After the loggers have gone, wither Tasmania?

Tasmania seems to be turning into a quirky punt on the sustainable economy. The risk, as industries such as forestry shrink, is that hundreds of jobs lost in "brown", extractive industries will be replaced by just dozens of jobs in the new "green" economy.

Tasmania seems to be turning into a quirky punt on the sustainable economy. The risk, as industries such as forestry shrink, is that hundreds of jobs lost in "brown", extractive industries will be replaced by just dozens of jobs in the new "green" economy.

It's all very well to hope for - work towards - a clean green future but we can't all sit around admiring the scenery, knocking back craft brews.

It's been pretty hard graft for a bunch of outcasts and hopefuls scratching an income out of this country for most of the past 200 years. Quite suddenly - we still can't believe it - it looks like we're rich for decades on the back of Asian industrialisation.

Australians can be pretty confident these days that if we dig something up, or grow something, somebody in the world will pay a decent price for it. When it comes to selling manufactured goods, or services like tourism and education, things get tougher - especially with the dollar high and likely to remain so.

If Australia's economy is hollowing out, Tasmania is right in the firing line.

Sparked by the Prime Minister's review of the carve-up of GST, the states and territories set about having a punch-up. The West Australian Premier, Colin Barnett, got a few good shots in.

Questioning why Tasmania should get back $1.60 for every GST dollar it raised, when WA gets 72?, Barnett branded it a "mendicant state".

"If they continue to reject any sort of development, well, what right is there to simply take the spoils of hard work in other states?" Barnett told Sky News.

A report released this week by a former state Labor minister, Julian Amos, underlined the problem, finding Tasmania was becoming an "aged care facility in a national park". Dr Amos warned Tasmania was "living beyond its means" with low population growth, a forecast gross state product (GSP) below inflation, a lower GSP per capita than the rest of the country and receiving more in benefits than it pays in taxes.

According to the chairman of the Tasmanian Chamber of Commerce, Troy Harper, roughly 70 per cent of the state's population get their primary income from the government - either as public sector wages (40 per cent) or welfare assistance (30 per cent - a rate six times higher than the rest of the country). The private sector employs just 30 per cent of the population.

The crisis in Tasmania's forest industry - with export woodchipper Gunns Ltd on its knees, and a "peace deal" to be finalised this weekend - is emblematic.

Until last year, what operated was a mad government-private enterprise between Forestry Tasmania and Gunns Ltd, dependent on subsidy (native forest timber for next to nothing) with scant regard for commercial reality (falling woodchip prices, a shift to plantations), governance norms, or social and environmental impacts.

The peace deal is expected to sling another $250 million to an industry which conservationists estimate has received more than $1 billion in state and federal handouts over the past 15 years - including more than $100 million to Gunns, which is trading at record lows and desperately trying to finance its $2.3 billion pulp mill in the Tamar Valley.

"We've had a forestry company that's behaved appallingly," Harper says. "A lot of Gunns's problems were self-created. That doesn't mean the whole forestry industry is bad."

But the death of an industry is no cause for celebration unless there's something to replace it.

Greens leader Bob Brown denies anyone is cheering at job losses. "Who is?" he fires back.

Where will future growth come from, though? Is Tasmania a good place to do business? Let's take two of the most significant private investments in Tasmania lately.

Professional punter David Walsh's $185 million Museum of Old and New Art, adjoining his Moorilla winery, is stunning. Entry is free, food and alcohol is high-end. A faintly sinister air - like some Bond villain hideaway - is edgy, not off-putting. But if it's a commercial proposition it's very long-term.

Likewise, the real test of multimillionaire conservationists Graeme Wood and Jan Cameron's shock acquisition of Gunns's Triabunna woodchip mill will be in the follow-through. The temporarily closed mill cost $10 million, but that could be a fraction of what's needed to turn the site into a profitable tourist attraction.

Wood, founder of, and Cameron, founder of Kathmandu Clothing, are successful businesspeople who have outplayed the forest industry. Do they - alone or with new investors - have the desire, the vision and the energy to launch an entirely new business there?

You wouldn't punt Tasmania's future on the benevolence of a Walsh, Wood, or Cameron.

So what industry does Tasmania fall back on? Wine. Food. Tourism. The Yartz (as Sir Les Patterson would say). Wind! It feels like half an economy, notwithstanding the theories of futurist Ross Honeywill - a consultant to some leading businesses who has moved to Hobart and spoke recently to ABC Radio National about the rise of creative industries and the knowledge economy in the state he dubbed a "tear drop at the bottom of the world". "The rust bucket jobs are really going and once they've gone they're never coming back. It's a matter of necessity that Tasmania needs a new or what I call a neo-economy to work in peaceful partnership with the traditional economy."

Brown compares the small number of jobs in failed, subsidised forest industries to federal government research which showed Tasmania's vast World Heritage Area generates, directly and indirectly, roughly $722 million in annual state output or business turnover and 5372 jobs.

And that could grow. Senator Brown's model is over the ditch, 100 per cent pure. The whole of Tasmania, he says, "is full of history, heritage and natural wonders, but you've really got to be savvy to be looking for them because they're not signposted, they're not highlighted, in the way that New Zealand does so well".

But is that all? "We've got carried away with green lifestyle," Harper says. "We have a large group of people in this state who moved here and don't want a single thing to change."

Where Harper and Brown sound the same is that both believe the future of Tasmania's economy lies more with small business than large. Not with propping-up industrial dinosaurs, or picking winners, but with entrepreneurial, often family-run businesses. Maybe the wheel is turning and, with food insecurity paramount and climate change driving agriculture south, Tasmanian is about to enter a heyday.

It is unfair to take Tasmania's woes as a litmus test of green economic policy - do that, says Greens leader Bob Brown, "when we're in government".

But the Greens need to hammer their growth credentials. Once you support public education, public health, public transport, public broadcasting - and throw in opposition to privatisation of everything from utilities to banks - there's not much of a private sector left to encourage.

We can't regulate our way into the future. We can only innovate, and compete. Banning and taxing and phasing out problem industries won't drive prosperity. A free market - properly regulated, free of fossil fuel subsidies, pricing in externalities - is our best hope of solving climate change.

Brown says he's been for business all along, but the media won't listen. He needs to keep saying it anyway.

Twitter: @gpaddymanning

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