Tasmania will not make big gains on mainland living standards without a more ambitious reform agenda than the state Liberals or Labor took to the election.
That is according to economist Saul Eslake, who also renewed his calls for state taxation reformin analysis of Premier and Treasurer Peter Gutwein's 2021-22 budget, which was delivered on Thursday.
Mr Eslake said that if state Treasury's forecasts and corresponding federal Treasury forecasts for the national economy proved correct, Tasmania's material living standards - "as proxied, however imperfectly, by per capita gross state product" - would not have changed relative to the rest of Australia.
"They will still be just over 20 per cent below the national average, a little bit better than at the trough of the recession which Tasmania had a decade ago, when they were more than 23 per cent below the national average, but worse than they were by this metric during the 1980s and 1990s.
" ... we should - in my opinion, anyway - be aiming for better than that.
"But we won't get there without a more ambitious reform agenda than this government took to the last election, or, to be fair, than the Opposition did either."
Mr Eslake said Tasmania potentially faced a huge financial hit when the federal government's transitional guarantee (paying for giving Western Australia a larger GST share than it would otherwise get) expired after 2026-27.
He described the transitional guarantee as part of a corrupt bargain with WA.
"From then on, Tasmania and the other states and territories will wear the costs of appeasing Western Australia's insistence on keeping the bulk of the windfall gains it reaps from the good fortune of having so much iron ore under part of its surface, and China's willingness to pay so much for so much of it," Mr Eslake said.
"The budget papers note that this transitional guarantee is worth $112 million to Tasmania in 2023-24 and 2024-25.
"It also notes that Tasmania stands to lose $83 million, or $147 per head, in 2027-28, as part of the process by which Western Australia stands to gain $5.6 billion, or $1945 per head.
"And it rightly notes that this loss of GST revenue 'could significantly impact Tasmania's ability to provide essential services, such as health, education and emergency services'."
Mr Eslake said that was why Tasmania should be actively considering reforms of its state taxation system, which he argued was one of Australia's most inefficient and least equitable.
"Unfortunately, the present government - unlike its Liberal counterpart in New South Wales - appears to have no appetite for anything that could be meaningfully described as tax reform," he said.
"And nor does the Opposition.
"Which is such a pity.
"If governments can't bring themselves to contemplate reform when, as the Premier said in his budget speech, 'our economy is strong ... and our businesses and our people are confident,' ... when on earth are we going to do it?"