The COVID-19 pandemic, with its associated economic shockwaves, represents an unprecedented challenge to the world economy. The economic impact is unlike anything seen since the Great Depression 90 years ago—an impact which, in Australia, has been echoed at both national and sub-national levels. This research paper considers what the next stage of Tasmania’s economic development could look like, and how Tasmania can recover and reconstruct after this pandemic.

In response to COVID-19, it was necessary to shut down large sections of the economy to stop infection and protect public health. This resulted in an unprecedented drop-off in production. In Australia and Tasmania, however, businesses and households will not simply 'regain confidence' and drive a full recovery themselves. Indeed, Tasmania’s proactive and protective fiscal response indicates that the state government already understands that major support from government is necessary.

Societies around the world are trying to move from an acute emergency response to a rebuilding stage – although the stubborn persistence of the virus is still constraining that transition in many countries. The state government in Tasmania will clearly be required to play a hands-on, leading role in job creation, investment and income generation for years to come, and it will need to borrow to do so.

Key recommendations:

  • The Tasmanian government must make a direct, substantial and focused investment in public housing. This will support the construction sector, address Tasmania’s housing affordability challenge and enable the Tasmanian government to directly contribute to better longer-term social and economic outcomes.
  • Expansion of the health, aged and disability care sectors must be expedited as a matter of urgency. This expansion should take place in the public sector.
  • 'Back-sourcing' (that is, returning outsourced public sector functions to direct provision by government) should be expedited wherever possible, for reasons of cost, accountability and quality. This will also provide the state government with another direct lever to improve wages and conditions across the economy, particularly for women.
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