February 14, 2013
The Conversation has been running a series of articles on Tasmania in conjunction with the Griffith Review and the Inglis Clark Centre at the University of Tasmania. The articles are about the Tasmanian moment; or Tasmania at the crossroads. Tasmania confronts the future; or Tasmania at the tipping point. The theme is Tasmania sliding down the drain or Tasmania innovating and embracing change.
Rodney Croome in his article says:
Tasmania is a fractured and polarised society with a weak middle ground. It moves forward by the grinding of fault lines against each other. Unfortunately this sometimes produces great heat and instability, but it offers far more to the world as a result. Tasmania is neither entirely conservative nor predictably progressive. If it were, it could not have made its great and original contribution to the nation and the world.
Tasmania relies on Canberra for two-thirds of its funding, and it cannot continue to rely on federal GST distributions via the transfer from the richer mining states (Queensland and Western Australia), given the increasingly fractious and adversarial nature of Commonwealth-State relations. Tasmania must stand up for itself.
The after effects of the global financial crisis has seen the Commonwealth 's revenue decrease: Australia's budget position has deteriorated swiftly because commodity prices have crumpled while the dollar remains high. Treasury had been expecting the exchange rate to fall when commodity prices fell last year.
Richard Eccleston says that this has implications for the states:
when national governments come under financial stress it is normal, and indeed politically rational, to cut discretionary transfers to the states early and hard, effectively passing the political burden of cutting services and increasing taxes and charges to state politicians...the current state budget cuts prove that the rate of Commonwealth funding to the states over the next five years will be at historical lows..Given that Tasmania relies on Canberra for two-thirds of its funding, there is little wonder that this drought has been felt first and hardest in Tasmania.
The fact that all states are now dealing with this structural decline in revenue provides support to the thesis that Tasmania’s financial condition is symptomatic of a more fundamental problem, namely, the states do not have sufficient resources to meet their constitutionally defined obligations.