OUR economy, society and political ideologies are geared to increasing consumption to grow our economy rather than focusing on productivity, innovation and the traded sectors.
However, with an end to population growth on the horizon threatening future consumption patterns (apart from increasing tourism), it highlights the point that Future Tasmania series social commentator Bernard Salt made – that any future growth in Tasmania is unlikely to come from population growth.
Consumption – the expenditure of disposable income – includes such things as housing and home furnishings, education, entertainment, travel, new cars, personal services and, smashed avocado.
The prevailing premise is that greater spending by more people creates jobs and grows the economy, hence a reliance on population growth.
Some of the jobs created in such an environment are skilled, higher-paid, secure professions such as engineers, lawyers, builders and teachers, but more are less-skilled, lower paid and less secure: think baristas, cleaners, sales staff and other personal service jobs.
This reliance on increasing consumption to grow our economy is evident in the recently released ComSec State of the States report which outlines it’s eight key indicators of economic performance, all of which are based on consumption patterns: new housing construction, unemployment, population growth, economic growth, equipment investment, housing finance, retail spending and other construction work.
While the report suggests that the Tasmanian economy is faring relatively well (based on historic performance), it also highlights that the state’s weaknesses are relative economic growth, employment growth and retail spending; all of which are a risk to future consumption levels if not improved.
In considering where Tasmania’s growth will come from in the future in the absence of population growth, it is worth reflecting on the concept of Australia as the “Lucky Country”.
When Donald Horne titled his 1964 book The Lucky Country, he was proposing that Australia’s relative economic prosperity was based almost entirely on luck, the product of other people’s ideas rather than the strength of its political or economic system, which Horne believed was ‘second rate’.
He argued that Australia’s lack of leadership and levels of enterprise and innovation, lower than any other prosperous industrial society, were masked by wealth and power largely derived from rich natural resources and immigration.
Fifty-five years later, these thoughts are echoed by a Harvard Kennedy School Center which developed a database of 133 economies to map the economic progress and opportunities of the industrial and non-industrial world.
The Atlas of Economic Complexity reveals an inconvenient truth about Australia; that our natural resources have masked, and contributed to, Australia failing to innovate and develop the industries needed to maintain its position in the top ranks of developed nations.
The index measures the diversity and sophistication of national exports, and while if finds that Australia is the eighth-richest nation, it has the export profile of Angola. Over a 15-year period, Australia has failed to innovate compared with other nations; the seven new products that Australia has innovated in a meaningful way has generated value of just $US33 per Australian.
The report projects that Australia’s economy will grow very slowly and concludes that Australia is part of a group of simple economies that should adopt policies that single out specific industries for support. It further suggests that Australia will struggle to break into international markets beyond resources and agriculture.
So, in the absence of population growth, in order to inclusively grow the economy and essentially improve the living standards of all Tasmanians, a rethink of economic development policy is critical, and its timing is even more paramount.
Dr Lisa Denny is a research fellow at the Institute for the Study of Social Change at the University of Tasmania.