Peter Gutwein

Premier of Tasmania

24 February 2020

Peter Gutwein, Premier

Committee for Economic Development of Australia (CEDA) Speech

Christina, thank you for that overview. I’ve been to a number of these over the last six years and whilst there are some challenges, that was one of the more positive overviews that I’ve heard at one of these functions, so that was pleasing. Jarrod, my pleasure to be here today and thanks again for the introduction.

Ladies and gentlemen, what I want to run through today is just to provide, if I could, an economic update. I want to talk about the mid-year revised estimates report, touch on the Government’s priorities. We’re releasing the final terms of reference for the state’s sector review today, and also I want to just touch on, at the end, some thoughts around climate change.

Now, in terms of Tasmania’s economy, and the previous speaker touched on it, in terms of state final demand, in terms of growth, we lead the rest of the country. That’s a fantastic position to be in for a small jurisdiction like Tasmania.

Importantly, in terms of business confidence we lead the country as well. And again, you know, when we came to Government six years ago, one of our key aims was to ensure that we could rebuild business confidence. For a small jurisdiction like this, confidence is king. And if businesses are feeling confident, if consumers are feeling confident, then our economy works very well. And I’m very pleased that the private sector especially has responded to the Government’s policies, and we do have a very confident business sector. Interestingly enough, and it’s something that I like to point out often, is that when we came to Government, two out of every three small businesses thought that the previous Government’s policies were working against them. So, we had a good starting point to work from, and I’m very pleased that we’ve been able to, through our policies and through our actions, end up in a place where businesses in Tasmania are very confident.

In terms of what this has translated to, Tasmania now has an unemployment rate of 5.8 per cent, starting to catch, in fact it’s almost at the five-year national average, which I think is important. But one of the key things that I do want to point out is, since we came to Government, 21,100 more jobs have been generated. And I want to thank the private sector for that largely. The public sector and our Government businesses have played a role, but ultimately it’s because of the private sector having the courage to invest, to employ, and what we’re seeing now is much greater opportunity for Tasmanians.

Importantly, the growth rate in terms of employment growth, at 3.5 per cent in trend terms, was the highest in the nation, and so for us, again, for a small jurisdiction, we’re doing very well. The unemployment rate I’ve touched on, 1.7 per cent lower than when we first came to Government, and we’re working very hard to drive it lower still.

In terms of population, and Treasury were very quick to point this out to me early in my term as Treasurer. I note we have a Treasury table here, and I should just take a moment to thank Treasury for the work that they have done over the last six years. They are an exemplar organisation, and certainly you get frank and fearless advice from them. And their Secretary, I believe, leads, you know, one of the best Treasuries in the country, albeit it a small Treasury with limited resources, but does a fantastic job and, like the state, punches above its weight.

In terms of population growth, if there are jobs in Tasmania, our population increases - simple correlation. That’s what’s happened at every other occasion that we have had employment growth in this state that our population grows. And so, what we’re seeing is a very strong correlation in terms of population growth. Around 6,000 people was the increase last year in terms of our population. And what’s really interesting and important is that what we are seeing is a broader mix in terms of that growth. We’re now seeing a higher percentage of younger families coming to Tasmania and professionals coming to Tasmania.

I think as we continue with our infrastructure program and we roll that out as we announced in last year’s budget, we will see an increase in the number of trades people, engineers, that will see Tasmania as a vital, as an important opportunity for themselves, both in terms of career, but certainly in terms of their family.

The population growth that we’re seeing at the moment is the highest annual population growth in the state in thirty years. It’s growing at twice the long-term trend rate, and it’s now four times greater than the rate of growth, which was about 0.3 per cent when we first came to Government. But, again, with population growth there comes challenges, and that was one of the reasons why in last year’s budget we rolled out what was a record $3.6 billion worth of infrastructure spend for the state to ensure that we can build the schools, the hospitals, the roads, the bridges that we need.

In terms of tourism and our retail sectors, and we touched on this in Christina’s presentation, our tourism sector is growing very strongly, and in fact, the spend now by visitors to the state is more than $2.5 billion. Around 1.32 million visitors come to the state. One of the, and I point this out in terms of Chinese visitation, we have around three per cent of our visitation is Chinese, so around 40,000 visitors. The vast majority of our visitation is from the eastern seaboard, close enough to 85 per cent. And touching on what Christina had to say, in fact Australians staying at home. Out of this we may just see some opportunity emerge as things progress, and I’ll have some more to say about that shortly.

In terms of retail, one of the best litmus tests for an economy, our retail growth to the end of December was around 6.4 per cent, the strongest growth in the country. Again, it demonstrates that we’ve got strong consumer sentiment, that people are positive and that they are continuing to spend. I do note though, and I’d say this in Launceston as well, you know, there are obviously, the channels that people are purchasing on are changing.

And I think that both, you know, in terms of brick and mortar retail and in terms of how we engage with people into our CBD areas especially, I think that there’s a conversation that we need to have about more experiential retail to actually bring people back to some of those areas. There’s probably also some thinking that landlords might need to do, because the market is certainly changing.

In terms of the housing sector, and again, this has been a challenging sector for the Government, but the market has responded to the policies that we have rolled out. Importantly, in terms of the broader country, we have one of the stronger housing sectors in terms of growth compared to anywhere else in the country. We’re seeing more houses come out of the ground, and I know that the Minister for Housing, and I’ve said this on a number of occasions as Treasurer, when you have challenges in the housing sector, you need to ensure that you can build more houses. And what we’re seeing, through a range of policy measures, is the market respond, more houses being built, more opportunities being provided. And, again, that’s been a very strong underpinning of our broader economy, because build a house and you not only include the trades, but everything that you’ve got to put in the house to fit it out and to furnish it, and therefore everybody gets a piece of the action.

Now, in terms of building approvals, we were the only jurisdiction to see an increase in building approvals of four per cent compared to the year before. All other jurisdictions were in decline. And so our market continues to grow. In terms of commencements and completions, we lead the nation, as shown in terms of building work commenced, but in terms of completions, again, we were also the fastest growing jurisdiction in the country.

Now, what that has led into is to have a very strong GSP. The economy of Tasmania, and I must say I was very pleased last year when I was able to point out that we were growing faster than Victoria, almost twice as fast as New South Wales in terms of gross state product, which for a small jurisdiction is an outstanding result.  And, again, it links back to the confidence that we have in our business, in our community, importantly the fact that we have businesses that are prepared to invest and the fact that underpinning that we have a growing population.

All 19 industries in the right hand slide grew, which is the first time that that has actually happened, that all 19 industry sectors have grown since the series began nearly thirty years ago. So, we’re not relying on any one industry, and we have a broad-based economy. Sectorally, no particular sector takes up more than around 13 per cent of our overall economy. The graph, this looks a little misleading with the per centages, that’s the growth rate in the individual sectors. The 13 per cent is in terms of the overall sectoral component.

Now, in terms of the mid-year update, if you look at what we thought we’d do in the budget forecast, 2¾ per cent gross state product, state final demand around 2½ per cent, employment growing at ¾ per cent, 60.5 per cent around participation, unemployment and the other indicators as they are. Treasury, I’m pleased, in the update revised up all of the forecasts for this year’s budget. GSP 3.0 per cent, stronger state final demand, stronger growth in employment, increase in the participation rate, unemployment rate revised down. CPI, which is challenging, but where we see the real growth in CPI is a result of what occurs in terms of our hospitality and tourism sector, with alcohol, with food and other beverages, accommodation etcetera, and that tends to push up our CPI, especially in the last quarter of each calendar year. And, again, we’re seeing population growth being written up as well. So, as I say, a very hard-working, frank and fearless Treasury but, you know, with this set of numbers I’m very pleased that they provided them.

Now, I want to talk about economic challenges and just touch on the coronavirus and bushfires. And, in terms of the coronavirus, you know, fortunately, at this stage, we have tested 22 people, we provided 24 tests, and all of them have been negative. The impact that we’re seeing is largely on those businesses that rely primarily on the Chinese market. Obviously, we’ve had a number of smaller businesses that focus primarily on Chinese visitation, and we’re working closely with them.

We’ve put out a hotline number a couple of weeks ago, and to this stage we’ve had around 12 to 13 businesses in all that have actually made contact, and we’re working with those businesses in terms of the challenges that they face. And some have been affected more so than others.

In terms of the public health challenge, the Director of Public Health, Mark Veitch, I think has done a sterling job, and in fact immediately we ensured that the additional resources were available, should we have more people accessing our EDs, that we’re able to respond quickly.

And, again, with the public hotline, that swung into play immediately, and we’ve taken, I think, now several hundred calls through that, in the main ensuring that people understand clearly what symptoms they should look for, but importantly also ensuring that we work with GPs and other health professionals. And that has worked very well to this point in time.

But, in terms of the coronavirus, there will be some impacts, and one of the things that obviously Tasmania does rely on is our university and our international students. And I’m not sure if Rufus is here today, but I think I can mention this. I met with him last week to have a discussion, and obviously it was reported that around 1,300 international students hadn’t been able to make it back into Tasmania when the travel restrictions were first placed on.

At this stage, in fact less than a handful of students had not resigned into courses and over 80 per cent had engaged online. And so, in terms of the student base, I think that the university is doing everything it possibly can in terms of reaching out, working with its population in a very positive way to ensure that we can continue that engagement, and I congratulate the university for that.

The challenge in our local economy is that the benefit of our international students fell, broadly speaking, fifty-fifty between the fees they pay at the university and then their investment into our local economy. And, obviously, whilst those students aren’t here, whilst they’re still engaged with the university, they won’t be spending in our economy, nor will family, friends and other relations be coming to visit them whilst they’re here. So, you know, we obviously have a keen eye to when that travel restriction may be lifted.

I did note yesterday that the secondary school restrictions were lifted, but with a very high bar in terms of how those students might be managed back into the country. And, you know, we’ll keep obviously a very close eye on, and engage with the Federal Government, in terms of where the broader restrictions are going to be going, because, I think that, as Christina said, you know, there is a bounce-back that will come once the restrictions are lifted and people start to find their way back into our economies.

In terms of where it might impact us, again, this will depend on the economies of New South Wales and Victoria, Tasmania receives its GST out of the GST pool. Obviously, last year in the budget I noted that there were headwinds and there was. Confidence had formed, certainly in the Victoria and New South Wales property markets, which we’ve heard this morning has bounced back probably much quicker than what was expected. But that lack of confidence played into consumer sentiment. We were seeing less spending, and therefore the GST pool was written down.

We wrote down our GST receipt by around $500 million last year, and just recently in the mid-year report I wrote them down by another $270 million again. Depending on what happens to the pool and to our relativities, there may be an impact on Tasmania, but we won’t know until we get closer to the budget. But that’s one challenge we may have to overcome.

In terms of another challenge, and I want to just talk about the issue of bushfires and some conversations that I had last week with other Treasurers, in terms of the bushfires. I can actually recall where I was in that period between Christmas and New Year this year when the fires were raging on the mainland and we had some record temperatures in Tasmania. The conversations I was having then with the then Premier, about ensuring that we were ready to react should we have needed to. We were very fortunate in that the carnage and the devastation that befell the eastern seaboard and other states wasn’t felt here to anywhere near that extent. We had some first, but we reacted quickly.

In fact, I was just speaking to Linda a moment ago. She’s a volunteer fireperson, it think is the right terminology. And the way this year in terms of the bushfire response was to hit it early, hit it hard and actually get it before it started. And it actually worked.  We had lots of choppers ad planes in the air, as soon as we saw smoke.

But when you consider that Tasmania’s footprint in terms of hectares is around 6.8 million hectares, so, I was speaking with the Treasurer of Victoria and New South Wales last week. Victoria lost over 5 million hectares, New South Wales more than 5 million, Queensland, up there, I think it was about 1.8 to 2 million hectares. You look across the country, the devastation was at a level that we haven’t seen in this country, certainly not with the intensity that occurred. And I should add to the 33 people that lost their lives. Tasmania sends its commiserations and its condolences because, you know, it was a tragedy.

The question that we’ve got to face up to and consider is what do we do in Tasmania today to ensure that we are ready for next season’s bushfires? You know, what are the adaption measures that we need to take, what are the things that we need to do to make certain that if it does occur, that we’ve done everything that we possibly can to protect life, to protect property, to protect infrastructure, to protect the environment? And I’ll talk about those things in a couple of moments.

Just to finish off on the mid-year report, across the Forward Estimates, net operating balance surpluses, net debt. There are two GFS net debt and net debt on the board there - $36.9 million. That’s a negative number, meaning positive cash. GFS net debt, once you wind out leases and the capitalisation of leases as a result of ASB 16, I think it is Tony? We hold $383 million worth of cash. Our infrastructure investment across the Forward Estimates is strong. You know, our budget and balance sheet is in good shape, is in good shape.  And I think everyone would be aware that when we brought down this report, we also announced there was some significant spending that we were going to do into health as well, and I’ll talk about that shortly.

Now, in terms of our priorities. As a Government, our priorities still remain strong financial management, to build and maintain confidence, grow the economy, create jobs and invest more into Health, Education and supporting vulnerable Tasmanians. That is what we’ve worked hard to do for the last six years, and nothing will change. But there is more to be done, in health, in housing and growing opportunities across Tasmania. How do we create the bridge to link people that can’t quite grasp those opportunities in our economy with what is a strong and growing economy? And I’ve announced a Minister with a particular focus on doing that, because those bridges could be transport, they could be skills, they could be training. There are a range of things, and we need to engage and ensure that people do have the opportunity to step up.

I just want to speak about health for a moment. Last week, when we brought down the revised estimates report, I announced that we’d be putting $600 million into health at this point. I made quite strongly on the day that in the last two years we have increased the number of people working in health by around 800. Over the period since we came to Government it’s around 1,200 people.  The vast majority are nurses, doctors, allied health professionals. But what we saw in 2017 was an increase in demand due to the flu epidemic. At the end of that year, demand didn’t abate, it grew again. And so what we saw from the 17/18 and 18/19 years was around 800 new staff being employed.

Now, as a Government we’ve accepted that this is a new normal, and so we’ve funded health to ensure that those elevated levels of FTE’s are now locked in across the Forward Estimates, and we fund it right across the coming four years. That’ll provide certainty. It is noted by the AMA, and I was pleased that they did note that. It’s not often that we get something positive from the AMA. But they noted that that will provide certainty and will enable us to plan as we move forward.

The other point I’d make as well is that I also announced that we need to look at how we can improve the IT architecture and infrastructure across health. We have over 9,000 people employed. We run a number of facilities, and it’s important that we can manage patient flow, that we can manage human resource matters, payroll, IT, other aspects of health management. We need a significant investment, and we’ll have more to say on that if we move closer to the budget. I think it’s important not only that we invest in health, but we ensure that we are getting the best outcomes that we possibly can from our health sector.

And in terms of climate change, I’ll chat a little bit more about that as we finish, because one of the things that I think is really important is, again, facing up to the challenge and accepting that we do have a variable, volatile climate, and what we do now over the next six to nine months is going to be very important in terms of standing us in good stead for the coming summer period.

Now today, I also want to announce today that we have finalised the terms of reference for our state sector review. In terms of the state sector review, the State Service Act is 20 years old. There are 29 employment directions, six ministerial directions, we’ve got over 31,000 Tasmanian state service employees, a $6.5 billion budget, schools, hospitals, and it’s important that we can look at the Act in a sensible way to ensure that we can get the outcomes that are going to provide better services for Tasmanians and ensure that we have a public sector that is fit for purpose. So, in terms of the terms of reference, they include ways that we can look at innovation, how we can better deliver for communities, the efficiency and effectiveness of the broader public sector, greater collaboration between public and private sectors. And one thing, I know as my time as Treasurer, I’ve been very pleased in terms of the interaction that we have had with the university. You know, we have some of the smartest people in the room working in that university, and I think that it’s incumbent upon Government to look at how we can have stronger relationships and how we can engage with other private sector companies with a view to getting better outcomes for Tasmanians.

Now, I’ll touch on climate change. In terms of the story that we’ve been telling in regards to where Tasmania stands, I don’t think we’ve been loud enough. Right across, if you look at Tasmania’s position, and this is not something that has been the province of this Government. This has been something that has been worked on for decades in this state and has put us into a position where we are one of the lowest emitters not just in this country but in the world. And it’s something that we should be very, very proud of. We were the first state to hit zero net emissions in 2016, based on 1990 levels. No one else in this country will get close to that. We’re the lowest emissions per capita in Australia, one of the lowest in the world. We generate around 25% of the country’s renewable energy, and it’s something that we should be enormously proud of. By 2022, we will be one hundred per cent renewable. Post 2022, we will be increasing the per centage share that we can provide to the rest of the country to assist them as they transition to a greener energy base. We have spoken about the opportunities with hydrogen, and with John Perry here, I know the work that he’s been undertaking in tem of working very hard to ensure that we can attract and, importantly, that we can benefit as a state in terms of hydrogen and especially green hydrogen. And then, there is the obvious opportunity that sits with Project Marinus, and importantly the Battery of the Nation. And we are so well placed in Tasmania in terms of our renewable energy opportunities that I think that that will be the next important revolution that we will see in terms of development and opportunity here in Tasmania as that progresses.

Now, from a climate change perspective, when I was holidaying at Bridport at Christmas time, I had the period between Christmas and New Year there. And I was taken by some locals to an area at the top of Bridport, and they pointed out to me that there was an area that had been managed by the Council and there had been burnoffs, fuel mitigation work that had been done. The tops out of some of the trees had been taken down. You could actually see the step-down impact, or the step-down effect of the work that the Council had taken on to mitigate the effect of a fire that might come through and over the top of the hill. 500 metres down the road was a piece of Crown Land where no work had been done. And if the fire had come over the top of the hill, it would have been too late to put in a fire break at that particular time.

And with many of our small communities around the state, we have taken great steps forward in terms of the fuel mitigation strategy that we introduced six years ago, and with the amount of fuel mitigation burns that we’ve undertaken, but there is still more to be done.

And one of the challenges that we face is that the window to burn is narrowing. Research shows  that the conditions to actually get away a fuel mitigation burn of a reasonable size at the right time is becoming increasingly more difficult.

I just want to note at the right of the screen, this is the legislation that relates to fuel reduction, or could relate to fuel reduction, depending on the land tenure, and what we’ll find for many people who are now motivated, and I know many public land managers who are now motivated in terms of ensuring that we can improve the safety of the state before the next bushfire season. But in many cases it can take there months or longer to get to a point where you’re actually able to reduce fuel.

The other challenge is that we need to face up to as well is in many cases the windows may be too small, even with the best of intentions or with all of the resourcing. So we may need to look at  reducing fuel through mechanical clearing and actually looking at fuel breaks instead of fire breaks, and actually make some decisions today that are going to stand our community in good stead when we get to the point where the fire does come over the hill. Rather than it being too late to put in a fire break, we’ve actually got a fuel break there already to ensure that property’s safe, life is safe, and that we protect infrastructure and that we protect the environment. And I’ll have more to say about this in coming weeks.

So, I think it’s absolutely important that we learn from the devastating, horrific circumstances that many Australians faced over the last summer and that we do what we reasonably can to ensure that people are safe in Tasmania and understand what options they have in terms of what they can do to make themselves safe.

Now, in summary, we’ve got a nation-leading economy, the budget’s in surplus, we have strong known-source revenues. There are economic headwinds, and there is always going to be more to be done. You know, I must say, I think certainly in the tourism space that there is an opportunity there for Tasmania, based on the fact that the vast majority of our visitors come from that eastern seaboard. I think that in terms of climate change, it presents both enormous opportunities and challenges, and I think that the time is right for us to have that discussion and that debate here in Tasmania.

Importantly, the state sector, which is critical to delivering the Government’s priorities over the coming 12 months, Ian Watt will conduct that state service review, supported by a reference panel which will include both representatives of unions, the private sector, the university sector, I think, as well, and the public sector. And by the end of the year we’ll have some recommendations on what we can do to ensure that we have a fit for purpose public service for the next 20 years moving forward.

Thank you very much.