City Focus: Hobart

By Olivia Minnock

The citizens of Hobart are ready to show the world that the capital of Tasmania belongs alongside the popular coastal metropolises of mainland Australia, but what makes the economic engine of Hobart move?

Hobart: the facts

Approximately 150 miles to the south of mainland Australia lies the island state of Tasmania, and its capital city Hobart sits near the southern coast of the island. About 225,000 people (around 40% of the population of Tasmania) reside in the greater Hobart area, which makes the city the beating heart of the state in terms of industry, government, tourism and culture. 

The abundance of natural resources on the island of Tasmania has long been a crucial part of the city’s economic identity. Both the processing and refinement of natural resources, as well as exporting products abroad, make up a significant portion of the gross product of the state of Tasmania. In particular, processed metals, ore, wood and food products have been driving economic activity in Hobart since its early days as a colonial outpost. China is the largest market for Tasmanian exports, having contributed about $873mn in 2016, but the state also has strong trade relationships with Taiwan, Japan and the US. Total Tasmanian exports for the 2016 financial year were valued at $2.85bn.

Tourism is also a critical sector of Hobart’s economy, both in terms of employment figures and revenue generated. The industry accounts for approximately $980mn yearly, and 2016 saw Hobart attract more visitors than Perth, and equally as many as Brisbane. Cruise ships remain a popular mode of tourist entry into Hobart, but many adventurers flock to Tasmania to experience the island’s rugged wilderness and abundant protected natural areas.

The economic landscape of Hobart

As Tasmania is the smallest state in Australia, both in terms of population and area (not counting territories and other holdings), Hobart has often taken a backseat in global commerce to its larger siblings such as Melbourne and Perth. However, that is beginning to change as new residents and businesses are finding themselves drawn to Hobart’s low cost of living, diverse economy and ample opportunities.

After somewhat muted economic growth levels hovering around 1% from 2015 to 2017, the Australian government expects Tasmania’s gross state product to expand by over 2% in 2018 and beyond. Employment numbers in the state tell a similar story – where the state-wide employment levels fell somewhat in 2016 and remained stagnant in 2017, labour force participation is forecast to rise in the near future. After ending 2016 at 6.5%, unemployment in Tasmania has fallen to 6% in recent months.

Young Australians in particular have been moving to Tasmania in recent years thanks to its positive economic outlook and relative affordability. Many economic experts note that it is a serious struggle for young residents to find affordable housing in cities such as Melbourne or Sydney, which is in turn driving them to Hobart. CommSec, which publishes a quarterly ‘State of the States’ economic scorecard for Australia, noted in early 2017 that Tasmania had jumped from seventh place overall in the previous edition to fourth place, largely due to population growth and strong home lending figures.

A hub for healthcare

Despite the recent growth in tourism and strong manufacturing and exporting activity, more people in Hobart are employed by healthcare and social assistance organisations than any other sector. The Royal Hobart Hospital – a public hospital operated by the Tasmanian Department of Health and Human Services – is located in the city’s central business district and is the single largest employer in Tasmania. It also functions as an important teaching hospital, maintaining a relationship with the nearby University of Tasmania. 

An incoming wave of tech innovation

The recent growth in Tasmania isn’t just about more affordable housing. Lately the state has emerged as a hotbed for IT startups that has led to some pundits labelling it the ‘new Silicon Valley’. 

The governments of both Australia and Tasmania have been making a big push to attract tech companies by offering substantial incentives to encourage the formation of startups in the state. Even global conglomerates are recognising the benefits of doing business in Hobart. In 2013, telecom giant Vodafone Australia announced it was adding 750 employees in southern Tasmania, with plans to expand its operations there further in the future.

In addition to the incentives, IT startup founders are flocking to Hobart because of the low costs of operation and the investments in tech and communication infrastructure throughout the city. With stories of the lack of affordable housing and office space in cities throughout Silicon Valley in California, it’s no wonder that many innovative entrepreneurs are choosing to build their empires on the more welcoming shores of the Tasmanian capital. 

Some IT startups that have been established in Hobart include:

Savage Interactive

This team of software developers created a design app which has been used by Pixar, Mattel and DC Entertainment.


An award-winning Australian IBM business partner which houses its Tasmanian operations in Hobart and facilitates a diverse array of business technology solutions.


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