Tassie freight schemes need change: report

TASMANIA'S freight headache looks set to continue with a Productivity Commission report finding the island state requires ongoing and improved support to maintain viable links to mainland Australia and international ports.

The draft report released on Friday recommends updates to current arrangements, which see the federal government subsidise goods and passenger services to help offset the cost disadvantage of Bass Strait.

"The design and administration of the current subsidy schemes are out-dated, resulting in outcomes not well-aligned with the schemes' underlying objectives," Commissioner Karen Chester said.

"The embedded administrative complexity also gives rise to anomalies and some perverse incentives."

Without change, the federal government will pay $2 billion over the next 15 years to fund the schemes.

There is a risk that subsidy recipients will become reliant on the funds, which will subsequently reduce the productivity of the Tasmanian economy, the report said.

The commission recommends the schemes are regularly and independently reviewed.

After a period of public consultation the report - titled Tasmanian Shipping and Freight - will be submitted to the Australian government in March.

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