By TOM O’MEARA
The State Government will be called on to reconsider its opposition to changes by broadening the base or rate of GST, following a detailed investigation by leading Tasmanian economist, Saul Eslake.
Mr Eslake has been engaged by the TCCI to deliver this month’s Tasmania Report, which will provide an independent forensic review of the state’s economic and social performance, along with proposed solutions.
His support for GST change is one solution to shore up Tasmania’s vulnerable economy, which relies heavily on Federal Government funding and has fluctuated dramatically over the past four years.
Mr Eslake will recommend the State Government supports GST changes, providing the Federal Government doesn’t change the GST carve-up between states.
Mr Eslake says Tasmania’s economy is vulnerable to Commonwealth funding changes, but in the case of GST, Prime Minister Malcolm Turnbull has described as “inconceivable” any increase in the GST without compensation for low-income households.
“Tasmania gets an above average share of the GST. But as we also have an above average number of low income earners, there is an assumption the Commonwealth would be compensating for the impact,” Mr Eslake said.
“Therefore we would get an above average share of the compensation. It’s the only way we can go.”
The Tasmania Report will also reveal good news, with significant improvement in many aspects of the economy and confidence levels.
The bad news is the economic gulf that still exists between Tasmania and the rest of Australia. However, the net debt in Tasmania is now less than four other Australian jurisdictions.
While Mr Eslake supports changes in education and health, he says the government could do more, particularly in education. He will recommend a cultural change to help build retention rates, which includes a campaign to discuss discourage media and schools calling Grade 10 functions leavers’ dinners, or farewells.
The report also found the State Government’s spending in some functional areas was higher per capita than the national average. This includes $152m more on community health care services and $99m more on primary and secondary schools. This would suggest Tasmania’s poor education and health outcomes are not the result of insufficient spending.
The Tasmania Report will also dissect “unbelievable” public sector employment figures, which show employment in healthcare and social assistance has increased by 7000, or 22 percent in the 12 months to August, while employment in education and training has dropped by 4700, or 21 percent.
Social issues also need to be addressed, including problems created by extreme poverty and social exclusion. The report will provide some answers, in the knowledge that an improved economy raises incomes, which leads to fewer problems.
Undoubtedly employment, and unemployment, is a major contributor to poverty. The report will highlight that fewer Tasmanians have jobs; Tasmanians work fewer hours than the national average, which means lower incomes, and Tasmanian workers produce less productivity per hour than the national average.
The TCCI will share the recommendations of the report with the broader community and use the information as the backbone of its 2016 budget submission to State Government in the first quarter next year.
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