Leading economist Saul Eslake fears Tasmania will take longer to come out of recession than the rest of Australia.
Mr Eslake said he was surprised that the fall in state final demand in the June quarter was the third worst in the country after New South Wales and Victoria, and worse than Queensland, South Australia and Western Australia.
“I suppose that’s partly because of the lock-down on the North-West Coast after the COVID-19 outbreak at the North West Regional Hospital,” he said.
“But it also casts a bit of doubt on the Premier’s repeated assertion that because we were doing better than the rest of Australia going into this recession (which is true) we will also come out of it faster (which I don’t think is necessarily true).
“If you look at the last three recessions – the early 80s, the early 90s and the GFC and afterwards, we went into two of those (early 80s and GFC) with lower unemployment than the rest of Australia: yet, despite that, our unemployment rose by more to a higher peak than the rest of Australia and took longer to come down to where it was before the recession than the rest of Australia.
“That’s almost inevitable because we are a small, narrowly based economy that is inherently more vulnerable to external shocks.”
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Mr Eslake said Tasmania was more dependent than any other state on tourism, with 17 per cent of the State’s jobs directly or indirectly dependent on tourism.
“Likewise some of our good economic performance pre-pandemic, especially in housing construction and the property market, owed a lot to the turnaround in migration across Bass Strait, especially among people in their 20s and 30s, and to the fact that we were getting a record amount of overseas migrants.
“Who knows whether interstate migration will pick-up strongly once it’s allowed to – and overseas migration almost certainly won’t when our overseas borders are re-opened, because the government will probably want to keep the migration intake lower than it was pre-pandemic while there are still lots of Australians without jobs.
“So one of the main drivers of Tasmania’s good performance pre-pandemic probably won’t be as strong as it was before.”
Tasmania’s agricultural export industries were also vulnerable with China wanting to punish Australia, he said.
“As much as we want to think that our wine, our seafood, our beef, our lavender, etc., is the best in the world (and in many cases that’s true), the Chinese can readily enough find alternatives that might not be quite as good but are good enough, from other places.
“And unlike Western Australia or Queensland, most of our exports to China are agricultural products.”
Mr Eslake said it also was worrying that people were saving the highest proportion of their after-tax incomes since the June quarter of 1974.
He said people were not spending on eating out, travel or sport or entertainment.
“For most people, incomes hadn’t changed all that much — yes, quite a lot of people lost their jobs, some of them temporarily, but some people actually earned more than they normally would have done (part-timers who were supported by JobKeeper).
“People who did lose their jobs got significantly higher benefits under JobSeeker + Coronavirus supplement than they would have done under the old NewStart, plus there was the round of cash handouts to pensioners and others on social security benefits.”