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Making A Statement

Friday, 5 April 2013
Author: John Spoehr, The Adelaide Review

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It is always difficult to attract attention to reflective policy statements like the 'Economic Statement' recently released by Premier Jay Weatherill. The statement deserved more attention than it received because it broke, to some extent, with the past by continually emphasising the mutually reinforcing linkages between social and economic objectives.

Weatherill began his second year as Premier of South Australia in October 2012 announcing a commitment to releasing a blueprint for South Australia's economic development. This was something the community expected from him, as he recently said: "It was clear to me that the South Australian community wanted an explanation from me where we are, what the future will look like, and what benefits South Australians can expect in that future." The result was a wide-ranging 130-page statement setting out his government's vision and policy program.

The 'Economic Statement' is an attempt to generate an overarching policy narrative for the Weatherill government in the lead up to the March 2014 state election. The challenge for Premier Weatherill since taking over the leadership has been to differentiate his administration in both style and substance from that of his predecessor. Projecting a more inclusive and consultative approach to policy development has been a priority, along with establishing some policy distance between him and the Rann/Foley era. Some gestures in this direction have included not bowing at the altar of the credit ratings agencies and presenting a more constructive view about the role of government in infrastructure development. The closure of the Thinkers in Residence program and the Integrated Design Commission sent a message that things were going to change, though it might be said that these initiatives warranted significant reinvention rather than abandonment. The same might be said of The Australian Centre for Social Innovation championed by Mike Rann.

The 'Economic Statement' helps to build the Weatherill Government's policy narrative. It is a scene setting document that no doubt will be followed by a series of policy announcements as the election draws closer.

A key message is that there is considerable room for optimism. The economic outlook for South Australia flowing from the statement is one of growth, ranging from solid growth to slow growth, largely determined by external conditions but shaped by domestic policy decisions. Three economic scenarios, prepared by Insight Economics are presented for consideration. The most optimistic of these is growth in Gross State Product (GSP) ranging from 3.2 to 3.9 percent, well above the historical growth of 2.7 percent. As we know the recent boom came to an end in 2007 with the Global Financial Crisis. While recovery appears to be on the way, a more realistic outcome for South Australia might be the mid range scenario presented in the statement. That has growth in GSP ranging between 2.4 per cent and 2.7 percent, still a good outcome if it materialises in the volatile world in which we live. This scenario is described as 'Smart Recovery' as it assumes sustained improvements in productivity and innovation that underpin the state's regional competitive advantage.

The Statement reminds us that, "despite the ongoing volatility in the global economy, South Australia has maintained steady growth throughout the decade. In the nine years from 2002-03 to 2011-12, South Australia's gross state product grew from $53 billion to $92 billion, a 65 percent increase, the same as Australia's non-mining states." At the same time annual exports have grown 36 percent, rising to around $11.4 billion. Australia and South Australia are the envy of the western world, most of which is struggling to recover from the devastating impact of the GFC.

The statement lays out four priority areas around which it seeks a collective commitment. The first of these involves "increasing the focus on innovation" to enable manufacturing to "move up the value chain through more advanced manufacturing" technologies. The second focuses on quality food and wine, intensifying efforts at value adding in our agriculture, viticulture and horticulture industries. Maximising the economic and social dividend from mining is the third area of priority. Finally the statement focuses attention on the need for "driving the development of a more vibrant Adelaide to secure talented workers and businesses". All of this might seem familiar and it is. What is distinctive about the statement is the broad philosophical outlook that underpins it - a commitment to a high skill, high wage, knowledge intensive economy that strives for a high standard of living for all.

When South Australia's mining exploration boom translates into a mining product, services and export boom higher economic and employment growth rates can be expected to flow but only if a manufacturing dividend is extracted from the experience. The statement rightly points to the importance of this, supporting the view that mining should not be viewed as South Australia's economic saviour but rather an opportunity to create opportunities for the diversification of the state's manufacturing and services base. This requires better positioning and gearing up our companies, universities and communities to take advantage of mining. It also requires mining companies to source more of the goods, services and employment they need locally.

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Associate Professor John Spoehr (email)
Executive Director
Australian Workplace Innovation and Social Research Centre (WISeR)
The University of Adelaide
Business: (08) 8313 3350

The Adelaide Review (email)
Level 8, 33 Franklin Street
Adelaide 5000
Business: 7129 1060