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SA pays in jobs for budget failures

Friday, 11 July 2014
Author: Kevin Naughton, Indaily

South Australia's job figures have thrust it into a special place - the worst in the nation and with little or no prospect of change.

For the families of 64,500 unemployed, it makes for a dark and cold winter.

Blaming international currency trends, federal Budget cuts or statistical anomalies doesn't wash either when the official figures show that every other state is doing better than SA.

Reflecting on June's unemployment figures, leading economic analyst Michael O'Neil said "the medium to longer-term outlook is in our hands" while the short-term reality of the unemployment rate shows SA is in need of immediate stimulus.

O'Neil and his Adelaide University-based think tank, the SA Centre for Economic Studies, have been warning about structural deficiencies in the local economy for several years.

The State Government, meanwhile, points to the prospect of some new shops opening in Kilburn as an example of job creation.

Perhaps new Employment Minister Susan Close should take a drive along Adelaide's main roads and count the number of "for lease" signs on old shopfronts.

O'Neil says the road ahead is a long and difficult one.

"Basically, the economy and the labour market are treading water, flattening due to subdued business and consumer confidence, declining business investment and then ongoing adjustments from the heady days of mining investment," he told InDaily.

"South Australia has had to rely on Commonwealth road infrastructure funding to get a glimpse of future jobs and due to the build-up of year-on-year operating deficits and an increase in state debt, had little room to move on further infrastructure projects (i.e. cancelled hospital investment, rail electrification)."

In this sense, he says, South Australia is paying for its past failures to deliver State Budgets with a stronger bottom line.

"Victoria and New South Wales were in the fortunate position of budget surpluses and hence had more `stimulus arrows in the quiver'."

With little money left to spend, the SA economy becomes more exposed.

"When the economy is not creating jobs and suffers further job losses such as the announced closure of Penrice Soda then obviously the unemployment rate will rise," O'Neil said.

"South Australia will tread water for the immediate future.

"In the short term it may get a boost from any positive announcements related to defence contracts - all well and good but still dependent on Commonwealth decisions related to defence spending."

It's not all gloom and doom, O'Neil maintains - a position he's reminded government of for years.

"(We're) a state with abundant resources, large open spaces, extensive sources of renewable energy and opportunities in manufacturing, research and development, services related to energy/renewable energy, opportunities for export growth into the ASEAN economies, China, India and others, in aquaculture, agricultural commodities, processed foods, services, medical technologies, products and services, electronics systems.

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