The past decade has seen at first slow, and now rapid transformation of the economic drivers of the South Australian economy. It started with the closure of Mitsubishi, and is now thrust to the centre of economic discussion in this state due to the imminent closure of Holden, Ford and Toyota and the automotive component manufacturers that will face ruin. It doesn’t help that the second major manufacturing base in South Australia – the defence sector, is being pulled from pillar to post and its reputation trashed daily in the political and media discourse. South Australia’s manufacturing and advanced manufacturing future is in rapid decline, and we need to act with more boldness than the budget response if we are to create a prosperous future for all South Australians.
The SA Budget released on Thursday is a start, but it does not go far enough if we are to stimulate real, tangible, and bold economic transformation this state needs in order to return to economic sustainability.
The next five years has the potential for a steep decline in economic fortunes in this state if bold action is not taken now. SA has been towards the bottom of the economic league tables in Australia for the past 5 years, and is now rock bottom. The crossroads have emerged and the economic decisions made in the immediate future will determine whether our economy returns to economic prominence or becomes an economic basket case.
Boldness is about accepting our current economic environment is dire, and not accepting the decline. It’s about understanding our place in the global market place, and recognising the regulatory burdens that are still dampening new job creation. It is also the time to acknowledge that SA’s future success is not tied to party politics, but to bi-partisan political action that does what is best for SA, not providing political barriers to new ideas (and some old ones) for ideological reasons.
We need to understand the decline in our economic fortunes has not been created by free trade agreements and “Asia”, but Asia is undoubtedly where South Australia’s economic prosperity lies in the immediate, medium and long term future. Our Asian (from India – Japan, and everything in between) neighbours, are economically steaming ahead of Australia and South Australia. There is increasing economic integration occurring throughout Asia. The ASEAN Economic Community (AEC) is one example which will place pressure on SA’s tradition approach to export and investment attraction. We need to be a part of this economic growth and integrated trading community, not compete with it! We will certainly miss the real opportunity if we continue down this path.
We need to recognise that a solution to economic and community development must be implemented in a global and Asian context where many South Australian industries are currently at a severe disadvantage relative to our global competition including:
- High cost and price structures.
- Lack of affordable housing and community services.
- Lack of effective economic infrastructure, especially transport and logistics services – internal and external.
- Lack of investment and integration into global/ASEAN supply chains.
- Minimal and ineffective in-market representation, branding and promotion.
We need to acknowledge this is not about political parties, but that bipartisan political support is required immediately. We would advocate the following economic steps which the Government should pursue with urgency:
- 20% reduction in business and household taxes, charges and costs across the board including State and Local Government Taxes, Fees and Charges – This will demonstrate that the Government means business and will provide a much needed stimulus. Be bold, and provide the incentive to start new businesses and build job creation.
- $20,000 to any South Australian domiciled company making an equity investment in an ASEAN supply chain or productive capacity businesses in 2015/2016. We need to support SA business to become part of Asian supply chains, and be part of the economic integration which is driving economic growth in our region.
- Introduction of Toll Roads to assist fund transport and logistics infrastructure. We need to develop our infrastructure faster, and much of the economic growth in South East and East Asia has been generated through fast efficient and user pays infrastructure….and all of it is user pays. If Jakarta, KL, Bangkok and Manila can afford to have toll roads why shouldn’t we? This will also free up crucial government spending for competing economic and social objectives.
- Establish Independent South Australian Commercial Representative Offices in Asia. A South East Asian Commercial Office in Kuala Lumpur, Malaysia, a North East Asia Commercial Office in Qingdao, and a South Asia and Middle East office in Mumbai. The cheap Austrade model currently preferred by the State government will not lead to real trade and investment outcomes for South Australia. It just makes us compete for trade with the rest of Australia…..and at the moment we are already on the bottom of the list.
- Leveraging South Australia’s and Adelaide’s Sister City/State relationships for mutual economic benefit including Shandong and Qingdao (China), West Java (Indonesia), Penang (Malaysia) and Austin Texas.
- Strategic use of new urban development projects as catalysts for economic and community development, affordable housing and job creation. These project will go a long way to compensating for the GMH job losses in the northern region of Adelaide. Immediate approval of development ready projects including – Roseworthy Garden Town, Concordia and Murray Bridge and the establishment of key urban corridors for economic development in strategic industries – Food, Defence, IT, etc. This will create a pool of inexpensive housing to meet the unmet demand and stimulate economic corridors, similar to what successful Asian economies have done for the last 10 years. AsiaAustralis has assessed the economic contribution of Roseworthy to the State economy at $12.1 billion or $4.7 billion in present value terms over 41 years, with total direct employment of 24,000 and whole of economy employment of 119,000, over 41 years or an average of 600 and 2,907 jobs per year respectively, sufficient to cover the impending GMH losses.
- Providing substantive Financial and Asset Investment Incentives for interstate and overseas companies to establish in SA as anchor businesses for industry development. Example targets would include:
- Automotive Industry – Specialist Vehicle Manufacturers in Defence, Motor Car Racing (V8), Niche Vehicles (e.g. Taxis, Embassy vehicles, Sandman, etc). Negotiation with Holden to secure the existing Elizabeth platforms for non-GMH competitive special vehicle manufacturing.
- Defence – First and second tier manufacturers in the maritime, aerospace and land sectors including the attraction of European companies to establish in Adelaide as a base for accessing the lucrative ASEAN markets utilising Australia’s Free Trade Agreements and the impending ASEAN Economic Community.
- Food and Beverages – A product consolidator/exporter to fill the logistics void in accessing global markets.
- Agribusiness – A global primary production company to accelerate transition from family to corporate agriculture especially in the Virginia and Riverland regions.
- Health – e-health and strategy development for delivery in ASEAN region.
- Energy – Solar farms, geothermal development, Non-Conventional oil and gas development.
- Transport –export focussed transport infrastructure which redirects dangerous B-Doubles away from city commuter routes onto major new toll ways connecting the Sydney, Melbourne and Perth routes effectively to Adelaide Airport and Port Adelaide.
South Australia is at the economic crossroads, and we need to have a vision, be bold and create a new economic future for all South Australians, and be a part of our global regional growth story – The Asian economic growth story. South Australia has a heritage of boldness, braveness and innovation, if we are to thrive in the 21st century economy we need to act now with urgency, and with a global economic vision that will return South Australia to a position of strength, where we can once again proudly say SA GREAT!