A prosperous Tasmania Growth, industry & government Carl Harris Managing Partner Tasmania

Transcription

1 A prosperous Tasmania Growth, industry & government Carl Harris Managing Partner Tasmania

2 Today I would like to cover Why the next 20 years will be better for Tasmania than the last 20 years (if we get it right) What the State Government can do to enable business to prosper; and Which industries are key to Tasmania s future prosperity.

3 Building the lucky country the series

4 While I will talk about the economy, I am not an economist I am an accountant

5 State economic outlook - Tasmania The mining boom did us no favours with a high AUD hurting our exporters, manufacturers, the tourism industry and international education. Additionally retail spending and housing construction were impacted. But a change is coming to the State economy

6 State economic outlook - Tasmania Contribution to Growth 6% 5% 4% 3% 2% 1% 0% -1% -2% Consumption Housing Engineering construction Exports The Australian economy is in transition Other GDP Source: Deloitte Access Economics

7 State economy outlook - Tasmania Who would have thought? Highest retail trade growth in the nation Growth in business investment spending Growth in construction Job growth in Tasmania above the national average Population growth at a two year high Residential building approvals up, property sales at a 4 year high State gross product of 2.5% (Above SA, WA & ACT) Source: Deloitte Access Economics

8 State economy outlook - Tasmania But risks remain AUD reducing slowly Ageing population and growing the population Funding health and aged care system Declining fertility rate Workforce pressures Different challenges facing the three geographic areas Unemployment and low disposable income Timber industry (North and East Coast) Mining closures on North West Coast Construction (outside of the South) Economies and industries in transition

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12 Set to boom Still important Mining Health Construction Manufacturing Retail Banking & wealth management Transport Water and waste telecommunications Pockets of growth Aging related industries ICT Private schooling Food processing and ocean resources Financing

13 What can we do? Collective economist views Population growth Increase productivity => Introduce more choice, contracting & contestability into government services (health & education > 50% of budget spending) Control spending Reform councils (mergers / single planning scheme), school, hospital, state government Invest in infrastructure (spend wisely not more) Sell non-core assets Review of state taxes Deal with the unfunded superannuation liability Increase school retention rate through to year 12

14 What can industry do? Invest in higher growth areas and transformational innovation Focus on increasing productivity Foster digital disruption => Inefficient replaced by lower cost, higher value added alternatives Talent directed to high growth areas Outside the areas of growth Move closer to them, position yourselves to take advantage of the boom

15 Next Waves - What can industry do? Agribusiness (including food processing and ocean resources) Tourism Quality and reliability of supply Technology and innovation world leader Farming consolidation and generational change Ag. science students Infrastructure irrigation, roads, train, ports Work with Gov t to resolve our freight / shipping issues Promotion safe, high quality Airport runway extension direct link to China Education as a drawcard Catering for Asian tourists? High end? Domestic flights More hotel rooms Marketing

16 Next Waves - What can industry do? International education (and private schooling) Aging population Attract Chinese and Indian students Investment in research and specialist courses Disruption Massively open on line courses Tailored courses for international students Secondary school is gateway to tertiary, workforce and residency Population growth, trending away from government schools and gateway into the country Community and personal care Retirement living & leisure Residential aged care Preventative health and wellbeing Reskilling an aging workforce

17 Education is an enabler of productivity and growth for virtually every part of the economy. ICT is integral to maximising the potential of nearly all the growth opportunities.

18 What can the State Government do? often the best thing a government can do is stand aside and let business progress and prosper (Premier Will Hodgman - 19th June 2014) Business should focus on the doing, Governments on enabling (Deloitte BTLC#3)

19 What can the State Government do? Attract emerging industries to Tasmania Prioritise investment into strong growth sectors (not spending more but spending wisely) infrastructure, innovation => Enduring benefit Increase productivity All three levels of Government working together in a coordinated way policy coherence and simplification Reduce red & green tape (not a one off) Address the risks and growth blockages in growth sectors Collaborate with the business community Stop subsidising sectors with low growth potential and no advantage

20 Thoughts of some of the States top Directors and CEO s Only govern in a majority government Economic growth to drive population growth Fix our State spending problem My reading s over the Remove impediments to job creation last 12 months of what Reduce red tape, establish a consistenteconomists planning platform, speed up think and simplify reduce costs for business the state needs to Maintain a level playing field stop tryingaddress to pick winners, don t give others an advantage, question why assistance is needed, enforce effective rules & regulations equally Employ in Tasmania Consolidate infrastructure Extend freight equalisation to exports (not a hand out, enable fair competition) Reduce the compliance burden and provide certainty with longer term contractual arrangements (not-for-profit) Population growth Better productivity Council reform School reform Hospital reform Public sector reform Infrastructure investment Unfunded superannuation liability Privatisation sell off non-core assets State tax review Education levels and increasing retention of student to year 12

21 Thoughts of some of the States top Directors and CEO s My reading s over the last 12amonths of what Govern astutely to achieve positive economists think economic outcome for the thestate state needs to address Population growth Better productivity Council reform School reform Hospital reform Public sector reform Infrastructure investment Unfunded superannuation liability Privatisation sell off non-core assets State tax review Education levels and increasing retention of student to year Deloitte Touche Tohmatsu 2014 Deloitte Touche Tohmatsu

22 Something we can all do My out readingmentality s over the last Stop the negativity and hand 12 months of what Celebrate the good news economists think Aquaculture industry, Wine, Dairy,the Irrigation state needs to address MONA, Chinese visitor numbers, Hotel developments Construction in the South is Population growth bullet, it s a long term play There no silver Better productivity There more is Council reformtransition and more pain to come School reform What can we learn from New Zealand? Hospital reform Public sector reform Budget surplus Infrastructure investment Dairy industrysuperannuation makes up 30% of exports to Asia (milk powder, Unfunded liability butter and cheese) Privatisation sell off non-core assets State tax review China is now 22% of all exports Education levels and increasing retention of student to year 12

23 Wrap up Reduce, reform, and simplify Education is key Spending under control and enduring in nature Unrelenting approach to improving productivity Level playing field Technology, innovation and disruption Start positioning yourselves State Government policy will help, but success or failure lies with the aggregate actions of the business community. The power to achieve prosperity for the State is in this room.

24 Thank you General information only About Deloitte This presentation contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the Deloitte Network ) is, by means of this presentation, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this presentation. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's approximately 170,000 professionals are committed to becoming the standard of excellence. About Deloitte Australia In Australia, the member firm is the Australian partnership of Deloitte Touche Tohmatsu. As one of Australia s leading professional services firms. Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory services through approximately 5,400 people across the country. Focused on the creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. For more information, please visit our web site at Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

25 TASMANIAN BUDGET Keeping our promises, fixing the budget mess and laying the foundations for the future Premier Will Hodgman MP

26 The Budget Delivers our commitments Begins fixing the budget mess Lays the foundations for the future 26

27 The Economic Context A fragile growing economy Confidence improving Nearly 2,000 new jobs since the election Participation rate rising Retail spending up Housing finance up Building and construction up Private investment up 27

28 The financial context Risk Report requested to draw a line in the sand It found Structural Deficits Net Debt rising 1,000 job losses embedded in the budget Federal Budget challenges $2.1 billion in lost revenue over 10 years August Budget provided the time to find the right balance 28

29 The Risks Report the line in the sand $m 500 Large structural operating deficits, even before Federal Budget impacts $1.1 billion 29

30 The Risks Report the line in the sand $400m $m Mounting net debt

31 How it unfolded: $m Revenue up $171m Expenditure up $751m 31

32 The starting point $m

33 Improving the bottom line Savings and Revenue Strategies deliver $993m Funds all commitments on time, implements the long term plan Funds $1.6bn in infrastructure Saves job and supports the economy Funds medium-term commitments not in the LaborGreen Budget Improves the bottom line every year and puts us on path to surplus in 6 years $249m $178m $567m Agency Savings Pay Pause Improved GB Returns 33

34 Delivering our commitments, implementing our Plan 1. Immediate economic stimulus and jobs Shovel ready sport and community projects Payroll tax incentives Headworks Holiday Small business employment First Home Builders Boost Regional Revival Fund 2. Structural improvements in the economy Educational attainment Y11&12 Coordinator General Planning Reform Parks EOI International Freight Red & Green tape reduction Opening, not closing our forest industries Backing Tourism 3. Strengthening the community via front-line service Better Schools (Gonski) funding 108 police & marine capability Elective Surgery NDIS, ERO and community service funding 34

35 The $1.6b Infrastructure Program ($m) Justice 9 Education 58 T&F and P&C 12 Parks Infrastructure 26 Police vessel 5 Provision 140 Housing 98 Health Infrastructure 54 Hospitals 456 Roads

36 Pay Pause saves jobs 1. Employee costs & super now $2.4bn, 46% of all outlays Wages bill $153m higher than forecast in Without other savings, a 1000 FTEs cut was embedded in the Labor-Green Budget month pause across the public service Already implemented for Parliamentarians and Senior Executives 4. Delivers savings of $30m in ,and around $50m in full year 5. Without a pay pause, there would be around 500 FTE cut in order to put the Budget onto a sustainable path 36

37 Funding medium-term commitments Better Schools funding (Gonski) NDIS $134m over 6 years $40m in Equal Remuneration Order an additional $9.2m in

38 Operating Balance Budget $m Reductions in the operating deficit every year Labor-Green Budget 4 year cumulative deficit around $450m less than the Labor-Green 4 year cumulative deficit of $1.1b 38

39 Net Debt Budget $m 500 Net Debt $47m, not $402m Labor-Green Budget 39

40 Conclusion The Budget: Delivers our commitments All commitments funded Implements our long term plan for Tasmania Fixes the Labor-Green budget mess Strikes the balance, supports the economy On track for a surplus in 6 years Net debt a fraction of Labor-Green estimates Lays the foundation for the future Health reform Education reform Planning reform Tasmania open for business 40