Let’s declare our love for Canberra

Last week I spoke about Tasmania declaring independence from Canberra. This week I’m looking at the opposite; getting into bed with the feds.

Tasmania’s current financial strategy is akin to giving your kids an unlimited credit card; the inevitable outcome is excessive spending, maxed-out limits, and an expectation of rescue when the bill arrives. And probably some questionable purchases.

By 2023, the state had amassed a debt of $4.4 billion, projected to escalate to $6.5 billion by 2027. The proposed solutions of selling public assets, cutting services, and hoping for a 2029 surplus are not sustainable.

Here’s how it goes. 

My youngest: “Dad, I’ve racked up a debt on my credit card and I can’t pay it off”.

Me: “You need to get a job”.

My youngest: “Even if I worked all hours I’d never be able to pay it back”.

Me: “What can you sell?”

My youngest: “What about our family home?”

Tasmania is overly reliant on the Federal Government for revenue, with GST receipts falling short. The government has been spending with abandon and without oversight, and the reality of their financial situation is now unavoidable. There is no bailout coming.

While Tasmanians may dream of being an economic powerhouse, the reality is that the state’s economy is not robust.

The Tasmanian government’s solution is to sell off everything they can claim they own.

‘Founder State‘

A more radical solution is to reconsider Tasmania’s status as an independent state and instead become a ‘Founder State’ – a part of the federal government but with Canberra managing the state’s finances. A hybrid between state and territory.

This would entail Canberra collecting taxes and providing Tasmania with a guaranteed annual budget. They tell us what we can spend but not how we spend it. The Federal Department of Tasmania would be in Hobart using existing workers and buildings, with an office in Canberra (keep the costs low, we could share one).

This arrangement would eliminate reckless spending and the yearly GST disputes with other states, and would result in zero debt.

However, it would also remove Tasmania’s autonomy to adjust taxes or borrow funds in emergencies, and Canberra would have the final say on major projects. Like, for example, a stadium.

Despite these drawbacks, this solution could provide a stable financial foundation, which may be preferable to the current debt spiral. It’s time for Tasmania to adopt a fiscally responsible approach and cease relying on unsustainable financial practices.

So let’s ask Canberra to take us under their wing. In return, we will rip up the credit cards.