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City's bold plan shows the way for SA

Analysis

The City of Adelaide's bold plan for the future shows how the wider state can remove the shackles of big government and risk aversion to build new enterprises, writes economics commentator Richard Blandy.

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Last Friday, the City of Adelaide’s four-year strategic plan was launched, at a CEDA luncheon, by the Lord Mayor of Adelaide, Martin Haese.

The plan’s themes are “smart, green, liveable and creative”. Its primary goal is to “strengthen the City economy by growing the number of people living, working, playing, visiting and studying in the City every day.”

In the context of the miserable economic performance of the state’s economy, the city’s plan is remarkably up-beat.

It does not put forward a particular population target, but cites (without demur) the South Australian Government’s existing 30-year plan target for the number of residents in the city. The state’s population is growing at only 0.6% p.a., but the State Government’s resident population target for the city implies growth at the rate of 2.9% p.a. In actual fact, over the last five years, with North Adelaide’s one third of Adelaide’s total resident numbers hardly increasing at all, Adelaide’s resident population has increased at the very high annual rate of 2.5%.

Similarly, the State Government’s 30-year plan employment target for Adelaide implies growth at approximately 1.5% p.a. Over the last five years, employment in South Australia as a whole has increased at the pitiful rate of 0.1% p.a., but the City of Adelaide’s strategic plan expects 1.4% p.a. jobs growth – consistent with the state’s 30-year target. This will be a big ask in the context of the state’s present trends.

Unlike the state, however, the city has a good plan.

Its plan says: “Adelaide as a ‘Smart City’ will put people and businesses at the centre of everything we do and focus on creating an ecosystem of open and citizen-driven innovation… We will embed 21st century digital technology into our city’s functions, services and infrastructure to improve the functionality and integration of the entire city and economy…

“Start-up and home-based businesses are also expected to undergo strong growth as we shift to being a truly entrepreneurial city and people increasingly work from home.”

Notice the words “citizen-driven innovation”, “start-up and home-based businesses”, and “a truly entrepreneurial city”. This is the antithesis of the State Government’s philosophy of “strong government”. And it will work if it is executed well.

“Smart City” implies an increase in the proportion of “smart people” working in the city. The plan says employment in professional and technical services, education, finance, telecommunications, creative and media sectors in the city is expected to grow by 4.6% p.a. over the next four years (compared with overall jobs growth in the city of 1.4% p.a.).

… it is important to try things out, to stretch people’s boundaries, and to see what might work in our modern world, rather than just accepting what we are used to and what is “safe”.

A main driver of the renaissance will be the provision of access to extremely fast broadband speeds – at least 100 times faster than the national average and 10 times faster than the NBN – enabling huge quantities of data to be moved and transformed very fast. This is the infrastructure of the 21st century, just as roads, rail, air transport, telegraph and telephone were the infrastructure of the 20th century.

To assist in this development, Adelaide has just become the first non-US city to join the US Smart Gigabit Communities program, led by US Ignite, a non-profit organisation that “fosters the development and deployment of advanced networking applications that will profoundly change the way Americans live, work and learn”.

The State Government project – called Gig City Adelaide – will enable multinational enterprises to more easily establish branch operations in Adelaide. These could be R&D, media or engineering operations that can be in constant communications with their HQ in Asia, while providing a supportive and cost-effective environment for the creative personnel involved. Why beat your brains out in the smog and traffic of Jakarta or Bangkok for four hours a day if you can live and work in Adelaide’s beautiful CBD or inner suburbs?

Consistent with this emphasis on IT, Adelaide will have:

Furthermore, “Smart City” is not going to give its superior technology away at taxpayers’ expense. Only technologies that demonstrate a clear return on investment through new revenue-generation models will be adopted using external funding sources and fee-for-services, including:

The large number of underutilised premises in the CBD will be connected to the upgraded  internet through Adelaide’s expert space renewal group, Renew Adelaide. Along with minor modifications to building standards, a large amount of inexpensive, premium-located floor space for new ventures will become available.

As Nick Mitzevitch, Director of the Art Gallery of South Australia, noted at the launch of the city plan, creativity is now the biggest driver of economies. The arts offer such a prospect along with a greater emphasis on new technology, R&D and innovation generally. The emphasis in the city’s plan on fostering the creative tool of super-fast IT access could have a big payoff.

But, as the Art Gallery of South Australia itself shows, some creative things are not everyone’s cup of tea. Some exhibits, many people loathe. Why have these exhibits? Because it is important to try things out, to stretch people’s boundaries, and to see what might work in our modern world, rather than just accepting what we are used to and what is “safe”.

Government-approved change is not how real change works. To get real change and creativity you have to minimise risk-management. Instead, South Australia has been risk averse for a long time. As a result, Adelaide has been in decline through most of my adult life as a significant Australian economic and population centre. It used to be Australia’s third-biggest city when I was at the University of Adelaide. It is now Australia’s fifth-biggest.

The emphasis in the city’s plan on state-of-the-art IT as a defining technology gives Adelaide the chance, as the Lord Mayor said at the launch, to be internationally competitive again. This is likely to be in a range of activities which we cannot clearly see the boundaries of at the present time. As Martin Haese said, we are engaged in “a race to the future”.

The future is intrinsically unknowable. To win the race, a place must have a lot of trials – including trials of ideas that their governments may disagree with – because, despite their own propaganda, governments are not clairvoyant.

A winning economic environment, therefore, must allow experiments in all sorts of things, including things that the government of the day disagrees with. Deregulate, cut costs, let 1000 flowers bloom, and compete. This is the formula for success – everywhere.

The City of Adelaide’s new strategic plan offers hope that some new, unexpected and highly successful developments will emerge in Adelaide from its Smart City revolution, focussed on citizen-driven innovation.

Richard Blandy is an Adjunct Professor of Economics in the Business School at the University of South Australia and a weekly contributor to InDaily.

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