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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-12-02 Daily Xml
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SOUTH AUSTRALIAN ECONOMY

The Hon. M. PARNELL (15:52): I want to talk today about the South Australian economy. Whether we like it or not, myths and misinformation dominate economic debate, and it is from history that many of these myths developed. The South Australian story started out with a big focus on mining. In the first 50 years of its life, the young colony was saved from bankruptcy more than once by a mining boom. So, it is no wonder that the state still eagerly embraces any promise of a mining boom today.

Then, in the middle of last century, premier Thomas Playford developed a new policy driven economic model that attracted manufacturing through cheap labour, housing and energy. As a result, factories sprang up and cars and whitegoods become the dominant symbols of our economy. This was such a successful model that 40 years ago one in three South Australians were employed in manufacturing. However, when tariff walls came down, so did the employment figures and today only one in eight has a job on the factory floor, with only one in 10 employed in traditional consumer durables. However, despite the writing on the wall for the automotive industry, the clarion call of the Commodore still commands attention.

Another powerful economic myth is the idea of 'punching above our weight', where a small sector or industry in which we are seen to be leading other states will attract more attention than a much larger one that is at or below average. Equally strong for myth making is the importance placed on export industries. Our analysis shows that South Australia's orthodox economic identity is closely aligned to export performance and not employment. This is critical to a debate over jobs, as job rich industries are not necessarily high export earners and vice versa. For example, anyone listening to the state government or the business lobby would swear our economic future rests on a big expansion in the mining and defence industries. Although mining-related commodities constitute about a quarter of all SA export dollars, the industry employs just 1.5 per cent of workers and contributes only about 4 per cent of gross state product. For the defence industry, it is a similar story, with only about 1.3 per cent of state employment.

So, why do these two industries take up so much of the public economic debate in South Australia when they make up less than 3 per cent of our employment? This is especially curious when we consider that a whopping 73 per cent of the state's employment is in the amorphous 'services' sector, where small business is much more prominent.

Scratch the service, though, and there is a rich vein of alternative voices and perspectives. For example, Dr Barb Pocock from the UniSA Centre of Work and Life has been highlighting for many years the importance of work/life balance. There is also Dr Phil Lawn from Flinders University, who has developed a genuine progress indicator (GPI) for South Australia which shows that since 2000 GPI has not moved while gross state product has roared ahead.

Another academic worth listening to is Professor Dick Blandy. He says that we should focus on fixing up our problems and, once we have fixed them, export the solutions to the world as, chances are, if it is a problem here in South Australia it would also be a problem elsewhere. This makes a lot of sense. By using this approach not only do we aggressively tackle areas of real and immediate need but best of all our export products will help and not harm others.

South Australia has a rapidly ageing population. The number of people over the age of 85 in our state is set to double by 2030, and this means that without radical change government spending on health is projected to consume the whole state budget by 2032. To avoid going broke we need to quickly find innovative solutions to keep people active and healthy and in their own home for as long as possible.

Another challenge we face is water. The Salisbury experience of capturing and recycling stormwater should become the crucible of an exciting export industry. In terms of energy supply and demand, South Australia has one of the peakiest electricity grids in the world. This means that much of our electricity supply capacity is set up for the few days of the year in summer when air conditioner use soars. Solving that problem—especially by developing our natural advantage in wind, solar, geothermal and wave power—offers many exciting export possibilities.

There is much work to be done, and if we get it right we will be well placed to export the solutions. If we are not happy being the world's quarry, with a sideline in military equipment, we must be ready to talk about how we can use the economy to create a better future while being mindful of the myths that allow the industries of the past to dominate.

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