Business Confidence

The Hon. J.S. LEE (14:57): I seek leave to make a brief explanation before asking the Minister for Business Services and Consumers a question about South Australia's business confidence.

Leave granted.

The Hon. J.S. LEE: It was reported by ABC News on 28 July 2015 that almost 70 per cent of businesses across South Australia believe the state's economy will weaken in the next 12 months. The Business SA survey asked 200 businesses for their views on the state's economy and expectations for the year ahead, and nearly 60 per cent of those surveyed said they had recorded a decline in profitability in the June quarter. Business SA chief executive Nigel McBride said that the findings of the survey showed businesses were feeling a lot of pressure. He continued, saying:

Declining business confidence and conditions combined with SA's high unemployment provide a strong imperative for the state government to act boldly to reduce the cost of doing business in South Australia…

Amongst these industry comments, it is very disappointing to hear that the Premier of this state has no plan when it comes to fighting unemployment, as he was quoted as saying, 'It's going to get worse before it gets better.' My questions are:

1. With 70 per cent of businesses concerned about the future of the state's economy and 60 per cent recording a decline in profitability, what actions will the minister take to rectify the situation?

2. Can the minister inform the council how many South Australian registered businesses have closed down or deregistered in South Australia in the last 12 months?

3. Can the minister explain what strategies will be put in place to safeguard jobs in the business sector, with the trend showing the state's economy will weaken in the next 12 months?

The Hon. G.E. GAGO (Minister for Employment, Higher Education and Skills, Minister for Science and Information Economy, Minister for the Status of Women, Minister for Business Services and Consumers) (14:58): I thank the honourable member for her most important question. While I am on my feet, and before I answer that question, I need to draw to the chamber's attention the fact that my trusty advisers have reminded me that the subsidised training list was reduced from 900 to 700 (I think I said 500). The other thing is that I think I inadvertently said ASQA was the accrediting body; what I meant to say was the Australian Industry and Skills Committee. They do the accreditation.

The Hon. R.I. Lucas: We didn't think that was right; it didn't sound right at the time.

The Hon. G.E. GAGO: It didn't sound right to the Hon. Rob Lucas—he usually jumps up and down right there and then, but he obviously restrained himself today.

Members interjecting:

The Hon. G.E. GAGO: He's all tuckered out. It is interesting, though, isn't it, whether you are a glass half full or a glass half empty type of person. Indeed, it's not surprising that we see the Liberal opposition always viewing the world from a glass half empty point of view. A number of reports have recently come out and, indeed, it's not all good news and I accept that. However, it's not all bad news either.

It's interesting that Deloitte Access Economics' Business Outlook for June 2015, which was just released on 20 July, showed that, over the five years to 2019-20 for South Australia, DAE estimates a decline in unemployment to 6.7 per cent, an employment growth of 0.7, which would result in around 30,000 additional people in employment, and they anticipate an economic growth of 1.8 per cent per annum on average. The Business Outlook discusses a number of positives for South Australia that, I notice, the Hon. Jing Lee failed to mention, so I feel responsible to draw it to the chamber's attention.

An honourable member: She's usually pretty good.

The Hon. G.E. GAGO: She is usually pretty good, too. It was obviously just an oversight.

The Hon. I.K. Hunter: She might have missed that page.

The Hon. G.E. GAGO: Perhaps it was on the next page of her notes.

The Hon. I.K. Hunter: They might have been stuck together.

The Hon. G.E. GAGO: Yes; obviously, her notes were stuck together, so I will just refresh her memory. The Business Outlook discusses a number of positives for South Australia. Record low interest rates and a depreciated Australian dollar are supporting the farming sector, tourism, housing construction, retail turnover and the manufacturing sector more broadly.

Contrary to the national trend, business investment in South Australia has been a rising share of the state's economy since early 2014. Future business investment will be supported by the state government's announcement of the abolition of business stamp duties, including on commercial property transfers. We anticipate that those measures and, no doubt, some of our other tax reforms will have a positive impetus particularly on small and medium-sized businesses.

Also, they reported that prospects going forward for engineering construction activity are relatively positive, with a collection of 10 new road projects with a combination of $6.3 billion entering the pipeline, following the recent budget.

The SACES Economic Briefing Report which came out in July 2015, just recently, apparently showed that, over the next two years for South Australia, SACES forecasts the unemployment rate to be around 6.8 per cent, employment growth of 0.75 per cent in 2015-16 and of 0.5 per cent in 2016-17, which would result in 10,000 additional people in employment, and economic growth of 1.5 per cent. Although the figures aren't exactly the same as those of Deloittes, nevertheless, the trending is quite similar, which is very encouraging.

Over the past year, they found that growth in demand has accelerated, supported by stronger business investment, solid growth in household spending and a continued recovery in residential building. Also, the depreciation of the Australian dollar has supported strong growth in the value of services exports.

Going forward, low interest rates and a depreciated Australian dollar, it is anticipated, will continue to support economic activity in South Australia. Businesses will be supported by the recent tax initiatives announced by the federal and state governments; new major infrastructure projects, they anticipate, will generate economic activity; and merchandise exports will improve as Olympic Dam resumes full production.

Of course, we see another fabulous report that came out today with South Australia bucking nationwide investment slump trends, with a new report showing that the total value of capital investment projects in the state has risen to $42.3 billion, which is an increase of 16 per cent in the quarter and a 23 per cent increase over the last 12 months.

Again, that is a fabulous outcome for South Australia in terms of our nationwide investment slump, as I said, with an increase of 16 per cent in the quarter and 23 per cent over the last 12 months, bucking national trends. It is not all doom and gloom. There are some very positive things happening on the horizon as South Australia continues to work to diversify its economy, to drive investments and to grow new job opportunities.