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Tasmania: senseless economics « Previous | |Next »
March 12, 2004

Wilderness StyxvalleyVh1.jpg
Roger Lovell

In a global world Tasmania sells itself as "the natural state". The gap between the clean and green rhetoric and reality of the logging of old-growth forests continues has been mentioned in the ecological vandalism post. This highlighted the effects of the logging of Tasmania's old growth forests through the practice of clearfelling. Logging is at odds with the state’s wilderness destination marketing.

In this story in The Bulletin Bob Brown outlines the economics of woodchipping. He says that Tasmanians are the poorest Australians and that much of the profits made from woodchipping go elsewhere. Brown says the numbers are like this:

"Tasmania, after growing the trees for ­centuries, gets $10 per tonne royalty, Gunns gets about $100 and the Japanese papermakers get $1200 per tonne. Tasmania, , gets less than 1% of the end price and is losing the nation's grandest forests in the process. "The export industry should be getting the leftovers but at the moment it gets the core and it's Tasmania that gets the leftovers."

This is Third World economics. Not much future there for a Tasmania ruled by rednecks, with little conception of sustainability and who cannot see beyond the clearfelling of old growth forests.

Bob Brown has an alternative:

" Many more enduring jobs could be created by adding value to the timber before it is exported and by supporting more specialty timber products – such as furniture, boats and crafts – and small sawmills. [Forestry] would remain an important high-value-added industry without exports of woodchips."

That makes sense, doesn't it. It undercuts the redneck claim that the Australian Greens are about destroying jobs.

Update 1
This article by Melissa Fyfe and Andrew Darby in The Age undercuts the forestry=jobs argument run by the Tasmanian Labour Government. The article says:

"In terms of economic worth, the two industries [tourism and forestry] are neck and neck, both claiming turnovers of about $1.3 billion. However, in an economy that has been sluggish for some time, the argument in favour of Tasmania’s timber industry is often about jobs. But employment growth is coming from the tourism sector, not logging. Once the dominant local employer in many small Tasmanian towns, forestry now yields fewer than half the jobs provided by tourism."

The deepseated view in the state government, that real jobs come from heavy industry such as forestry--Tasmania’s "smoke stack" future option--is flawed. Jobs are being downsized in a forestry industry dominated by Gunns. Future job growth will come from the "attractive industries" such as tourism.

| Posted by Gary Sauer-Thompson at 4:24 PM | | Comments (4) | TrackBacks (2)

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While it is possible to make the case in good faith that moving towards value-adding activities will provide an economic future for Tasmania, it is not economically possible to argue that:

"future job growth will come from the attractive industries such as tourism".

This is conceptually impossible. If it was that easy to create jobs, then we wouldn't have 6% unemployment as it is.

Further to the point, unless one is prepared to suggest an expansion in the industrial/export economy (with the job gains to flow from there), the only possible way "tourism" can increase is by:

-people voluntarily redistributing existing income to tourism (and necessarily saving less)

-government taxing people higher and redistributing these funds to tourism promotion.

On the first account, people will effectively have to save less - meaning growth will be lower and job growth specifically less. National income will fall. You do not magically get economic growth from tourism - it can only be supported by the industrial economy, and if savings fall, so must investment.

On the second point, if the government were to tax people higher to "help tourism", then household income must also fall.

There is no other possible outcome.

The "tourism" suggestions are based on economic modelling that does not stand up. I've heard this one a million times by WA Greens, but not once have they rationally explained how "tourism" can "create jobs".

Someone is baking a magic pudding.

Does 'tourism' not mean that people outside the local sphere visit? The money comes from other economies, Australian and international. Yes, people voluntarily redistribute existing income to tourism, but it is not the local economy that falls, it is the visitor's. Where is the magic in that?

I don't know about WA.But I do know about Kangaroo Island. The oversear tourssts come to see wilderness---ie., seals and forests.

They rquire tour operators, road and sea transport accommodation,food and wine, film, interpretors etc. etc.

So a new industry grows on the KI along side the farmers. It makes more money than the farmers, and the money is poured back into improving the infrastructure for tourists.

Tasmania would be a much bigger version than that.

Hmm. My point that tourism is ultimately a zero-sum game appears to be lost.

Point two. In order to restore full employment, hands up who is prepared to countenance a necessary fall in unit-labour costs? How is this fall to come about?