Growing SA

South Australia is at a cross-road.

Our economy is rapidly transitioning. We have tremendous opportunities before us – in advanced manufacturing, Defence, renewable energy, agriculture and food processing, tourism and in the health and education sectors.

To realise this potential, we need a Government that is honest, transparent, responsive and most of all accountable.

We need a political vision for growing our state – not just Adelaide, but our regional centres as well.

Not growth for the sake of growth, but targeted, well planned and sustainable growth. Growth underpinned by well-planned public infrastructure and private investment to raise the level of economic activity and create the jobs that set our path to sustainable growth.

SA-BEST wants our State to prosper, to grow and in the process to deliver better social and environmental outcomes as well – to tackle inequality through good, full time jobs, to fill skill shortages through a vocational education system that delivers results not dysfunction, and a university sector with a Research & Development nucleus being a catalyst for growth in high tech, biomedical and advanced manufacturing.

We should do more than pay lip services to the considered reports and analysis of Deloittes and Adelaide University’s South Australian Centre for Economic Studies who have done much of the groundwork of the challenges the state faces and the potential for growth.

With that in mind, SA-BEST proposes the following suite of reforms to help drive confidence, investment and growth in South Australia:

 

Reform our Parliament

SA-BEST will be relentless in pushing for deep reform to ensure a more responsible, transparent and accountable government and a smaller, harder working and less costly executive and parliament.

Underpinning the growth of our State must be systemic reforms to the way our State is governed – especially how the executive arm of Government is held to account by the Parliament.

We will strengthen the role of the Auditor-General, the Ombudsman, ICAC and Parliamentary committees to ensure tax-payer monies of the $19 billion state budget are spent wisely and well.

We will move for the most comprehensive whistle-blower laws in the nation so that public servants are empowered to come forward with evidence of mismanagement or waste – and even – hopefully rarely – of corruption.

A tangible example is SA-BEST will ensure speedier responses to Freedom of Information request which are now delayed and take so long they are really Freedom from Information. South Australian’s deserve better.

SA-BEST will be relentless in pushing for deep reform to ensure more responsible, transparent and accountable government. The State Parliament has been too lazy for too long. The rocking horse finally needs to become a workhorse – to keep Government on its toes and facilitate private sector growth and jobs.

 

Grow our Population

SA-BEST is committed to developing a long-term population strategy aimed at achieving at least the national growth rate.

Population growth and inward migration have stalled. On current projections SA is facing negative population growth in just 5 years’ time.

In the last three decades population growth in South Australia has been half the rate of Victoria and Australia as a whole; there are fewer young people than there were in 1982; the key workforce aged group are growing at half the national rate; the employment to population ratio continues to decline; the aged dependency ratio is 5 percentage points above that for Victoria and Australia.

In the 35 years from 1981/82 to 2015/16, the total population of South Australia increased by a little over 382,000 or some 28.8 per cent. Over that same period, Victoria’s population increased by 54.0 per cent and the population of Australia increased by 59.5 per cent.

Over that same period, the South Australian population grew at an average annual rate of 0.75 per cent, the Victorian growth rate was 1.28 per cent and the Australian growth rate was 1.38 per cent.

That we have fewer young people - 18-to-34 year olds - living in South Australia today than 35 years ago is emblematic of the state’s decline.

In the last ten years some 26,000 young people, skilled workers and families in the age range 20-39 have left South Australia. We are losing the economic dividend that young people and skilled workers offer. We must turn this around.

We are losing young people faster than other states, with significant flow-on effects through labour force productivity, lifecycle income and consumption from this ‘de-younging’ of our profile. The number of young, well-educated graduates and skilled workers who are leaving the state in search of employment and economic opportunity is of significant consequence. We need to get them back.

SA-BEST believes that it is an absolute priority to grow the State’s population to at least the national average.

Not only will this, necessarily include a population target for our capital city, Adelaide, but also for our key regional centres, where there is strong emerging industry and employment opportunities and capacity in existing infrastructure for growth.

We want to be part of driving positive outcomes that will see that exodus of our young reversed, and those who have left to come back as well as encouraging business migrants to our state.

We need to strongly promote the benefits and opportunities of South Australia to interstate business and investment migrants, those wanting to escape the congestion and high prices of the eastern states.

Alongside a population strategy, SA-BEST strongly supports a review into the branding and identity of our state to deliver a long-term approach to strategically and purposefully promoting SA interstate and abroad.

We also need to work hard to have our regional migration status reinstated so boost our fair share of overseas migration.

 

Reform our Taxation System

SA-BEST will push for a thorough and transparent review of the State’s taxation system within six months of the election

An independent review of the state taxation system, backed by robust economic modelling, will be a key pathway to economic reform and recovery.

Taxation is a significant revenue source for government as it funds our education, social and community service, however we need to ensure that it is optimised to both fund the public services our communities need, but also incentivise business and industry to grow, thus generating additional flow-on economic and social benefit to our state. An independent review is both timely and necessary.

A taxation system which is based on a shrinking economy and shrinking population is in trouble---we need a taxation system that is based on strengthening the level of economic activity, that leads to more employment and then that in itself contributes to taxation revenue.

The goal of SA-Best is to raise the level of economic activity which will contribute to higher taxation revenue---That is our goal----to make the pie bigger.

A one example, stamp duty is the largest transactional cost for purchasers of residential property.

It is an inefficient tax and a disincentive for property purchase.

SA-BEST believes calls to abolish stamp duty on new residential owner occupier housing under the median price (approx $460,000) has great merit, particularly as a mechanism to increase affordable housing and to stimulate housing construction. We also support investigating options around the first home-owners grant to encourage more young people to stay in SA and get into their own homes.

Similarly, the current land tax arrangement is counter-productive and anti-development.

It is an investment and jobs killer that SA’s land tax is virtually double the national average.

The rate of land tax needs to be brought down within no longer than five years to the national average, from 3.7% to 1.9%.

SA-BEST is concerned that South Australia has the highest maximum rate threshold (3.70%) and collects the most land tax as a share of its GSP (0.6%) compared Queensland as the least GSP at 0.3%.

Land tax aggregation is also a barrier for development.

As part of the overall taxation review, SA-BEST would seek modelling on the impact of:

Reducing the maximum threshold rate (to the national average) over a three to five-year transition period (and delaying the revaluation until such time as the revised land tax regime is in place)
Removing the land tax aggregation mechanism

The modelling would examine what the overall likely impact would be on stimulating investment in commercial property in SA and thereby increasing the land tax base.

In contrast, whilst payroll tax is a relatively efficient economic tax, the taxation review should consider how this could be made even more efficient.

Unfortunately, South Australia has the worst payroll tax threshold of any state, including NSW and Victoria.

Payroll tax in South Australia is paid on a payroll above $600,000. In the Northern Territory, it does not start until $1.5 million, in Queensland $1.1 million and in Western Australia at $850,000. These states are direct competitors for South Australian jobs.

SA-BEST would like to see a lower burden of payroll tax on small business to encourage employment and supports a proposal for small businesses who employ up to five new workers to pay no more in payroll tax.

Even if just 3 per cent of the businesses that employ fewer than 20 people took on 5 more

people as a result of the change, South Australia would have created around 21,000 extra jobs.

Fundamentally, we need a payroll tax regime that encourages increased employment, exports, consumer spending and overall higher South Australian Government revenues.

In reforming our taxation system, we want to ensure that SA is once again competitive with the other states – that we attract investment instead of repelling it.

However, we must bear in mind that any reform of state taxation is likely to cost revenue and it can only be done in the context of an overall plan to grow the economic pie.

 

Grow our Small Businesses

South Australia is a small business state.

Relative to other states South Australia’s private sector is more reliant on small business activity to generate private sector employment.

South Australia has the highest share of sole trader (non-employing) businesses of all states. It also has the highest proportion of employment from businesses employing less than 20 people.

We also have a workforce older and ageing more rapidly than any of the other states.

This presents a challenge, but also means we must be creative with our solutions – tailored to meet our unique business environment.

In addition to the review on taxation, we must also ensure the administrative and cost burden of regulation and compliance in this state is comprehensively evaluated and minimised wherever possible. We must consider the benefits to business if we were able to reduce avoidable compliance costs and find more effective and efficient ways to process forms, approve licences, handle applications and verify compliance.

SA-BEST also supports stronger legal protections for our small business when dealing with large suppliers, through rights of mediation and adequate notice before supply agreements can be terminated. We are a small business state. They must be better protected.

 

Grow our Industries of the Future

Over the past 5 years, most of the State’s employment growth has occurred in health care and social assistance, personal care services, real estate services, professional, scientific and technical services, public administration and safety.

Into the future, South Australia also has fantastic potential in areas such as advanced manufacturing, Defence, renewable energy, agriculture and food processing, aquaculture, wine and tourism and in the health and education sectors.

We also have considerable legacy infrastructure and expertise that can, and must, be transitioned to support these new growth areas.

Just like economist Antoine van Agtmael and journalist Fred Bakker in their book “The Smartest Places on Earth”, we must gather these remnants, foster research and develop materials and applications for the new and emerging products, services and technologies of the future.

We can do that in South Australia. We have already proven we can.

South Australia has made strong inroads in promoting a ‘clean and green image’; developing our world-class viticulture sector; developing the mining sector; pockets of high-end manufacturing; innovations in renewable energy and water technology; expansion of the aquaculture sector; product development to support tourism; and much greater emphasis on international investment and trade.

We have proven excellence in the processing of premium quality food; agribusiness and food technologies; medical technologies and medical research; electronics, surveillance systems and defence manufacturing; aerospace; pharmaceuticals; and expertise in coupling industry with research.

Government must do all in its power to create the conditions for new private capital investment from companies seeking to expand and attract new investment from out of the state - preferably without subsidies - but with offers of support that improve company performance, enhance skills training, workforce productivity and international competitiveness.

Industry commentators report that South Australia consistently ranks low on business investment, economic and population growth but with higher than average unemployment. It consistently ranks low on business start-ups, yet they have been responsible for over one million jobs in Australia in the last few years, while big companies and banks have been shedding labour.

SA-Best recognises that working with our Universities and Research Institutes is a pathway to employment growth, to retaining our young people in South Australia and turning around the “brain drain”.

We must lower business costs and entry costs and facilitate start-ups and we must continue to expand our export growth, provide modern infrastructure that is productivity enhancing, minimise regulatory and compliance costs and incentivise the benefits of employment growth.

 

Grow our Workforce

South Australia is facing substantial challenges related to managing the ageing of the population, securing skilled labour, succession planning for unincorporated businesses, and recruitment of international VET students.

We are losing the competition for attracting and retaining talent.

Skilled Migration

Migration to South Australia, from interstate or overseas, can have a positive impact on the South Australian economy.

South Australia must develop a population growth policy to target and attract young, educated and skilled migrants to the state. We must also stop the brain drain of our own best and brightest. SA-BEST will hold a young people’s forum within the first three months of the new Parliament to garner new ideas and incentives to make this a reality.

Providing opportunity and pathways to permanent residency for young, educated people with a desire to start a business in South Australia should be strongly encouraged and promoted.

Government, business, and the university sector should work together to encourage and provide clearer pathways for young international student graduates with innovative and entrepreneurial skills.

Unfortunately, changes to Australian migration policy is also impacting on many businesses, particularly in our regions.

Despite the focus on filling positions from domestic sources, and the relatively high unemployment and underemployment rates in South Australia, many businesses, particularly those in regional areas, report that they struggle to find suitable skilled and semi-skilled employees, and so are forced to turn to the migration system. However, these businesses also report that the current migration system does not meet their needs.

With eligibility criteria being progressively tightened, access to post-study work rights for international students substantially reduced, and concessional arrangements previously available to employers in regional Australia such as the regional 457 visa eliminated, migration to address short to medium term skills gaps has been challenged.

As such there are very few opportunities for semi- or unskilled labour migration into Australia outside of the humanitarian resettlement program.

At the same time, there is a mismatch between the semi- and low-skill needs of many regional businesses in SA and immigration’s focus on skilled labour. The bureaucracy and cost of lodging visa applications and the time taken for visa processing are also a barrier.

SA-BEST will continue to work with our Federal colleagues to address these challenges and enable the benefits that migration can bring to our state.

Innovation and Entrepreneurship

Innovation is an important determinant of productivity growth within an economy, which in turn, is the most sustainable driver of long-term economic growth. Innovation can also lead to less tangible, but incredibly important benefits, such as improved quality of life.

At the heart of a stronger culture of innovation are individual entrepreneurs or innovation active enterprises.

South Australia is recording a lower rate of business formation (at 5.4 per cent of the national total) than either its share of the population (7.1 per cent) or its share of employment (6.9 per cent).

This suggests South Australia is experiencing less innovation and productivity increase through new enterprise formation than the Australian average, further exacerbating our relative economic underperformance.

Skilled migration programs could be an important way to increase South Australia’s entrepreneurialism, but there are several potential barriers. South Australian only receives 4.2 per cent of the visa outcomes for the Business Innovation and Investment Program. And even within that program, most of the strands are not targeted so much at those planning to operate businesses within Australia, but rather at high net worth individuals willing to invest in Australia.

Current Australian migration policy settings are not suited to South Australia’s needs. This includes issues with:

The Temporary Skilled Migration Income Threshold (TSMIT), which sets the minimum wages for migrants entering under the Temporary Work (Skilled) visa (subclass 457)
Identification of occupations for inclusion in eligible (skilled) occupation lists for temporary and permanent skilled migration visas;
Business Innovation and Investment Program (BIIP) visas, which offer temporary or permanent residency to citizens of other countries wishing to invest or manage a business in Australia; and
Graduate Temporary work visa provisions and (Simplified) Streamlined Visa Processing of student visa applications (including Genuine Temporary Entrant (GTE) test provisions) that define international students’ and graduates to access to education and work in Australia.

We must adapt the international migrant visa system to improve its responsiveness to changing economic environments and, specifically, capable of supporting the South Australian economy.

SA-BEST will continue to work with our Federal colleagues to ensure these policy settings support, not hamper, South Australia’s future population and economic growth.

Training & Education

SA-BEST supports a more flexible, regionalised funding model that ensures our secondary schooling, vocational training and higher education is more closely linked to jobs we need.

South Australia’s economy is transitioning. We have huge opportunities before us in renewable energy, advanced manufacturing, Defence - but to fully realise these opportunities, we need to grow our skilled workforce.

Tertiary education – vocational and university training is critical to achieving this.

Unfortunately, we are seeing a persistent gap between the knowledge and skills that are most in demand in the workplace and those that education and training systems continue to provide. This is true at both the state and federal levels.

SACES (2017) reported that, despite South Australia’s unemployment rate, reports of skills shortages and recruitment difficulties were widespread amongst the firms and peak bodies. This is at odds with the skills demand found by the Commonwealth Department of Employment.

There is significant dissatisfaction with the way in which all the mechanisms for meeting labour demand are functioning at the present time. Employers are reporting that VET education is too expensive, too inflexible, and not targeted at regional skill needs, with university training often disconnected to industry needs.

This points to the centralised, ‘one size fits all’ approach to both school and higher education in this state is becoming a real barrier for development of our workforce and places a significant cost on both employers and students.

Our training and education system must be more responsive to the needs of industry and our emerging opportunities. There needs to be more seamless pathways between vocational and university study. There needs to be a stronger focus on reskilling and upskilling our workforce.

SA-BEST supports regionalised, industry-based skills boards to provide professional advice to maximise the effectiveness of vocational training and its integration into workplace outcomes.

Delivery must be tailored to suit students and businesses, not to suit the needs of a centralised bureaucracy.

We must have a much stronger focus on growing our own workforce. SA-Best will ensure that we link up our investment attraction activities and funding of our training system to reduce the need for financial subsidies, yet ensure new businesses coming to South Australia can hire the skills they require.

At least four heads of Government departments are from other states or other countries. That is a sad indictment on the confidence this Government has for its own workforce capability. It is a failure to lead by example.

We must do better.

 

Grow our Regions

SA-BEST is committed to working with regional communities to establish clear growth strategies and population targets for South Australian regional centres.

The latest census data from the Australian Bureau of Statistics shows there are now 30 regional cities in Australia with populations over 30,000 and 10 with populations over 100,000.

None are in South Australia.

Our regional cities and towns offer an affordable, safe and relaxed lifestyle with a strong sense of community. There is existing capacity in regional schools and hospitals, for affordable housing, for job opportunities and a high level of local support for population growth.

According to the Regional Australia Institute, for every 100,000 Australians who choose to live in growing regional centres rather than our large capital cities, an additional $50 billion will be released into the economy over 30 years in reduced congestion costs and increased consumption.

Our regional centres and rural communities have, for the entire history of South Australia, been exemplary agricultural and aquaculture producers and exporters, home to skilled manufacturing, industrial output and mining. Our regional centres have an abundance of space and on average 300 days of sunshine that positioning them for a new future in value adding in food production, energy generation, sea water desalination and hence new energy intensive industries. Already we are seeing this in Port Augusta, Port Pirie, Whyalla, Mount Gambier and Murray Bridge.

Committing to actively growing our country centres offers a chance to stop the urban sprawl of metropolitan Adelaide, provide more workers for our rural industries and support a secure future for our regions and our state.

Solutions will need to be tailored for each region and will require both State and Federal Governments to work in strong partnership with Local Councils and communities.

Supporting this commitment will be a Royalties for Regions fund to leverage investment into new, catalytic infrastructure to help grow our regions and activate local economies and a Regional Entrepreneurs Programme to encourage new businesses to start-up in regional areas.

 

Planning for the Best

SA-BEST will maintain close scrutiny on the new reforms under the Planning, Development and Infrastructure Act 2016, to ensure they deliver the benefits promised.

South Australia’s liveability and affordability are undoubtedly two of our states best attributes.

We must ensure they remain so.

Our state is currently in the midst of significant reform of our planning and development system that aims to deliver more liveable neighbourhoods, facilitate economic growth, create a sustainable environment, and maximising the efficient use and integration of infrastructure.

The new Planning Reforms offer the opportunity for faster, more streamlined approvals, greater consistency across the state and much clearer, upfront detail on requirements for more complex development.

However, the risk of the reform transitional timeframes not being met and implementation outcomes not meeting initial expectations, are significant.

SA-BEST intends to be a strong ‘watchdog’ to ensure the new planning reforms achieve their aims and their timeframes.

Rather than building sprawling ‘commuter suburbs’, SA-BEST supports urban design that more closely aligns where people live, work and play and provides the local cycling and pedestrian infrastructure to facilitate this.

Integrating land use and transport planning when developing new infrastructure and residential, commercial, industrial and recreational areas makes sense.

We support the focus on transport-oriented design – new mixed-use development close to public transport - and public transport that is accessible, affordable and takes people where they need to go.

We support greater range of housing choice to meet changing household needs - taking into account the genuine land use and development conflict concerns raised by the community.

 

Building SA

SA-BEST supports a new independent infrastructure body, Building SA, to determine the best, most cost-effective way to deliver infrastructure that will be focussed on driving economic growth.

SA-BEST supports establishment of an independent infrastructure coordination body ‘Building SA’ to coordinate core infrastructure and utilities to maximise timeliness and efficient use of resources, and in particular, an independent body free of political interference.

Taking into account the scale and geography of many rural developments and local contractor and workforce availability – and consistent with SA-BEST’s policy for Regions

- we would also ensure well-resourced decision-making units of Building SA are also located within each of the regions to ensure more localised access and response.

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