House of Assembly Fifty-Second Parliament, First Session (52-1) 52 1 Parliament of South Australia House of Assembly published Grievance Debate South Australian Economy SOUTH AUSTRALIAN ECONOMY Mr HAMILTON-SMITH House of Assembly Waite Mr HAMILTON-SMITH (Waite) (15:24): I rise to express concern about the state of the South Australian economy and to suggest some alternative pathways forward for the house. The country, the state, and indeed the world, are facing very difficult times indeed. It is little wonder that confidence is down. The Sensis Business Index (released just a few days ago) showed that confidence had fallen from 16 points down to -5, as profitability and sales plummeted into negative territory over the past quarter. Of businesses, 14 per cent reported that they were considering closing down over the next year, further evidence of uncertainty for jobs in the short to medium term. According to the ABS (statistics again released recently) South Australia has experienced the largest drop in the number of housing finance commitments, declining by 3.9 per cent in July, while the national average increased by 1 per cent. Business is indeed in serious trouble. With building approvals having declined by 8.8 per cent in July alone, the worst result on the mainland, there is cause for concern. Our share of the national economy now is only 5.9 per cent over July, when before this government came to office it was well over 7 per cent. The pain goes beyond the housing sector. The Australian Industry Group's Performance of Manufacturing Index, again released in the last few weeks, reveals serious concern in manufacturing. That report confirmed that conditions in the manufacturing sector deteriorated in August down to 43.3, well below the 50 point level, which indicates an ongoing contraction in activity—so, well below the 50 point level. Ten out of 12 manufacturing sub-sectors recorded declines in this state from the nine in July. In 2002, there were 92,500 jobs in manufacturing, but under Labor's stagnant leadership jobs in this sector have declined to 83,700. From 2000-01 to 2009-10, manufacturing's contribution to our gross state product has fallen from 15 per cent to a mere 11.7 per cent, and it is little wonder. There are four fundamental problems. One is that state Labor has, within the space of 11 or 12 years, turned South Australia into the highest taxed state in the country. It has also ruined the WorkCover system—the worst performing in the nation. Federal Labor has now introduced industrial relations changes that have set the clock back decades and the burden of red tape is overwhelming business. The Pitcher Partners State Tax Review recently showed that the aggregate tax for a small business with a $1.1 billion wage bill in South Australia is $47,000 more than in Queensland, and that is before you look at the cost of payroll tax, which is well above that paid in every other state. I urge this government—I have publicly and I will repeat it—to consider holding a manufacturing and industry reform summit during 2012. I conducted a similar summit in 2008 on tax reform. It could be done here in the parliament, but that work needs to be continued. It must address tax reform, the WorkCover system, Labor's industrial relations changes and the need for science, innovation and entrepreneurship to show the light forward for business. That is not to mention the need for skills development and infrastructure—a no-brainer. Action is needed, and action is needed soon. Export statistics that the government is currently touting are propped up by high prices as a result of the Australian dollar and an extraordinary result from our farmers. The government can take little credit for them—export performance remains poor. The world financial system is also facing extraordinary stress at present. We face uncertain times in the years ahead. There is concern in Europe and America, but also in Australia. There is no time to delay. There must be an industry and manufacturing summit, it must be held within the next six months and it must get the results that business needs.