Image for Looking for a cool change? Tasmania gets some 2020 vision

You know there’s an ageing issue in Tasmania when they’re closing down a school and converting it into a funeral parlour! Although, I am sure the tourism authorities in Tasmania are not about to launch: “Tasmania - From Cradle (Mountain) to the grave” as their next tourism slogan. But the demographic trend in Tasmania is serious.

According to Richard Dowling, chief economist for the Tasmanian Chamber of Commerce and Industry (TCCI), the story is a mix of exit and entry across the generations: “The schools are half full, we have a small population with the Generation Xs and Ys leaving and the retirees returning for lifestyle reasons. This leaves us with a demographic time bomb and a low work to welfare ratio, which will put fiscal pressure on the state’s finances.”

Many retirees of course, are Tasmanians returning home or mainlanders who are “sea changers” or “tree changers” taking advantage of Tasmania’s lower property prices and unique environment or maybe with all this talk of warmer temperatures, they are “cool changers” attracted to Tasmania’s pleasant climate.

In fact, the Airport Economist saw some anecdotal evidence of this whilst just simply hailing a cab in Tasmania. It seemed at first glance, that many of the taxi drivers in Hobart, are over 60 and Anglo-Celtic in background. In this regard, Hobart is unlike the unlike the mainland Australian capital cities where you’ll be picked up by Shanghai and Bangladeshi taxi drivers in Sydney, Punjabi or Somalians in Melbourne or Afghans and Eritreans in Adelaide. The age profile is different as well. The drivers tend to be younger in the larger cities as well as being foreign born.

But the overall population of Tasmania is rising, according to Tasmania’s Treasurer Michael Aird, which reverses recent trends. And furthermore, according to Aird, the state unemployment rate is also lower than the national average (which favourably compares to previous decades when Tasmania typically had a higher jobless rate compared to the other states). Furthermore, Aird is putting great emphasis in having a local version of the education revolution through the national broadband network, in which Tasmania is leading the nation. Michael Aird is also planning to hook up broadband to the residential colleges at the University of Tasmania to help local students hook into global knowledge instantaneously.

The emphasis on education and broadband is not surprising, after all the eminent economist and proud Tasmanian,  Saul Eslake (TT articles, HERE), now of the Grattan Institute at the University of Melbourne,  has often argued for more investment in human capital in Tasmania to help lift skills and productivity. Eslake says: “School retention rates are still low in the state, and Tasmania historically is behind the nation on this score. A solid investment in human capital is essential to lock in productivity growth and therefore higher living standards for all Tasmanians.”

But whilst an education revolution will help Tasmania, an investment revolution is needed as well. According to Richard Dowling, “At the moment there are insufficient levels of debt and equity. We have only seven main Australian corporates with their headquarters in Tasmania, and this restricts our business potential.”

However, at a time when the rest of Australia is concerned about climate change, future weather patterns may actually work in Tasmanian’s future. “Tasmania has 14 per cent of Australia’s water, for 1 and half per cent of Australia’s land mass,” according to Tristram Travers of Austrade Hobart. And Travers believes the new environment is creating new importunities for Tasmanian exporters. “Tasmania has been a leader in renewable energy for nearly a century, and Tasmanian exporters like Hot Rocks, Tyco Tamar and Roaring 40s are leading the way as companies with enormous environmentally sustainable export potential.”

Jonathan West, from the University of Tasmania’s Australian Innovation Research Centre believes that Tasmania is on the cusp of a new wave of innovation and economic development. “From 1830 to 1860, Tasmanian had its first wave of economic development with the colony issues land grants and we had a land boom. From 1913 to 1983, we had our second wave with hydro-industrialisation, which was in at its heart, Tasmania’s innovation strategy. Now we are entering our third wave of economic development and innovation which will be built around our strengths in agriculture and food production, forestry products, environmentally sustainable energy, and creative industries.”

West has worked on a comprehensive blueprint for Tasmania’s future along these lines which in the words of the immortal commentator, Dennis Cometti could described as “ambitious” for a small island state but as West points out, some lessons can be learnt from the case of Finland. According to West, “Finland had similar challenges to Tasmania at the beginning of the 1990s. It had a small population, and its economy relied on forest products and ship building, but when the Berlin Wall collapsed and with it Finland’s exports to the Soviet Union, Finland embraced innovation and now is one of the most successful small, open economies in the world and has global brand like Nokia which is a world beater.”

So can Tasmania do something similar? West believes that emphasis on Tasmania’s strengths, in agriculture, renewable energy and the creative industries is the right way to go but “investment in human capital, infrastructure through broadband and developing a strong brand will definitely help this strategy. “

And that’s important, because Tasmania, like any economic region, clearly cannot ‘live’ on funeral parlours alone.