Across the Bass Strait from Australia’s south, Tasmania continues to be an island setting which prides itself on its uniqueness.

The Apple Isle’s population is a tick just over 500,000, but in the year ending September 2016, some 1.19 million tourists poured in, according to Tourism Tasmania.

Considering you can drive almost anywhere on the island in under three hours, it is the unique range of attractions that pulls in the punters.

Take MONA (Museum of Old and New Art), the inimitable underground domain of distinctive art and the brainchild of equally eccentric owner, professional gambler and billionaire businessman, David Walsh. Its attraction is similar to Tasmania itself – it is a uniqueness that does not come easily to all locations.

To further understand how this unique nature drives its economy, and the supporting accounting industry, Acuity spoke with Paul Breen FCA, a partner at BDO, and new chair of the CA ANZ Tasmanian Regional Council.

“We call it the ‘MONA effect’,” explains Breen.“The notion of having unique attractions to bring people in from the mainland, but also from around the world. Our number one economic driver is tourism. Our tourism increase from 2015 to 2016 has been around 8.4%. Alongside MONA itself, there are also historical attractions like Port Arthur.”

"We call it the MONA effect, the notion of having unique attractions to bring people in from the mainland."

Breen notes that a growth area in tourism is cruise ships, with an influx heading down to Tasmania.

“We now have some cruise ships coming into Wineglass Bay on the east coast for a day, another visit down to Port Arthur the next day and then on to Hobart the following day, so three stops around the island in one cruise.

“As Tasmania visitor numbers are up, this is having a flow-on effect for a range of businesses such as coffee shops, and the smaller foodie shops have stepped up their game.”

Breen says annual events, such as the Sydney to Hobart Yacht Race and in February the Australian Wooden Boat Festival, produce an influx of tourists filling up hotels.

“The second major driver of the Tasmanian economy is building and construction, with this aspect also being driven by that first tourism component.

“There are new hotels being built here in Hobart, there is a major revamp of the Hobart hospital, while the University of Tasmania campus up in Launceston is undergoing a redevelopment,” he says.

Weighing up the Tassie challenges and opportunities

Like all states, Tasmania has its share of economic challenges. Breen cites renowned economist Saul Eslake’s report on Tasmania late last year. The major concern? Desperately low education rates.“Tasmania has the lowest rate in the country of people in the 15-75 age bracket with a degree,” Breen says.

“It is also a long-term and endemic issue that we don’t encourage our students to go through to a higher level [of education], or if they do go through to Year 11 or 12, the completion rate is too low.

“Indeed, there are a lot of schools that do not have a Year 11 or 12 programme, so students have to attend another school or college, which brings in a culture that when they finish Year 10 they just drop out.”

“There are a lot of schools that do not have a Year 11 or 12 programme, so students have to attend another school or college.”

Breen says the state government is trying to get some colleges and schools in gear to offer year 11 and 12, particularly in rural areas.   

“This issue leads into a low participation rate for employment, with Tasmania’s rate being lower than other states, especially for full-time workers, where there are a lot working casual and part-time.

“This results in the average working week being an hour and a half shorter in Tasmania than other states.”

As for the opportunities for the Tasmanian economy, Breen explains that its current major driver will continue as its largest opportunity too.

“There is still room for more inroads into tourism as we get infrastructure built to accommodate more people coming in,” he says. “International tourism is also a focus, there are a lot of international students here, particularly from mainland China.

“They are bringing across their families when they graduate, so you get an influx of tourists going home with their [Tasmanian souvenir] lavender bear saying how good it is. We also had the Chinese president here a few years ago and there was some good publicity in that.”

Accounting for Tassie

As for life as a chartered accountant in Tasmania, Breen explains much of this hinges on scale. And being at the more diminutive end of it.

“We have smaller practices, we do not have those really big offices. So the size and scale of what we work with is different here,” he says. “We are also a state which is big in government, with the government being a huge employer of accountants.

“Plus, from a CA perspective, there is perhaps a little bit less support than in these bigger offices where there are more people doing CA at any one time. That can make it a harder ask, but the opportunities are still there for CA-qualified people to have decent careers,” Breen says.

Along this theme, a unique challenge for accounting firms in Tasmania is that clients are similarly small.

“I find that within my practice and working with other partners in BDO around the country, that they would be thinking about their average fee being in the A$30-50k per annum range for most of their clients, where a practitioner here might be dealing with A$3-5k average clients,” Breen says.

“That puts a strain on the Tasmania practitioner. There is a shift away from pure compliance that the industry is facing alongside the technology shift that is pushing a lot of your practitioners into more advisory roles, making it a more difficult task for a Hobart practitioner to get what was previously a A$3,000 compliance fee to be a similar fee in an advisory role, because a client has not previously asked for that.

“Whereas taking your A$3,000 Sydney client and adding value through additional consulting fees is an easier thing to do."

The future of the Tassie economy

As for the prospects in the Tasmanian economy, Breen explains that as such a small state, rapid growth is a tougher prospect.

“What the economy will have to do is look closely at the things we do well and continue to work on doing that well,” he says.

“The accounting industry as it moves towards being advisory, will have a part to play in that by looking at organisations and clients and saying, ‘well, how do we change this from being one of the pack to being a premium business that tourists and people coming to our state want to experience?’

“A similar aspect in our agribusiness, we have got a clean green view of ourselves and we want to make sure that we continue to protect that and therefore be able to promote what we do and what we are about here – being unique, boutique, clean and green.”

Breen concludes that in the meantime, hopefully successive governments can put the infrastructure in place so Tasmania can remain “open for business”.

This article first appeared in the April/May 2017 issue of Acuity magazine, which can be read in full online for free here.