South Vicmania? North Tastoria? Why merging three Australian states is a bad idea

Jeff Kennett has long been an advocate of joining Tasmania and Victoria. AAP/Joe Castro

Is Tasmania at a tipping point? Over the next two weeks The Conversation, in conjunction with Griffith REVIEW and the University of Tasmania, is publishing a series of provocations. Our authors ask where does Tasmania’s future lie? Has it reached a “tipping point”, politically, economically and culturally? Thinkers, writers and doers from Tasmania and beyond, including members of its extensive diaspora, challenge how Tasmania is seen by outsiders and illuminate how Tasmanians see themselves, down home and in the wider world.

Recent chatter about a potential administrative merger between Tasmania and Victoria and including South Australia looks like a solution in search of a problem.

“Tasmania’s problem” is deeply rooted in its political culture and requires a regional development policy solution, not an efficiency dividend as proposed by merger options.

Tasmania’s role in the Commonwealth of Australia is both secured by the provisions of Chapters V and VI of the Constitution and by a political alignment of choice.

There is little evidence that Tasmanians wish to join Victoria or South Australia in some administrative nirvana that will realign the Federation’s “fair go” ethos, nor is there any compelling evidence that either Victoria or South Australia would welcome Tasmania into the fold.

Why would they embrace the mendicant state?

Tasmania’s mendicancy as a State in the Commonwealth was sealed in the first 50 years of colonial self-government; confirmed by at least five significant inquiries since Federation and highlighted by a range of significant current socio-economic circumstances in Tasmania.

To this we can add the political repercussions of three-speed economic alignments in the Australian economy and debate about economic and financial relations with the Commonwealth.

Colin Barnett believes Tasmania needs to be more economically responsible. AAP/Alan Porritt

WA Premier Colin Barnett’s April 2011 remark that Tasmania is “Australia’s national park”, rejecting development and becoming the nation’s beggar state put the issue of Tasmania’s mendicancy back in the public arena.

Tasmania’s challenge in the 21st century remains the same as it was in the 19th century: not that it should leave the Federation, but how it might best take advantage of the features of Federalism to attract people to work, invest, visit and live in Tasmania.

To suggest that there is a debate about the future of Tasmania in the Commonwealth of Australia is to confuse matters.

Debating Tasmania’s right to exist misses the point

There is a debate in Australia about distribution of GST. There is a debate in Australia about the future of Federation.

But that debate is not about Tasmania’s future in the Commonwealth of Australia.

There is some commentary however, about merging administrative roles and functions, specifically between Tasmania and Victoria, with some reference to South Australia.

Tasmania, South Australia and the Northern Territory are drawn into this debate because their socio-economic and financial circumstances highlight the outcomes of some current political economy disparities facing Australia as a federation.

Tasmania and South Australia’s collective vulnerability is linked to the prevailing view that the “rust bucket” manufacturing sectors in these states, coupled to Victoria’s are in decline.

A declining manufacturing sector is seen to be the third component of the three-speed economic analysis of Australia’s political economy, behind the rural and regional and; State resource extraction wealth generating disparities.

The arguments for

Some commentators, notably former Victorian Premier, Jeff Kennett, Hobart Mercury newspaper columnist, barrister and social activist, Greg Barns, have confused the matters of Tasmania’s security in the Commonwealth of Australia, with their own determination to join Tasmania to the administrative hip of Victoria.

Jeff Kennett to be fair has held these views since 1996.

In a recent, March 2012 rendition of his position he informed the readership of the Hobart Mercury that:

Jeff Kennett has long questioned Tasmania’s independence. AAP/David Crossling

“There’s no doubt that if firstly Tasmania and Victoria became one administrative unit, the benefits for particularly Tasmania would be immense. You would cut down on your administration costs and make huge savings for the community and deliver those savings in better quality services or improved infrastructure.”

Kennett went on to suggest that ideally South Australia would also be part of the merger.

He also conceded that: “…the so-called political leaders in Tasmania would not be interested in that deal.”

Barns, a strong supporter of using Victoria’s greater ability to provide services to sustain Tasmania, added that:

“Victoria’s not nirvana by any means but it has the population and funding to support services across the board. The reality is, Tasmania is like living in regional Victoria if you’ve got a really sick kid you go to Melbourne.”

The arguments against

Tasmania’s Premier, Lara Giddings argued that Tasmania’s strong sense of identity made a significant contribution to the nation:

“There has never been any compelling evidence that merging Tasmania and Victoria would lead to better social or economic outcomes. In fact, in practical terms, the challenges of such a move would be immense.”

Premier Gidding’s response mirrors that of her 1930s counterpart, Premier J.C. McPhee who in responding to a suggestion by the Federal Statistician that Tasmania should be tacked on to Victoria was reported as saying that such sentiments seemed an entire departure from the ideal of Federation and it was ridiculous to suggest that Tasmania should be joined with Victoria. McPhee added that in his view such a union would save little in administrative costs.

Lara Giddings thinks a merger would create more problems than it would solve. AAP/Alan Porritt

Tasmania’s challenges and potential responses as a small sub-national peripheral economy need to be examined through the prism of regional development policy, rather than the well-intentioned aspirations of random political commentary.

It may well be the case – especially if a gaggle of constitutional lawyers are involved – that there is a constitutional case that can be made for emergence of a new State (Chpt 6) or an administrative merger sanctioned by State and Commonwealth parliaments (Section 111, 117 and 123) but whilst this may be interesting or indeed compelling for some, its political impact in Tasmania would be restricted to a late night meeting in a telephone box and its outcomes in terms of addressing real and compelling challenges would be negligible.

This commentary emerges when issues of the future of Federation are debated, but in terms of addressing Tasmania’s plight as an isolated regional economy, it can be politely rejected.

The compelling discussion must be around how Tasmania can respond to the challenges and opportunities afforded by statehood in the Commonwealth of Australia.

Facing the reality of Tasmania’s situation

This discussion acknowledges Tasmania’s mendicancy; its governance and political culture and real constraints facing it as a federal state in a global economy.

None of these political economy characteristics are likely to be resolved through any constitutional means. They have persisted over 150 years of self-government and will shape future challenges and opportunities.

The most recent Commonwealth State inquiry into Tasmania’s economy, the 1997, Nixon Report, prepared for the Howard government by former Fraser government Minister, the Hon Peter Nixon, AO drew parallels between its report and the recommendations and observations from reports covering the period from 1920 to 1997.

These reports included the 1926 Lockyer Report; the 1977 Callaghan Report; the 1987, Centre for Regional Economic Analysis (CREA Report) and the 1992, Curran Report.

In summary the Nixon Report drew heavily on the finding and recommendation of these reports to highlight common and persistent problems encountered by Tasmania – “the Tasmanian problem” - as a state in the Commonwealth of Australia, including:

Tasmania needs efficient government, a streamlined, focused and co-ordinated State Government and bureaucracy and local government areas of a size that allows for the economic provision of services given that;

The Nixon Report’s recommendations were extensively shaped by what the Report suggested was the overwhelming consensus around what Tasmanians regarded as their problems, preventing the State from achieving its potential:

  • Tasmania is over-governed;

  • There is needless and wasteful parochialism between the regions;

  • The bureaucracy is ponderous, slow and unhelpful to those seeking to develop businesses, especially if it is new or innovative, and has an entrenched culture which seems more interested in protecting its patch than helping;

  • There is desire for many existing operators to protect their position in the economy, often sheltering behind needless Government regulation;

  • It is too easy for minority groups to use the system to actively oppose developments or changes which will progress the State, but which they believe will affect the tranquillity of their own local lifestyle; and

  • Issues become easily polarised resulting in outcomes which are not necessarily in the best interests of Tasmania.

Ostensibly, the multiple reports on Tasmania’s political economy since Federation create sufficient evidence for an argument for change.

Tasmania is Tasmania is Tasmania

However, an administrative adjustment/merger option or a new mega state solution overlooks some salient features of Tasmania that both exacerbate the challenges facing this small, sub-national peripheral economy and diminish the capacity of any administrative change to promote better outcomes for Tasmanians and by extension the broader ‘fair go’ dimensions of the Federation.

These unique Tasmanian features include:

  • Its isolated, island status;

  • Its small and rapidly ageing population;

  • Its conservative political culture, supporting “Big Men” cargo-cult approaches to patronage and development;

  • Its reluctance to value and embrace education as a platform to transition economies;

  • Its lack of scope and scale in terms of working population participants in market-type transactions as distinct from those dependent on government support and services and given the small market place, a significant disadvantage in the extra-costs attached to transactions within markets (imported services) or getting to markets (exports);

  • Its high levels of inter-generational socio-economic disadvantage.

The Tasmanian hand-shake – the palm help upwards towards the hand out, rather than the hand-up – is the dominant currency of dependency and mendicancy.

The MONA myth

There are those who suggest that developments like MONA (Museum of Old and New Art) demonstrate a “way forward” for the Tasmanian economy.

Tasmania has MONA but it is not MONA. Nearly 70% of MONA’s visitors come from interstate or overseas.

MONA may not be the source of pride it was intended to be. AAP/Brett Boardman

Some Tasmanians are proud of MONA but for the majority their places of inspiration remain attached to hydro-electric dams, forestry, agriculture and mining, sporting events and champions, fishing, camping and hunting.

MONA is not the silver-bullet solution for cargo-cult Tasmanians still longing for the one-trick solution: a big pulp mill or expanded hydro-industrialisation.

Change is occurring but the demographic constraints and socio-economic disadvantage are persistent and do not support transformation.

Structural employment numbers in industry sectors over Census periods (2001-2011) indicate trend adjustments not transitional change.

A small ageing service sector economy will not provide the platform for transitional change built on the back of competitive, sustainable product and service provision.

Tasmanians, especially young Tasmanians, vote with their feet in judging the options available to them.

For many this is the best decision they make in their lives.

They leave Tasmania and return if they so choose, having experienced what the rest of the world has to offer.

Tasmanians returning or staying are fully cognisant of the costs involved around lifestyle choices. They add value to the State and value its distinctive attributes.

What conclusions can be made?

This is a misplaced debate. It is a discussion amongst the converted.

Tasmania faces significant regional develop challenges beyond the machinations of ill-considered proposals that appear to be a solution in search of a problem.

This solution is not connected to the Tasmanian problem.

Those who propose a mega-state or an administrative efficiency drive lack support from Tasmanians.

Sharing increasingly scarce resources with an extra 495,354 (Census 2011) mendicant Tasmanians, doesn’t seem to be a conversation Jeff Kennett has had with many Victorians.

Tasmania’s destiny is not in its own hands, but better the hands that you know will figuratively feed you – the Commonwealth provides 62% of the State Budget - than having to compete at a larger trough but with many more snouts, reluctant to move aside.

In a 21st century global economy where consumption choices, rather than production capacity, shape strategic planning for smart, innovative and competitive small, sub-national economies, no-one owes Tasmanians a living but this reality means that the Federal principle of horizontal fiscal equalisation remains the next best thing.

Constructing competitive advantage is a bridge too far, although a big bridge across Bass Strait has appeal.

A new mega-state or mergers promoting administrative efficiencies can be cast aside as proposals endorsed by mere mainlanders, joining the bountiful volumes of Commonwealth reports, that didn’t help!

Tasmania rests … its case.

You can read the whole series here.