ to these market failures, because the latter do not get to the root of the

advantages for one group over another should generally be rejected because they promote perverse, rent-seeking incentives rather than encouraging wealth creation for the community as a whole.

The Coalition does not support unfettered and unregulated markets. Appropriately regulated

deliver the best outcomes for consumers, families and the broader community.

Responsible government will, in other words, seek to promote robust growth while curbing the scope for market failures in areas where actions have impacts beyond those taking them. It will focus on delivering real, tangible gains for citizens by creating institutional frameworks and market rules that provide incentives for investment, innovation, and productivity growth, while limiting unintended detriments like environmental degradation or social exclusion.

Unfortunately, the Tasmanian economy is being held back by a wide range of policies from Labor/Green Governments at both the national and State level, that needlessly undermine growth or exacerbate rather than overcome market failures.

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Natural Resouce Restrictions

First, Federal and State Labor/Green Governments have put in place excessive restrictions on the use of natural resources that are a source of comparative advantage for Tasmania’s economy. Over 44 per cent of Tasmania’s land mass is ‘locked away’ from development or industry use. Large tracts of valuable resources, including mineral and timber, are unusable due to restrictions imposed by Federal and State Labor/Green Governments, often for political

Australia’s wood product requirements, Tasmania’s forestry industry has contracted. The Australian Bureau of Agricultural and Resource Economics and Science recently noted:

of around 15,000 hectares a year over the decade to 2008-09, to 4,000 hectares in 2009-10, and 1,500 hectares in 2010-11.6

Tasmanian industries that are holding these industries back or driving them to relocate elsewhere. The carbon tax, for example, adds to the cost of shipping components and goods to Tasmania and increases electricity and gas costs for business. When considered in concert with unnecessary resource constrictions, the carbon tax is holding back the development of industries where Tasmania has a comparative advantage, thereby denying employment opportunities for Tasmanians.

The mining tax similarly acts as a disincentive for some investment and job creation in Tasmania. Although small by Australian standards, Tasmania does have some iron ore and coal mining - so it is not only Western Australia and Queensland that are potentially affected by the mining tax. More importantly, Tasmania also supplies a range of mining equipment

amongst others. By hampering mining development elsewhere in Australia, the mining tax

Greens government would almost certainly seek to expand the existing mining tax to include many of these other minerals, as the Greens have explicitly called for.

New Development Restrictions

development of new products or limit incentives for industry aggregation and contestability, particularly at export facilities.

because they are prevented from realising scale economies or differentiating production into

Key Agricultural Industries in Tasmania,’ September 2012, p.20.

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and food purposes is, for example, being held back by the State Government’s Poisons Act, even though the Farmers and Graziers Association believe that Tasmania capitalising on global demand for hemp could bring millions of dollars of much-needed revenue into rural communities. Red tape has also hamstrung investment and industry development, with the Institute of Public Affairs calculating that

- including more than four and a half times more regulation per person than in Victoria.

Non-Productive Resource Reliance

Fourth, the State Labor/Green Government has become increasingly reliant on non-productive

administration and a lack of incentive to bolster the State’s productive capacity. Over 60 per cent of the State Government’s revenue comes from grant funding. GST distribution is the State Government’s largest single source of income.

This reliance on non-productive revenue sources means the State Government has less incentive to pay attention to the concerns of the private sector or to boost the competitiveness of local industries. This is contributing, at least in part, to the adoption of yet more policies that distort investment, hinder innovation, and slow productivity growth - so that bad policies are being layered upon bad policies, reducing the state’s capacity for sustainable real wage growth and improved standards of living.

Lack of Certainty

Finally, Federal and State Labor/Green Governments have failed to provide consistent and certain regulatory settings. Changes to forestry agreements, ad hoc sector and repeated changes to the mining and carbon taxes have resulted in lower investor certainty and increased the perceived risk of doing business in Tasmania. The consequence is exacerbated sovereign risk and thus higher investment costs for business.

If we are to see greater investment, job creation, innovation, and productivity growth in Tasmania, then the failures caused by Federal and State Labor/Green Governments need to be corrected.

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Matters for public discussion The Coalition has already outlined a range of measures that will reduce the cost of doing business in Tasmania and promote investment, innovation and productivity growth. Some

economic and business climate in Tasmania, supporting jobs growth, investment and demand.

These measures are outlined in Box 2 overleaf. They will provide an immediate and tangible boost to growth in Tasmania.

could be considered to further unshackle the State’s economy and restore hope, reward and opportunity to Tasmania.

1. Striking the right balance between promoting growth and protecting Tasmania’s natural endowments

No one thinks that Tasmania should simply plunder its natural resources in the pursuit of higher standards of living. Sustainable development and a more competitive economy depend on appropriate investment that balances the sustainable use of natural resources, and protection of the environment, with responsible value creation.

The locking up of over 44 per cent of Tasmania’s land mass by successive governments has, however, arguably been a step too far in balancing the demands of environmental protection severely hampered the local economy and hamstrung real wage growth, reducing job opportunities and standards of living for all Tasmanians. The threat of locking up a further 8 per cent of Tasmania’s landmass under the Inter-Governmental Agreement not only raises issues of sovereign risk and uncertainty, but also the capacity of the State to sustain itself economically, when this would result in the locking up of more than half of Tasmania’s already small land mass.

There is no reason why the locking up of 44 per cent or more of the State is either economically or environmentally responsible. The United Nations’ Food and Agriculture Organisation has noted, for example, that sustainable forestry practices can deliver both environmental and

A challenge for the forestry profession is to communicate the simple idea that the best way of saving a forest is

forest management are applied and forest products and ecosystem services play an increasing role, the global economy will become greener…

…When looking for ways to stimulate economic development, politicians and planners seldom see all the dimensions and potential of the forest sector. Forests are viewed as either a feature of the environment to be preserved or, in stark contrast, a source of land to aid the expansion of agriculture. A balance should be found in which forests contribute to achieving all these goals: sustainable forest management adds value to a forest by using forest products for energy, construction materials, packaging and a wide variety of other consumer products while preserving the pieces and functions of a healthy forest ecosystem. When sustainable forest management is practiced, the value of the natural forest can largely be maintained.7

7. United Nation’s Food and Agriculture Organisation, ‘State of the World’s Forests 2012,’ pp.vi and 29-30.

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Box 2: Immediate policy measures to grow Tasmania

On the Gillard Government’s own estimates, Labor’s carbon tax means Tasmanian households are paying around 10 per cent more for electricity and gas. The Coalition will put an end to this by

We will so that families have

more spending power and businesses have greater incentive to invest and create jobs.

We will encourage investment and job creation in Tasmania’s resources sector by , a tax that has collected virtually no revenue but done immense harm to our international investment reputation.

To support responsible development of the forestry sector, we will

We will Australia wide. This will

make it easier for businesses to invest, innovate and create jobs, including in Tasmania.

We will conduct a to and from

Tasmania. According to Deloitte Access Economics, Labor’s changes to domestic shipping laws will cost the Tasmanian economy $466 million over the next decade, with freight charges to soar by up to 16 per cent and the loss of 570 full-time Australian jobs.

movement of goods and people. That is why we will so that

We will by introducing mandatory work for the

for people under 30 in areas where unskilled work is readily available.

We will by ending government waste, balancing the

Budget and starting to pay back Labor’s record debt.

will to ensure fair and effective

competition in all sectors of the economy.

To promote more business investment, we will so that large-scale projects that create jobs can get going sooner while maintaining existing levels of environmental protection.

We will boost investment and productivity growth in the Tasmanian construction sector by and requiring

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Development should also not be hamstrung by excessive red tape and regulation. The Tasmanian Farmers and Graziers Association notes, for example, that:

Tasmania has the most stringent regulatory requirements of any Australian State, and so our farmers are

export markets - but particularly in markets such as those in Asia where costs of production are low.8

Regulation is important, but it should not inhibit environmentally responsible investment that creates the jobs, productivity and higher real wage growth that Tasmanians could enjoy.

The Coalition will pursue policies that get this balance right. By doing so, we will best ensure Tasmanians and all Australians can experience higher standards of living in the long-term while protecting the State’s remarkable natural heritage.

1a. The economic costs of the proposed Inter-Governmental Agreement, which would see the proportion of the State locked away from all development rise to over 50 per cent, and whether there are alternative ways in which desired environmental outcomes could be better balanced with the need for Tasmania to promote economic growth and job creation.

1b. The scopefor changes to State or Federal regulatory arrangements which wouldencourage environmentally responsible development within Tasmania, without compromising the State’s natural heritage.

2. Reducing the cost of doing business in Tasmania - shipping reform

The fact of Tasmania’s separation from the mainland is generally accepted to increase Tasmanian business costs. The thrust of this argument is that transport costs to/from the mainland create an additional cost burden on Tasmanian businesses, in getting their goods to market, vis-à-vis businesses on the Australian mainland.

there is merit to this argument (although this same cost burden could at least, with the right

It is for this reason that successive Coalition Governments introduced measures aimed at offsetting the transport cost disadvantage faced by Tasmanian industries that, unlike their mainland counterparts, do not have the option of moving their goods interstate by road or rail. The Fraser Coalition Government introduced the Tasmanian Freight Equalisation Scheme

the Bass Strait Passenger Vehicle Equalisation Scheme in 1996.

The TFES has successfully encouraged freight movement between Tasmania and the mainland. Claims paid under the Scheme increased steadily between 2004-05 (6,377 claims

8. Tasmanian Farmers and Graziers Association, ‘Submission to Tasmania’s Place in the Asian Century Issues Paper,’ October 2012, p.7.

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claim has decreased from approximately $14,000 in 2004-05 to $7,735 in 2009-10.

The Government committed around $100 million in 2012-13 for the TFES.

The Coalition continues to support the TFES and Bass Strait Passenger Vehicle Equalisation Scheme.

There are, however, opportunities to improve the ongoing effectiveness of the schemes as they

…operating rules and the parameters used to determine eligibility and assistance payments have become

…there are shortcomings in several key areas of program administration, which include the absence of a risk-based approach…9

There are valid questions as to whether the TFES is overly complex, whether it incorporates a

Fundamental, however, is whether shipping arrangements to and from Tasmania are

shipping market for bulk and non bulk goods is vital to ensuring Tasmanian businesses have the maximum opportunity to succeed against their mainland and overseas competitors, as well as to minimising the burden on taxpayers from equalisation arrangements.

Fundamental, downward pressure on the cost of doing business in Tasmania will occur if greater competition occurs in the shipping and transport sectors. The introduction and expansion of international shipping services directly to/from Tasmania will, for example, create competitive tension in the freight sector and generate incentives for existing freight operators to be more cost effective and innovative and for international shipping to service Tasmania. The Tasmanian Department of Premier and Cabinet notes, for example, that:

…there is no-longer an international container shipping line berthing at Tasmanian ports, resulting in higher costs for exporters and reducing the competitive position of Tasmanian industry on domestic and international markets.10

The Coalition has already announced that we will establish a review into the effectiveness and

more competitive industries and a stronger economy for Tasmania. It will examine whether

and it will incorporate an examination of the TFES (including whether reforms are necessary

The review will include the Scheme’s effectiveness for Flinders and King Islands as well.

A key consideration is the scope of the shipping review.

10. Department of Premier and Cabinet, ‘Tasmania’s Place in the Asian Century,’ Issues Paper, August 2012, p.23.

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Should this review, for example, be limited to the structure, content and functioning of the TFES and the Bass Strait Passenger Vehicle Equalisation Scheme or should it be broadened to incorporate consideration of the competitive structure and functioning of the broader Tasmania-mainland freight corridor? If the latter approach is adopted, should the review consider the competitive structure of Tasmania’s intra- and inter-state freight networks? Such an approach would be broadly consistent with the views of the National Infrastructure Co-Ordinator, who has called for “a review of shipping costs and competition policy issues for both sea freight and passenger services”11 the scope of inquiry and the timeframe needed for such a review to be completed.

Regardless of its scope, the Coalition believes that a comprehensive review of Tasmanian shipping is a vital element of reducing the cost of doing business in Tasmania.

In saying this, we are mindful of previous reviews into the various Tasmania-mainland transport schemes.

just their views on the effectiveness of the current subsidy schemes, but present potential improvements to the structure and functioning of the schemes and of Tasmanian shipping arrangements more generally. Stakeholders should also, if possible, detail alternative options that will simultaneously lower the cost of doing business in Tasmania and promote productivity growth.

2a. The implementation of a review of the competitive structure and functioning of the Tasmania-mainland freight corridor and the Tasmanian intrastate freight network, to include consideration of the Tasmanian Freight Equalisation Scheme and the Bass Strait Passenger Vehicle Equalisation Scheme.

2b. Potential mechanisms to promote further private sector investment, job creation and competitiveness in international shipping services to/from Tasmania. The Coalition will not, however, support mechanisms that encourage public sector involvement or rent-seeking behaviour by the private sector.

3. Competition reform

While successive Tasmanian State governments have introduced a range of competition

necessary to ensure stronger and more sustainable economic growth over the long-term.

A matter of concern is the competitiveness of Tasmania’s economic infrastructure, especially infrastructure required for export industries.

11. Michael Deegan, Letter to the Hon Anthony Albanese, 24 May 2012.

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The National Infrastructure Co-Ordinator has noted that:

• to Tasports; • • the rail network - poor infrastructure condition and operating subsidies.

Each of these would have a negative impact on the competitiveness of businesses located in Tasmania, and on the Tasmanian economy generally.

…the split between three ports results in Tasmanian industry not enjoying some scale economies available to their mainland counterparts.12

services in the absence of more competitive port facilities with greater throughput.

Recent changes to domestic shipping laws by the Gillard Labor Government have only made Tasmania’s freight services more uncompetitive. According to Deloitte Access Economics,

over the next decade, with freight charges to soar by up to 16 per cent and the loss of 570 full-time Australian jobs.

The Coalition’s comprehensive ‘root and branch’ review of Australia’s competition laws and competition framework, already announced, will provide broad scope to identify areas

The original National Competition Policy, introduced in the 1990s, resulted in a 19 per cent fall in average real electricity prices nationwide and conservatively increased GDP by 2.5 per cent

incentive payments by the Commonwealth to the States and Territories to the implementation of competition reforms and realised productivity gains. realised

The Tasmanian Government has noted that the original National Competition Policy:

…assisted the State in meeting its objectives of attracting investment, generating employment and achieving higher levels of economic growth.13

Detailed consideration of Tasmania’s industry structure may be a necessary precursor to achieving long-term competitiveness, investment, productivity and higher real wage growth for the State.

In this context, the Coalition believes that a ‘root and branch’ review of

competition laws must incorporate consideration of structural economic issues that determine the long-term competitiveness of Tasmania and the Australian economy.

12. Michael Deegan, Letter to the Hon Anthony Albanese, 24 May 2012.

13. Cited in Bureau of Infrastructure, Transport and Regional Economics, ‘A Regional Economy: A Case Study of Tasmania,’ Report 116, p.xxii.

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The Coalition’s ‘root and branch’ review will consider broad competition issues and will not be constrained or limited to consideration of just the functioning and effectiveness of the Competition and Consumer Act.

The Coalition will, in other words, implement a competition review akin to the parameters and substance of the Hilmer Review. Such an approach is appropriate if we are to lay the base for a more productive and competitive 21st century economy and a more prosperous Australia.

3a. Issues of relevance to Tasmania which should be considered in the Coalition’s comprehensive ‘root and branch’ review of the national competition laws and competition frameworks - including consideration of reforms to the structure, utilisation and contestability of Tasmania’s economic infrastructure.

4. Tasmania’s agricultural and irrigation potential

Agriculture has regrettably often been overlooked in Tasmania’s future growth prospects.

Tasmania has abundant rainfall.

Bringing that water resource to the more fertile agricultural lands has seen growth in production which can be enhanced even further. The Meander Valley Irrigation Scheme, for example, will increase the gross value of production in that valley by $27.3 million per year, which is a 23 per cent increase in output compared to before the scheme was developed.

Proposals for irrigation works that would support jobs growth, investment and the further development of Tasmania’s agricultural sector have been developed by Tasmanian Irrigation. These include proposals around the Blythe River, Circular Head, Southern Highlands and Scottsdale that could develop and enhance Tasmania’s agricultural industries over the next one hundred years.

The Coalition believes that the need for dams for both agricultural and tourism purposes is now well and truly understood. There is the potential to dramatically expand agriculture and dairy production in Tasmania by developing new dams, without compromising the State’s outstanding natural heritage.

4a. The adoption of irrigation proposals outlined by Tasmanian Irrigation, including consideration of projects that deliver the most economic return to the Tasmanian economy.

4b. Options for the building of new dams in Tasmania, including consideration of potential locations and the impact on local communities, the environment and the broader economy.

4c. Other options for increasing Tasmania’s agricultural output, to make the most of the state’s tremendous potential for high quality, high value food production.

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5. Promoting research and innovation

advantage.

One of Tasmania’s key strategic advantages is its proximity to Antarctica.

The Coalition has a proud history of recognising and capitalising on this advantage.

DuringapreviousFederalCoalitionGovernment,withthesupportoflocalFederalrepresentatives especially Michael Hodgman, Bruce Goodluck and Shirley Walters, the Antarctic Division was

Hodgman, MHA. A former distinguished Governor, Sir Guy Green, has acted in a variety of roles and successfully enhanced the State’s reputation as a gateway to Antarctica.

Since that time, the Convention for the Conservation of Antarctic Marine Living Resources, the Antarctic Climate and Ecosystems Cooperative Research Centre, and the Integrated Marine Observing System have been located to Hobart. Hobart also hosts an important node of the CSIRO specialising in Southern Ocean research.

There is no doubt that with the CSIRO, the Antarctic Division, the Convention for the Conservation of Antarctic Marine Living Resources, the Antarctic Climate and Ecosystems Cooperative Research Centre and the Integrated Marine Observing System, Hobart has

There are two limitations to the existing Antarctic research programmes in Tasmania. First, the programmes are administered by numerous Departments and funding sources.

Second, funding for some programmes (such as the Antarctic Climate and Ecosystems

certainty. The Government has provided $9.5 million in the 2013-14 Budget to support Australia’s presence in the Antarctic and $7.9 million over four years for the Aurora Australis icebreaking vessel used to support the Australian Antarctic Programme. But it is an open question as to

maximise Tasmania’s Antarctic-related research potential.

Long-term secure funding could realise the vision of a greater Antarctic role for Hobart.

Whilst Tasmania has an excellent reputation and record in Antarctic research, it faces constant competition from New Zealand and South America.

It appears that Tasmania’s Antarctic research capacity could be better utilised through more concerted and concentrated facilities that provide funding certainty and greater scale economies.

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The Coalition believes there is scope for appropriate Commonwealth agencies or functions to be relocated in whole or part from Canberra to Tasmania.

Relocation of Commonwealth agencies or functions should only occur where there is an inherent logic, cost advantage and where there is complement between the capabilities of the agency and the comparative advantages of the region.

5a. The establishment of a new ‘Centre for Antarctic and Ocean Research’ in Hobart that will incorporate the existing Antarctic research activities, whilst retaining their individual independence.

5b. Appropriate funding for a new Centre for Antarctic and Ocean Research, including consideration of increased funding tied explicitly to performance targets such as patent applications, research publications and tangible industry or business linkages.

5c. The relocation of Commonwealth agencies and functions to Tasmania and whether any such relocation would be mutually advantageous to both Tasmania and the nation

productivity growth.

Tasmania has a number of Defence-related facilities and industries, including the Australian Maritime College and various manufacturing facilities.

While Australia’s strategic outlook may not warrant an increase to Defence facilities in Tasmania, there is potential for Tasmania to develop its expertise and capabilities in Defence-related facilities and industries.

The HMAS Jervis Bay was successfully deployed for our East Timor operations in the late 1990s, highlighting the effectiveness of this Tasmanian-built vessel for defence operations.

There is potential for the State to attract further investment in maritime research or manufacturing targeted for Defence procurement, as well as to leverage up existing related Defence-expertise. The food research facility at Scottsdale’s Defence Science and Technology Organisation site could, for example, become a major international centre for food research

Removing barriers and costs to business are important mechanisms to improve both the capabilities of Defence-related industries and the attractiveness of investment in such industries.

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consideration should be given to mechanisms (such as structural reforms to the Tasmanian

in Defence-related Tasmanian industries.

6a. Potential mechanisms to promote further private sector investment, job creation and competitiveness in Defence-related Tasmanian industries.

Authorised and printed by Brian Loughnane, for the Liberal Party, cnr Blackall and Macquarie Sts, Barton ACT 2600. May 2013.