Stealing from Tassie to feed Qld?

Labor's Queensland defeat will likely see Canberra's funds focused on that state in the lead-up to the federal election. But being a testing ground for the broadband economy will bring Tasmania its own advantages.

The blue tide washing across Australia has done its work in Queensland. It ferociously eroded the Bligh government's foundations for well over a year, and the ALP condo has finally tumbled into the sea.

The Queensland election will have been watched with special horror by the remaining Labor outposts – Jay Weatherill in South Australia, Lara Giddings in Tasmania's minority government, and chief ministers Paul Henderson and Katy Gallagher in the Northern Territory and ACT respectively.

Gallagher knows she's a goner when the election falls due in October. There's still a slim chance of Henderson hanging on in August. But most attention will be on the two remaining Labor states – both are expected to go to the polls in March 2014 and their fortunes are partly dependent on the scale, or otherwise, of a Labor rout at a federal level.

One of the lessons of Labor's Queensland disaster is the newfound confidence of voters around the nation to be disloyal to all parties – something like 40 per cent of voters now have no 'rusted-on' tendencies at all. If Tony Abbott gives the Gillard government the hiding many expect, it could well excite a counter-balancing swing five months later at the South Australian and Tasmanian elections.

We shall see. The short-term effect of the Queensland result is likely to be a whole lot more visits to the sunshine state by Julia Gillard, and just about anyone else presentable, to announce a long list of 'essential infrastructure' spending.

On that score, Gillard and incoming premier Campbell Newman's interests are aligned – more federal spending is good for the power base of both. Gillard wants to hold and augment the eight federal seats Labor holds in Queensland, and Newman wants to be the one who, while cost cutting state finances, is still able to cut the ribbon on a host of Canberra funded projects.

And that's the way politics works. No point lamenting it, but the far worse economic problems in South Australia and Tasmania just don't feature as prominently in federal Labor's election strategy – as former Queensland premier Peter Beattie has said several times since Saturday, the next election will be lost or won for Labor in Queensland.

That said, Lara Giddings has one reason to smile that South Australia does not have. While her state is in recession (she glosses over this by saying it's a public sector recession while the private sector experiences "growth off a very low base") and has the highest unemployment figures, it has all the traits required to tell federal Labor's story at the next federal poll.

Labor is frequently slammed for having no vision for the nation, but nominally at least its policy mix addresses the side-effects of the mineral boom in ways the Coaltion's platform currently does not – namely it is skimming some revenue from the exploitation of 'our' mineral resources, and spending some of that money to prevent the 'hollowing out' on the non-resource states.

Yesterday in Tasmania, one of those commitments was given tangible form – NBN Co signed a $220 million contract with Leighton subsidiary Visionstream to finish the NBN rollout in Tasmania by 2015.

That's only worth about $440 a head for Tasmania's population of around half a million, but its value is greater for the very fact of the Apple Isle being first to be fully connected to the high speed network. As I wrote during the NBN political fight of 2011, the importance of the network for business lies less in its impressive upload/download speeds, and more in the fact that every customer or business partner will have the same basic experience – data transfers, lack of congestion and reliability that just doesn't exist with the current patchwork of internet technologies. When all your customers can look through the same large window, your shop front can shift more product.

Tasmania will become a national, and to some extent international, laboratory for what businesses can do when every customer, every supplier, is connected at speeds greater than the need.

I asked Saul Eslake, recently appointed chief economist for Bank of America Merrill Lynch in Australia, what this would do for the Tasmanian economy. One impasse it might break, he said, is the long-running conviction in both the Labor and Liberal parties that Tasmania's problems can only be solved by one more 'mega project' – such as a pulp mill.

What the connectivity of the NBN offers is much greater scope for small businesses to find innovative ways of doing business. Eslake points to diverse opportunities – branding and design, creative arts, niche horticulture and agriculture, marine engineering, IT and education exports. All can find news ways to market, new ways of collaborating, news ways to deal with suppliers, when the connectivity is better than required.

Tasmania will not be top of Labor's infrastructure spending list simply because of the unnatural disaster repairs the party must do in Queensland. But the struggling Giddings government has two years in which to play with the rapidly expanding high-speed network. The Tasmanian experience will be covered extensively during the 2013 federal election campaign as a pin-up for what Labor can do to 'manage the boom'. And there is a chance it can help Giddings pull that ailing state up by its bootstraps, in the absence of increases of federal largesse.

Follow @_Rob_Burgess on Twitter

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles