TASMANIA must harness its natural competitive advantages to meet the economic challenge posed by the demographic time bomb of the State’s ageing population.

The peak employer body, the Tasmanian Chamber of Commerce and Industry (TCCI) says the time to act is now. Tasmania cannot afford to ignore the economic reality and it must put policies in place if it is not to destine future generations to a lower standard of living and growing and unmanageable levels of debt.

TCCI chief economist Richard Dowling said Tasmania’s ageing demographic time bomb meant the State had to change its approach to economic policy.

“It is the unfortunate reality that a status quo economic performance in Tasmania will not even maintain a status quo lifestyle,” Mr Dowling said.

“Today there are little more than four people of working age for every person aged over 65.  Yet within 30 years Tasmania will only have two people of working age to support those aged over 65 years.

“It is not hard to envision why government health and aged care services will be pushed to the limit in such circumstances and the State’s budget position and debt levels will become unsustainable.”

The impact of the demographic time bomb was illustrated in last month’s Tasmanian Business Reporter showing the cost of government exceeding the size of the Tasmanian economy by 2050. It demonstrated that the State’s economic growth would have to more than double to maintain current living standards.

Richard Dowling is delivering a series of business presentations around the State, discussing the latest developments in the global economy and the need for economic reform in Tasmania.

He said the demographic die was cast.

“The ageing process cannot be reversed, however, a diminishing way of life does not have to be our destiny.

“It is within Tasmania’s power to avoid this ticking time bomb.

“The strategy must be twofold. Firstly, we need to focus on budget sustainability to prevent the red line of government costs growing so rapidly.  Secondly, we need to increase the economic output of our workforce by improving the ‘three Ps’ of productivity, participation and population.”

Mr Dowling said a Tasmanian economic renaissance must be centred around harnessing the state’s competitive natural attributes to produce goods and services that a globally competitive.

“We have some of the best renewable energy resources in the world across technologies such as wind, wave, tidal and geothermal and we have the something approaching 14 percent of the nation’s rainfall on less than two percent of the landmass.

“We soon will have some of the best digital communications infrastructure in the world and we must capitalise on our lead advantage.”

Mr Dowling said policy approaches to education, population health, infrastructure and taxation must be structured to mitigate the undesirable consequences of an ageing demographic and at the same time, capitalise on our competitive advantages.

“There is cause for optimism that with the right policy settings from government combined with community willpower, this time bomb can be defused.

“Tasmania’s greatest challenge may not be the demographic time bomb itself, but an apparent resistance on the part of government and Tasmanians to undertake the painful restructuring required to defuse it.

“Research consistently shows that Tasmanians are the happiest people in the nation and love their way of life.  But we are getting older every day and we must act now if the Tasmanian way of life is to be maintained. There is no time to lose,” Mr Dowling said.