Leading South Australian economist Michael O’Neil says the State Government is responding with confusion and inertia to the economic challenges facing the state.
After yesterday’s convergence of the country’s worst unemployment figures with the end of coal mining at Leigh Creek and the closure of power stations in Port Augusta, O’Neil said the Government needed to match its rhetoric about our economic challenges with action.
“The Government keeps saying we are facing this major structural change, with the decline of the traditional manufacturing sector,” said O’Neil, the director of the South Australian Centre for Economic Studies (SACES).
“We say – how are you responding structurally? We we get from the public sector is complete inertia.”
Yesterday’s announcements from Alinta Energy will result in the loss of more than 400 jobs, and a serious threat to the future of Leigh Creek and surrounding townships.
ABS labour force data released yesterday shows South Australia in May had Australia’s highest unemployment rate of 7.6 per cent – the state’s worst jobless figure since July 2001.
“Overall, these figures are somewhat of a wake-up call about the direction of policy, not the economy,” O’Neil said.
“That is to say, yes the old manufacturing is disappearing, the labour intensive assembly jobs are going, renewal technologies are threatening some sectors and we see RET impacting on the old coal power plants. All to be expected, nothing new here – labour intensive manufacturing moving to low cost developing Asian economies. The critical issue is how is the government responding.
“How are the policy levers in sync to achieve a more rapid transformation and response of the SA economy? What does government expect of business, industry, unions and the public sector to make the necessary changes and build a competitive economy.
“The problem is the government is confused – it is sending mixed signals.”
O’Neil said the state was seeing a continued erosion of blue collar jobs, mostly held by male workers, and there was little evidence of a government response.
“By and large, the public sector is not responding to these changes,” he said.
“Non-competitive polices are employed (such as the TAFE SA training monopoly) while the government argues it wants a competitive economy. On the other hand WorkCover reforms are endeavouring to build competitiveness.
“If the structure of the economy is changing, what implications might this have for the public sector? There are clear functions and services that government has assumed to itself over the years that it now does not need to do. There are new roles of regulation and enforcement that require new skills.
“Market forces will drive much of the change but there is clear role for government as well and this involves Commonwealth and state. There is little point in fighting the Commonwealth on peripheral issues and then going cap in hand on the big issues.”
On the unemployment figures, he said that despite some misgivings among labour market economists about the ABS methodology, he believed the South Australian picture was broadly accurate.
O’Neil said other data, such as city office vacancy rates, indicated that full-time jobs were disappearing in South Australia.
SACES analysis of the data shows static employment growth. While the total number of people employed in May 2015 – in trend terms – was up 0.5 per cent compared to the previous year, part-time and full-time figures are moving in opposite directions.
Full-time employment was 0.1 per cent lower than a year earlier, while part-time employment was 1.8 per cent higher.
“These changes indicate a lack of confidence on the part of employers to hire full-time, lack of demand and shift in the structure of the economy,” the analysis says.
O’Neil says the State Government isn’t solely to blame for a lack of confidence.
“A poorly performing Federal Government isn’t helping either,” he said.
