Tasmanian State Election - Building Resilience through Public Policy

How Tasmania can Prosper – the Conversations we Have to Have

Well its election time again in the great State of Tasmania. I initially set out to write a political commentary to help local readers better exercise their civic duty (voting is compulsory in Australia) but changed my mind. Instead I have tried to answer the question: “what would have to change for Tasmania to become economically self supporting?” It is a question with wider implications because Tasmania is a marginalised peripheral economy. There are lots of them in the world and we can learn from what works elsewhere.

So rather than talking about who to vote for, let’s talk about what we need….I don’t have all the answers but I would like to start a conversation, so here goes….

Evidence Based Policy....

Tasmania is stuck in a hole. It is a welfare dependent State in which forty per cent of the adult population are on some form of welfare/pension, youth unemployment is around 20 per cent, a handful of large foreign based businesses call the shots, the population is ageing and unwell, and the political class spend their time on wedge social issues and slagging the other team instead of figuring out how to fix things.

The thing that most needs fixing is the fact that almost everything that is spent on retail, insurance, chattel and home mortgages, business finance, gambling, much of our hospitality, and increasingly food, leaves the State to line the pockets of people who live somewhere else. Vast amounts of money have been made from mining but Tasmania is littered with dead, dying or just plain poor mining towns. The money is not here. Mining the Tarkine will help some folk for a time but it will not fix our economy. In my opinion things will only improve if we find an economic model that keeps our wealth circulating at home.

Here is an imaginary story based on real world examples that have worked elsewhere. Not all of these initiatives are necessary and not all are possible, but all are worth talking about.

“Once upon a time Tasmania established a State Bank which could issue its own credit. The bank was given the same charter initially given to the Commonwealth Bank of Australia and for the same reasons. In addition the Bank provided small business finance at below market rates to foster and encourage small business. In addition the Government offered State based insurance for basic insurances on a not-for-profit basis. In this way a huge amount of money was kept in the State that would otherwise have left. Shares in both the State bank and the insurer were issued to all long term residents thus circulating money within the local economy. In addition to issuing dollars the State bank issues each long term resident with a ‘Taz’ which was time limited currency only recognised in the State. This had an immediate stimulatory effect on business by encouraging spending and preventing hoarding. The government also sponsored an Island wide ‘Community Exchange System’ or ‘tally system’ which allowed the exchange of goods and services without money. This system enabled persons with low incomes but with skills, to participate more fully in the economy and community. It increased business activity and strengthened the social fabric. Being untaxed it could also be considered an indirect form of economic assistance.

The Government appointed a Small Business Minister who soon learnt that the chief concern of small business was the cost of electricity, and that small business and consumers heavily subsidised a handful of bulk industrial power users. The Minister also found that small business was the single greatest employer outside the public service. The Government therefore mandated a single electricity price for all users in the State. This led to a dramatic increase in small business confidence and consequent uplift in employment. Bulk power users were concerned about how this might impact their viability but a ‘supply and demand’ study found that there was abundant electricity if it were not exported to Australia via Bass Link. From that time on only surplus electricity was exported and importation of electricity was banned. However the State continued to invest in wind power as a natural compliment to base load hydro electricity increasing security of supply and exporting the surplus. Income from exports was then used to drive down the domestic price or re-invested in further production.

The Small Business Minister also learnt that there was no effective civil enforcement mechanism for non-payment of debts. The law was modified to allow persons to obtain a ‘debtors judgement’ in the Courts and have that judgement enforced on a fee for service basis by the Monetary Penalties Enforcement Service. Assurance of debt recovery boosted business confidence.

 

This success in stimulating small business led to some serious debate about taxation policy. The new Government put a proposal to the Commonwealth to make Tasmania a ‘special economic zone’ in which all taxes were abolished except for GST, company tax, resource royalties, personal income tax; and taxes on alcohol, sugary drinks, and imported tobacco. Abolished taxes included FID, stamp duty on cars and homes, motor vehicle registration, land tax, capital gains tax, air port taxes, and taxes on employment. In addition council rates were found to be a poll tax where rates were based on the nominal value of a property rather than a fee for a service. Councils were obliged to radically restructure their rates. Those that were found to be unviable were merged. Motor vehicle owners were obliged to pay into an insurance fund – either the State insurer or a private equivalent, for medical care. These changes in themselves saved a great deal of bureaucracy and encouraged investment and employment. Removing a tax on motor vehicle registration was particularly beneficial to farmers and other businesses.

However all of this tax cutting led to something of a funding crisis for the public service which had already been asked to ‘do more with less’. The Government addressed this firstly by making a law allowing Departments to reduce staff hours as an alternative to redundancy. This copied the approach adopted by Germany during the GFC. It enabled cost cutting during hard times but kept critical skills, corporate memory and social capital within the public service, avoided a crisis of confidence, and kept money circulating. It also avoided the former ‘boom and bust’ approach where the public service grew during the good times then faced harsh redundancies during the harsh times.

The first Department to be tackled was Health and Human Services. The Government knew that it would never be able to provide a comprehensive public health system in Tasmania. This has been understood by academics and health professionals for over 20 years and reflects the situation in the rest of rural Australia. The Government also realised that Australia failed to tackle the emerging national health crises in part because the health system is run by and for the benefit of doctors and medical specialists. Further, legal liability increased the cost of medicine because medical practitioners feel safer referring patients to specialists. This has led to a dumbing down of general practise. In tackling these issues the Government set out the following policy road map:

·        Limit liability and the amount of liability claims by law, and provide a State sponsored not-for-profit professional indemnity scheme for medical professionals.

·        To the greatest extent possible for a state government, implement the recommendations of the Productivity Commission Report into Health Workforce (Australia’s Health Workforce, Productivity Commission Research Report, Productivity Commission 11 December 2005). See further: http://www.pc.gov.au/projects/study/health-workforce/docs/finalreport

·        Allow appropriately trained nurses to perform most of the treatment and diagnosis currently performed by GPs, both privately and in the public system, under remote supervision by a doctor.

·        Protect the practise of midwifery in private homes.

·        Trial delivery models for treatment in patient’s homes thereby freeing up hospital beds.

·        Trial delivery models for outsourcing medical treatment to developing countries.

·        Trial delivery models for web based analysis of medical data from specialists outside Australia where this is more cost effective.

·        Remove restrictions on intake numbers to surgery and medical specialist courses.

·        Properly fund medical student placements so that medical graduates are not obliged to pay ‘up-front’ and do not graduate with a substantial debt.

·        Restrict sugar, salt and fat content in drinks and processed foods.

·        Tax sugary drinks in the same way that cigarettes and tobacco are taxed.

·        Enact plain packaging for cigarettes.

While taxing imported tobacco the Government legalised the domestic production of tobacco for sale and personal use. As a result many people stopped inhaling tobacco laced with herbicides and pesticides in favour of less addictive organic leaf. These reforms over time delivered significantly better health outcomes and led to savings in the hospital system.

The next major area of reform was in education. Noting that previous State by State comparisons were unfair because Tasmania is part of regional/rural Australia, the Government compared educational outcomes against rural Victoria. While these results were more encouraging they were still found to be poor compared to OECD averages. The Government discovered that a decade of chaos with constantly changing curricula, constantly changing structures, and school closures had led to teacher burn out, loss of experienced staff, and lower educational outcomes. The Education Minister also learnt that in Tasmania a person can qualify as a teacher based on a university ‘pass’ of 49 per cent. This was lifted to 60 per cent overall, and 90 per cent in spelling, grammar and maths. The Minister also learnt that, while the requirements to qualify as a teacher in Tasmania are among the lowest in the developed world, the requirements to maintain registration are amongst the most onerous. This created a brain deficit at one end and a brain drain at the other. The Government moved to reverse that situation.

The Minister also found that:

·        Immigration, family breakdown and autism, have a negative impact on academic outcomes. It is simply not possible for a class room teacher to cater to high and complex needs, whatever their origin.

·        The state education system does not invest in bright students. There is no gifted education program in Tasmanian State schools, although gifted children both need more support than average, and provide a greater return on investment.

·        Many classes are chaotic and stressful because teachers have no effective tools of discipline and many parents do not discipline their children.

In light of the above the following approach was adopted:

·        rejecting the doctrine of ‘mainstreaming’ children in favour of special classes, and potentially special schools, where children with high and complex needs had some chance of getting their needs met;

·        advancing children according to their ability not according to their age;

·        abolishing teacher registration by shifting the onus of hiring competent staff to school principles;

·        shifting funding away from buildings and technology towards supporting class room teachers;

·        keeping focus on core competencies in maths, spelling, grammar and science;

·        supporting the right of parents to education their children subject to reasonable oversight by the Tasmanian Home Education Advisory Council;

·        increasing the age of compulsory schooling from five to six for girls and seven for boys in line with research on neurological development, particularly in boys; and

·        allowing appropriate disciplinary options for classroom teachers (following discussion with parent bodies).

The next area tackled was the criminal justice system....but the State Service Act prevents me from writing about it....

In tackling these issues the Government adopted the following policies. First they developed a realistic housing policy which is discussed later. Then they ...did another bunch of stuff I am not allowed to write about...

Tasmania had unfortunately inherited Australia’s decade long housing crisis. The self evident failure of the market mechanism to house families was identified as an exacerbating factor in almost every other social ill including crime and family breakdown. The Government conducted an audit of all vacant Crown land to which services could reasonably be connected then put low cost dwellings on that land. Initially these were pre-fabricated shipping containers that were fitted out at the prison as part of a ‘pay for incarceration for work’ scheme and as a trades training program. As modular units these could be configured to house anywhere from one person to a family of five as they are in Holland. Closed school buildings were re-modelled to hostel style accommodation. Various public/private partnership models were explored. In addition building and council regulations were changed to emphasise shelter over middle class ideals of housing. While the regulatory issues were initially complex, living in huts, sheds, shipping containers, and vehicles became a legal and viable alternative to housing insecurity and homelessness.

Having addressed health, education, justice and housing, the Government turned its attention to supporting agriculture. Unlike the Australian Government, the new Tasmania realised that not all investment is good, and that the buy-up of productive land by Chinese State companies did not reflect the operation of the free market, but rather reflected the foreign policy of the Communist Government of China. Sale of agricultural land to persons not resident in Tasmania was banned but Tasmanian farmers were allowed to lease land to foreign interests subject to a national interest test and limited to a 30 year lease.

Tasmanian retained its market niche by banning GM crops on the Island but actively encouraged establishment of an industrial hemp industry for the production various products including clothing, paper, food, oils, ethanol, and building materials. In time this came to be a major crop alongside poppies and essential oils. The Government did not invest money in irrigation although the State Bank was prepared to lend on favourable terms. However a comprehensive environmental impact statement examining salinity water table issues was always required. Similarly any person who wished to undertake coal seam fracking was required to prove that there would be no impact on the water table, and to conduct small monitored trials. This had the effect of banning fracking from most parts of the State. In recognition of the rights of farmers, the Government allowed farmers rights to all of their land to the centre of the earth and the right to deny access to it.

The new Government continued to respect the Forest agreement, recognising that industry had initiated negotiations, all parties had made compromises, and that the agreement was key to gaining recognition and international markets. The Government also commissioned a study into potential commercial uses of plantation timbers including composite structural timbers, log cabins, firewood, and combustion for electricity generation.

Those pushing for a Tasmanian Republic suggested that it could avoid buying expensive military toys and protect its territorial integrity by maintaining a citizen army. Military service would be compulsory after high school and would double as health and fitness training. Each person who was assessed as ‘fit to bear arms’ would be issued one and this weapon was kept under lock and key at local police stations to be issued in the event of war or insurrection, and for training. The police would became part of the new military structure thus creating greater linkages between the police and young people. Genuine conscientious objectors would not be obliged to participate. It was suggested that the Republic of Tasmania should be able to put around 80,000 people under arms – the same number as the Australian army.”