How long until Tasmania is totally empty?

You can buy a fully renovated mansion on top of a hill in Tasmania for under $850,000.

Tasmanian MansionDid I mention that it is a mansion?

Hobart House plansIt’s also in the heart of Tasmania’s capital city, 1.4 km from the waterfront.

Even though a similar property in Melbourne would cost probably seven times as much, a multi-million dollar saving is apparently not enough to actually tempt people to live in Hobart.

Demographic data out today show the Apple Isle circling the plug hole. Its population growth rate is not far from zero, and people continue to leave in large numbers.

Tassie interstate migration

In the 36 years since 1981, Tasmania has managed to actually lose people to interstate migration, despite the Australian population more than doubling. They’ve been saved from extinction by overseas migration and the birth rate. But will that continue?

The entire state has managed just 700 babies in the last six months, an amazing new low.

Tassie births

The Tasmanian fecundity shortfall looks especially stark when you compare it to other states. WA has had 9800 babies in the last six months.

Screen Shot 2014-06-19 at 12.37.09 pm

The reason for Tassie’s child shortfall is not unguessable: Too few mums and dads, and too many grandmas and grandpas.

Tasmania by ageHow does Tasmania break out of this cycle? If mainland house price growth continues, there should eventually be push factors. Once the price of new housing in country Victoria and outer Melbourne starts to be much higher than the price of new housing in Tasmania, people might start moving there.

Also if climate change picks up, Tasmania will offer the last temperate zone in Australia.

But that doesn’t offer much to Tasmania in terms of positive actions it can take. Another option I’ve canvassed is learning from the failure of the EU, and giving Tasmania its own monetary policy and currency (The Boonie).

Essentially, the lesson of migration everywhere is that most people (except retirees) will move for jobs. That’s something Tasmania has too little of.

Unemployment by state

How to fix? There are glimmers of hope in the data above. Australia’s next big boom will be looking after the aged. If Tasmania can turn itself into Australia’s Florida (the place to move when you retire), there should be lots of jobs in aged care.

It just needs to convince the mainland-dwelling elderly that if they don’t want to work all the way to Tony Abbott’s new pension age, they should downsize to a much cheaper house on the other side of Bass Strait.

That would bring an influx of wealth to the island, and provide for a lot of jobs. The aged care industry is already showing a lot of growth.

Aged care

Can the Apple Isle fill those creaky old Hobart mansions with happy retirees? The key to Florida’s success has been “Weather, effective marketing, low taxes and a herd mentality.” Tasmania can match two of those already (good marketing and a retiree flow). Lower stamp duty for over-55s buying a new property might be a good policy move.

As for the weather? It can’t do much more than it’s doing already, by logging those virgin forests and exacerbating climate change.

 

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thomasthethinkengine

Thomas the Think Engine is the blog of a trained economist. It comes to you from Melbourne Australia.

3 thoughts on “How long until Tasmania is totally empty?”

  1. lower stamp duty for oldies would potentially lift the state’s mortality rate and raise health care costs so probably not the answer

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  2. As a Kiwi, I find your thoughts on Tasmania and possible solutions very pertinent. The aged care sector is booming here too, making money and providing jobs, albeit poorly paid jobs! Housing here especially in Auckland, is very pricey in good areas, and space is at a premium! Love that Hobart mansion….

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    1. Thanks for the comment! I think 15 years ago tassie and NZ were comparable, but NZ has grown a lot wealthier a lot faster ever since.

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