Tasmanian Barometer Newsletter (September - November 2025)

Introduction

This period was marked by economic performance, significant government decisions, and a strong focus on digital transformation and sustainability. The state’s labour market remained robust, with low unemployment and rising participation, while exports and tourism continued to support growth. Government initiatives targeted economic diversification, digital health, and major infrastructure projects, including the high-profile Macquarie Point stadium. Strategic efforts emphasised innovation, workforce development, and public–private collaboration. The technology sector advanced rapidly, with widespread AI adoption and new investment in digital infrastructure, positioning Tasmania as a leader in both sustainability and digital transformation.

Finance

Tasmania’s financial environment remained resilient with key developments in employment, trade, and capital markets shaping the quarter.

1. Labour Market Stability and Growth
   Tasmania’s unemployment rate held at 4.0% (seasonally adjusted to 3.9%), the lowest among Australian states. The participation rate edged up to 61.5%, and underutilisation fell to 10.9%. This stability reflects a robust job market, supporting household confidence and underpinning broader economic activity. The increase in part-time female employment also suggests greater workforce inclusivity and flexibility, which may help address skills shortages and support family incomes​.
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2. Tasmania’s Credit Rating Downgraded
   In late November 2025, Moody’s downgraded Tasmania’s credit rating from Aa2 to Aa3, the lowest among Australian states. The downgrade was driven by a sharp rise in the state’s debt burden, which more than doubled since 2019, and ongoing budget pressures from capital projects and rising health costs. This change is expected to increase Tasmania’s future borrowing costs and has prompted calls for urgent budget reform to restore fiscal sustainability and confidence.
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3. Exports and Trade Expansion
   Overseas exports grew, with China accounting for 33.6% of Tasmania’s export market. Imports also rose, influenced by a major ship purchase. The positive trade balance supports Tasmania’s economic resilience, while the concentration of exports to China highlights both opportunity and risk, underscoring the importance of ongoing market diversification​.
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4. Cautious Household Spending
   Household spending declined slightly, indicating more cautious consumer sentiment amid cost-of-living pressures. Despite this, domestic activity remained steady, and building approvals held firm. This suggests that while consumers are wary, underlying demand for housing and infrastructure investment remains intact, providing a buffer against broader economic uncertainty​.
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5. Steady Building Approvals
   Building approvals remained stable, supporting the construction sector and reflecting continued confidence in property development. This stability is important for employment and investment, particularly as construction is a key driver of regional economic activity in Tasmania​.
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6. Rising Car Registrations
   An increase in car registrations points to ongoing consumer and business investment in transport. This trend is often seen as a proxy for economic confidence, as major purchases like vehicles typically reflect optimism about future financial conditions​​.
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7. Inflation and Wage Growth
   Hobart’s CPI was 4.3% per annum, above the national average of 3.2%. Wages increased by 3.4%, helping to offset inflation and maintain real purchasing power for households. However, higher inflation may pressure household budgets and business costs, requiring careful policy management.
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8. Final Demand and GSP Trends
   Final demand grew by 4.8% for the quarter and5.4% annually, outpacing the national figure of 2.2%. Gross State Product (GSP)grew at 1.4% per annum to June 2024, down from 1.9% previously. While growth remains positive, the slowdown suggests emerging headwinds and the need for continued economic diversification.
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9. Sea Forest IPO
   Sea Forest, a Tasmanian-based innovator in methane-reducing livestock feed, debuted on the ASX in November 2025 with a valuation of approximately $112 million at the offer price of $2.00 per security. The company’s technology, developed and manufactured in Tasmania, positions the state as a leader in agricultural sustainability and climate solutions. The IPO is expected to accelerate commercial scale-up, create local jobs, and support Tasmania’s reputation for scientific advancement and environmental leadership.
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10. Business Investment and Lending
    Business investment remained steady, with lending conditions supportive for established firms but more challenging for new entrants. This environment encourages established businesses to expand but may limit opportunities for startups, highlighting the importance of targeted support for innovation and entrepreneurship​.

Government

The Tasmanian Government advanced major policy, infrastructure, and digital transformation initiatives, with a focus on long-term planning and economic diversification.

1. Macquarie Point Stadium Development
   The government advanced the Macquarie Point stadium as a Project of State Significance, despite the Tasmanian Planning Commission’s recommendation against it. The project, with an estimated cost of$1.13 billion, is highly controversial due to its financial implications and community impact. Supporters argue it is crucial for the new AFL club and broader economic benefits, while opponents cite concerns over state debt and priorities. The government’s decision to proceed, including significant borrowings and federal funding, will have long-term implications for Tasmania’s infrastructure, finances, and social fabric​​.
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2. Tasmanian Development Board Role Expansion
   The Tasmanian Development Board’s mandate wasexpanded to support strategic investments in AI and digital tools for localbusinesses. By providing targeted loans and support, the Board is helping toaccelerate the adoption of advanced technologies, which is critical forproductivity and long-term growth​​.
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3. Legislative Review and Financial Toolkit
   A review of the Tasmanian Development Act 1983and related financial tools was initiated to ensure the government can deliver on its expanded economic role. Modernising these frameworks is essential for enabling innovation, supporting new industries, and fostering public–private collaboration​.
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4. Trade Strategy 2030 Consultations
   Statewide consultations for the next Trade Strategy 2030 were launched, engaging industry and community stakeholders. The strategy aims to diversify and grow exports, reduce reliance on single markets, and leverage Tasmania’s strengths in technology and advanced manufacturing​.
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5. Digital Health Transformation
   Implementation of the 10-year, $476 million Digital Health Transformation Strategy continued, with an extra $30 million allocated in the 2025–26 Budget. This investment is modernising healthcare delivery, improving patient outcomes, and building system resilience, particularly in regional and remote areas​​.
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6. Digital Connectivity Investment
   $11.5 million was allocated to improve digitalconnectivity, including support for the Marinus Link subsea cable project.Enhanced connectivity is foundational for economic development, enablingbusinesses and communities to participate fully in the digital economy​.
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7. Public Sector Digital Transformation
   Ongoing digital transformation initiatives are modernising public services, improving efficiency, and enhancing the citizen experience. These efforts are also helping to attract and retain skilled workers in the public sector​​.
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8. Government Technology Spending
   While the government increased investment in digital health and connectivity, the tech sector expressed concern over reduced technology spending in other areas. This may impact sector growth and highlights the need for a balanced approach to digital investment​​.
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9. AI Island Economic Strategy
   The government launched the AI Island Economic Strategy, aiming to position Tasmania as a national leader in artificial intelligence adoption. The strategy prioritises digital transformation, economic diversification, and workforce development, with an AI investment mandate to drive innovation across sectors. This approach is designed to future-proof the economy and ensure Tasmania remains competitive in a rapidly changing global environment​.
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10. Proactive Long-Term Planning
    The government emphasised proactive, long-term planning to ensure economic resilience and growth. This approach is reflected in its commitment to major projects, digital transformation, and stakeholder engagement, aiming to position Tasmania for future challenges and opportunities​.
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11. Consultation Engagement
    Multiple roundtables and an online survey were conducted to gather input for the Trade Strategy 2030 and other major initiatives. Broad stakeholder engagement ensures that government strategies are responsive to community and industry needs, increasing the likelihood of successful implementation​.

Strategy

Strategic efforts focused on building resilience, fostering innovation, and strengthening Tasmania’s long-term competitiveness.

1. Economic Diversification Blueprint
   The Economic Diversification and Investment Strategy was launched to reduce reliance on traditional sectors and position Tasmania at the forefront of innovation. By targeting emerging industries and supporting advanced technology, the strategy aims to create new opportunities and buffer the economy against external shocks​.
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2. Advanced Technology Industries Strategy
   Plans for a whole-of-government Advanced Technology Industries Strategy were announced, aiming to coordinate efforts across departments and maximise the impact of technology investments. This approach is critical for building scale, attracting investment, and fostering innovation ecosystems​​.
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3. Trade Strategy 2030 Direction
   The upcoming Trade Strategy 2030 will provide high-level direction for strengthening Tasmania’s global presence. By focusing on market diversification and leveraging local strengths, the strategy seeks to reduce vulnerability to external shocks and support sustainable export growth​​.
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4. Digital Roadmap Advocacy
   The tech sector called for a comprehensive government digital roadmap to improve digital services and maintain competitiveness. A clear roadmap is essential for aligning public and private sector efforts and ensuring Tasmania can capitalise on digital opportunities​​.
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5. Workforce Development Focus
   Workforce development and student engagement in ICT and cyber security were prioritised, recognising the importance of skills for future growth. These efforts are vital for addressing skills shortages and ensuring Tasmania can meet the demands of a rapidly evolving economy​.
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6. Support for Local ICT Businesses
   Ongoing support and funding for Tasmanian ICT businesses were highlighted as part of the government’s economic strategy. Supporting local firms helps build a resilient technology sector and creates high-value jobs within the state​​.
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7. Public–Private Collaboration
   The government encouraged collaboration between industry, education, and government to amplify Tasmania’s strategic advantages. Effective collaboration is key to unlocking innovation, attracting investment, and building a competitive economy​​.
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8. Legislative and Financial Toolkit Review
   The review of legislative and financial tools aims to ensure the government can deliver on its expanded economic roles. Modern frameworks are necessary for supporting new industries and enabling agile responses to emerging challenges.
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9. Resilience and Innovation
   The government’s strategy focused on building a more resilient, innovative, and productive economy for the future. By investing in technology, skills, and infrastructure, Tasmania is positioning itself to weather economic shocks and seize new opportunities​​.

Technology

The technology sector saw rapid progress in AI adoption, digital health, and cybersecurity, with ongoing challenges in workforce development and government support.

1. AI Adoption in Business
   Over 86% of TasICT members reported using AI in their businesses, with an additional 7% researching implementation. This widespread adoption reflects the sector’s commitment to innovation and positions Tasmania as a leader in digital transformation​.
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2. Critical System AI Deployment
   Around 5% of TasICT members were deploying AI for critical system processes, aligning with national trends. This indicates growing confidence in AI’s reliability and its potential to drive efficiency and competitiveness in key industries​​.
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3. Tech Sector Growth
   The technology sector employed 11,200 people, representing 3.2% growth and contributing $1.1 billion to the state economy. This growth supports high-value job creation and underpins Tasmania’s broader economic diversification efforts​​.
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4. Projected Tech Job Growth
   Deloitte Access Economics projected that Tasmania could create 21,000 additional tech jobs by 2035. Realising this potential will require sustained investment in skills, infrastructure, and innovation ecosystems​​.
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5. Cybersecurity Challenges
   Cybersecurity and skills shortages were identified as major challenges for the tech industry. Addressing these issues is critical for protecting businesses and public services, and for maintaining trust in digital systems​​.
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6. Digital Health Transformation
   The government’s Digital Health Transformation Strategy continued, with significant budget allocations supporting the rollout of new technologies and services. These investments are improving healthcare delivery and building system resilience​​.
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7. Cyber Hubs Initiative
   The Cyber Hubs Initiative was launched to bolster cyber defences through a shared operating model. This approach enhances the state’s ability to respond to cyber threats and protect critical infrastructure​​.
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8. Digital Connectivity Upgrades
   Investments in digital connectivity, including telecommunications and the Marinus Link project, are expanding access to high-speed internet and supporting economic development across Tasmania.
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9. Tech Sector Optimism
   34% of TasICT survey respondents expected revenue growth above 10% in 2025, up from 19% in 2024. This optimism reflects strong demand for digital services and confidence in the sector’s future prospects​​.
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10. Hiring Intentions
    45% of tech firms planned to hire staff, maintaining previous year’s levels. Sustained hiring is essential for meeting growing demand and supporting the sector’s expansion​.
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11. Government Support Concerns
    81% of TasICT members felt the government was not doing enough to advance the digital economy. This feedback highlights the need for ongoing dialogue and targeted support to ensure the sector’s continued growth​.
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12. AI and Digital Transformation Leadership
    The government’s new strategies aim to position Tasmania as a leader in AI and digital transformation. By fostering innovation and supporting the adoption of advanced technologies, Tasmania is building a foundation for long-term economic and social benefits.

Conclusion

This period reflects a state in transition; balancing fiscal pressures with major infrastructure commitments, expanding its digital capabilities, and strengthening its position in emerging industries. Economic indicators remain broadly positive, with low unemployment, rising participation, and steady investment supporting resilience despite a cautious consumer environment and the recent credit rating downgrade. Government initiatives across trade, digital health, and advanced technology signal a long-term commitment to diversification and innovation. The technology sector continues to accelerate, driven by widespread AI adoption and growing business confidence, but will require sustained focus on workforce capability and cybersecurity. As Tasmania navigates these shifts, the coming months will be critical in determining whether momentum can be maintained and translated into durable, broad-based growth.