How can we revitalise the State's economy?

Monday, 22 January 2018

A new report has proposed a range of policy initiatives aimed at "reinventing the State economy" and boosting economic competitiveness in South Australia.

The recommendations have been made in the latest Economic Issues report by the independent South Australian Centre for Economic Studies (SACES) at the University of Adelaide. The Centre has a 36-year track record of high-level analysis aimed at supporting economic outcomes for South Australia.

"No matter which political party wins the 2018 State Election, there is a job to be done to turn South Australia's economic situation around," says Associate Professor Michael O’Neil, Executive Director of SACES and co-author of the report.

"Our new report sets out a range of initial policy responses required to bring South Australia's competitiveness back on track, relative to the rest of the nation, which will assist in reinvigorating the State's economy."

Associate Professor O’Neil says South Australia has many strengths that can be built on for economic sustainability.

"Our State has proven excellence in the processing of premium quality food, agribusiness and food technologies, medical technologies and research, electronics, surveillance systems, defence manufacturing, aerospace, pharmaceuticals, and expertise in coupling industry with research centres and R&D.

"We have three universities contributing high-quality education services and innovation, and established excellence in research institutes, such as at the University of Adelaide's Waite and Roseworthy campuses, SAHMRI, SARDI and many others.

"But a range of economic challenges are facing this State. Agriculture and mining are not the high-employing industries they once were, the loss of car manufacturing is still being felt, and the job-creating capacity of the private sector has virtually stalled," Associate Professor O’Neil says.

"South Australia has become too heavily reliant on public sector employment, and meanwhile the burden of regulation and compliance creates additional cost for industry and government itself, including local government.

"What we need is an environment in which private business can thrive, to shift the balance of employment away from the public sector to an efficient private sector, and to make it easier for business to innovate and grow," he says.

"While there are multiple challenges facing our State's economy, we hope this new report – and our Centre's ongoing analysis – will provide a basis for debate and discussion. Through this, we aim to assist policy advisers in the creation of an economically stronger, more competitive South Australia," Associate Professor O’Neil says.

The report's recommendations include:
• Reform of government to create a "cost-effective democracy" for South Australia such as reducing the number of State electorates by four, restricting Cabinet to no more than 10 Ministers
• The introduction of a State-based Independent Productivity Commission
• Streamlining government service delivery, and creating more competitive markets in which private companies can deliver services more efficiently
• Getting the right mix between local and State Government service provision, and creating more economies of scale in local government
• A reassessment of the State's tax system, including changes to the amount of payroll tax paid by businesses and the way in which it's applied
• Adopting recommendations of the Sustainable Budget Commission, to provide more formal evaluation of and reporting on State Budget initiatives

The full Economic Issues report will be released to the SA Centre for Economic Studies' corporate members today (Monday 22 January).

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