Crikey subscribers love a pub night so we’re having one in Adelaide this Wednesday to discuss all the various problems confronting the South Australian economy.
The venue is one of the favourite journalist drinking holes in Adelaide, the Union Hotel in Waymouth St just near the office of the Adelaide Advertiser.
Crikey recently travelled to Port Augusta for an ABC Television Australia Talks program with George Negus. In the course of our research, a subscriber sent through the following summary of how relatively poorly South Australia is travelling.
It would appear that it’s a bit of a basket case with residents fleeing from the low-growth, high unemployment, tax and spend regime that John “master of the corporate subsidy” Olsen still presides over.
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These are some of the key statistics that we can debate at the pub night this Wednesday:
“Real GDP growth over the past decade (to 1999-2000, latest available year) averages only 2.2 per cent which is worse than other State except Tasmania, and trails the national average of 3.5% pa.
Per capita household disposable income has slipped from 94.5% of the national average in 1994-95 to 91.3% in 1999-2000; once again only poor old Tassie (83.1%) ranks lower.
SA productivity (Gross State Product per hour worked) was 8.2% below the national average in 1999-2000 meaning they need to get a lot more efficient.
SA’s trend unemployment rate of 7.4% is half a percentage point above the national average; although this gap has narrowed somewhat (it was nearly 2 pc points above the national average in 1998).
SA’s unemployment rate is “held down” by the fact that it has the second lowest “participation rate” (ie, proportion of the working age population in work or actively looking for it) of any State (guess who has the lowest? Tassie of course).
From a different perspective, employment has increased at an average annual rate of just 0.5% pa in SA over the past five years, less than one third of the national average of 1.8% pa over the same period.
People are still leaving SA in droves – and at an increasing rate. Interstate emigration averaged 100 people a week in calendar 2000, compared with 66 a week in 1999 and 52 a week in 1998. At least this is one area where SA is even worse than Tasmania – people are still leaving Tasmania but at least the rate of interstate emigration is falling.
Incidentally, people are also leaving SA in coffins at a higher rate than other States because – the grey highway to Queensland notwithstanding – SA has Australia’s oldest population on average, and its highest proportion of over 65s).
SA is the tax-and-spend capital of Australia. According to the latest Grants Commission analysis (which SA people dispute at their peril since it’s this analysis which justifies the relatively favourable treatment of SA in the distribution of Federal money), the SA government raises about 15 per cent per capita more in State taxes than it would if its taxes were the same as the average of all States and Territories (1999-2000 figures). SA is easily the highest-taxing State in the nation on this basis. SA’s high State tax burden reflects the fact that it’s also the nation’s leader when it comes to State spending, spending 12.9% more per capita on State public services (excluding debt charges and superannuation) than the Grants Commission reckons is required to provide SA citizens with the same standard of public services as the average of all States and Territories.
It is of course SA’s democratic right to be the Sweden of Australia – a tradition dating back to Tom Playford, by far Australia’s most successful practical socialist – but it’s also the right of industries to shy away from it as a result (unless the direct subsidies are sufficient to offset this) and for individuals to seek to escape the resulting tax burden.
Response from Catley, former MHR, Adelaide
Re South Australia being stuffed:
1. SA has been in relative decline in most indices since the 1890s
2. It recovered a bit under Playford’s protected industrialisation that was well integrated with Menzies’ policies of that period
3. It started to slide economically under Dunstan although his social policies disguised this. Taxes became high and state subsidies to welfare became the highest in Australia.
4. Bannon revived the place a little during the early Hawke boom and then it slid with liberalisation and the failure of its heavily protected industrial base
5. The bankruptcy of the State Bank in 1991 stuffed the place for ten years
6. Brown wouldn’t do what Kennett did to fix the similar problem in Vic because a generation of left/liberal voting left the state a left/liberal/democratic stonghold
7. Olsen has been unable to do so because he has lacked the political power and possibly the will; still a high tax place for business.
8. Now a great place to retire to. I am going to North Haven, eventually, naturally.
9. Manifestations of stuffedness: PC capital of Australia; industry Head Offices leaving for twenty years; Unis in decline; biggest vote for Democrats in the country.
10. Causes of stuffedness: water through a pipeline; not enough mongrel in a Wakefield settlement; all Premiers since Playford; letting Malcolm Blight go to Victoria and Rupert go to the USA
Rural sector booming
With South Australia losing most of its key corporate head offices such as Southcorp, FH Faulding and now possibly Normandy Mining, it is a relief that at least the rural sector is booming.
Seafood exports have more than double in 5 years to $450 million a year and overall food exports have doubled to $8 billion since 1995 and are expected to double against to $16 billion in 2010.
However, the state has done very little to help industry. John Olsen tried to maximise the sale price from the electricity industry and the result has been that Hong Kong based Hutchison Whampoa has been cranking up prices for business by as much as 30 per cent.
With the world’s biggest lead smelter at Port Pirrie battling for survival as owner Pasminco goes into administration, the last thing they needed was a $9 million increase in its annual power bill but that is exactly what they got last year.
Water prices for households have also been rising steadily with the British-led private manager of the state’s water keen to screw every last dollar out of their unprecedented long term contract. When you’re relying on the Murray River for your supply, it is a difficult starting position made worse by a shocking contract.
Premier John Olsen has resorted to some reckless corporate welfare and pork-barrelling to try and get the state moving. Remember how the Liberal offered incentives worth $28 million to failed pay-TV company Australis Media to set up in Adelaide.
There have been many millions in subsidies paid to the likes of BHP and Westpac to move call centres and administration wings to Adelaide and then you have the huge contribution to the Darwin to Adelaide railway line which is one of the most ridiculously uneconomic projects ever contemplated.
The government has also had no shortage of political scandals that will probably seen it swept from office when the state election is called in the next six months. This is what Hillary sent to Crikey subscribers last week about the Hindmarsh Stadium fiasco:
Hillary on Hindmarsh scandal
Big, big problems lie ahead for South Australian Premier John Olsen. Two senior South Australian government members have been criticised by the state auditor-general today for their roles in the multi-million dollar cost blow-out of Adelaide’s soccer stadium redevelopment.
The report has found current Tourism Minister Joan Hall had a conflict of interest over the Hindmarsh Stadium redevelopment and the disgraced former Deputy Premier and now Cabinet Secretary, Graham Ingerson disregarded concerns expressed by Treasury officials, saying it was a contributing factor to the final cost of $41 million, as opposed to the estimate of $22.5 million.
It goes on to say that the government proceeded with the redevelopment despite not having performed an adequate feasibility study and that Cabinet approved the project after hearing inaccurate submissions.
The Auditor pulls no punches:
“The government, through its responsible ministers, committed to the expenditure of substantial sums of public monies with insufficient regard to existing controls for determining whether that expenditure was, in all circumstances, warranted, 05
“The government made financial commitments and entered into legal obligations on the basis of inaccurate and incomplete information and in the absence of adequate analysis, 05
“I have found that, in two cases, Mrs Hall had a conflict of interest. Mrs Hall’s failure to resign as ambassador for soccer immediately upon her appointment as a minister of the Crown, 05 was, in my opinion, inappropriate and a departure from proper standards of ministerial conduct.
“The disregard shown by Mr Ingerson and his advisers to the concerns of the Public Works Committee, the Crown Solicitor’s Office, the Department of Treasury and Finance and Services SA warrants criticism and must be considered to be a contributing factor to the final scope and cost of the Hindmarsh Soccer Stadium redevelopment project, 05
“In economic and financial terms, there is a very strong basis for concluding the … redevelopment project was not cost effective.”
Olsen already leads a minority Government. The Opposition, the crossbenchers and probably a majority of his own party would love to see him heave Hall overboard and see her devoured by sharks.
Ingerson saw which the way the wind was blowing last year and announced that he would retire at the next election. Both of them resigned their posts the following day which was the right thing to do in the circumstances.
Talk is that there will be an early December poll in South Australia. If that’s the case, after this report Olsen will have to do a lot of tidying up – and fast.
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