Running a business is always a challenging task. Before entering parliament, I did just that – employing around 120 people.
The key to success is to recognise your strengths and deal with risk so you can take on the challenges as they arise.
I read Tania Tonkin’s opinion piece in InDaily yesterday and heaved a sigh of disappointment. It was yet another negative assessment of our beautiful state with so much promise before it.
The more we compare ourselves to Sydney and Melbourne and lament our lack of a Sydney Harbour, five million people, cheap coal and so on, the more we run around in circles. Let’s understand who we are and where we are. I tire of the critics talking SA down.
Throughout its history, South Australia has faced challenges: the driest state in the driest continent, water shortages, a small population, long distances from markets and a lack of cheap energy supplies. We have always responded with innovative and entrepreneurial solutions. The truth is we have never been top of the charts on most economic fundamentals. What we do have is amazing strengths in agriculture, especially grain crops and premium food and wine. We have a vibrant advanced manufacturing sector built around creative people and smart universities. We have world class capabilities in health, education and aged care services. And when you add in our fantastic tourist attractions and major events it’s no wonder that Lonely Planet, The Economist, and London’s Sunday Times rank us among the best places in the world to live or visit.
Yes, our unemployment rate is 6.8 per cent, but is the cup 93 per cent full or 7 per cent empty? I remember coming into parliament in 1997 under a Liberal Government and unemployment was 9.8 per cent. That was seen at the time as much better than the 11-12 per cent of a few years prior.
So why the incessant whingeing from the commentariat? I heard one ABC presenter this week bemoan our international embarrassment and damage to our reputation from the September blackout caused by the tornadoes that ripped our transmission towers out of the ground. Has he forgotten the Thailand blackout of 2013 that put eight million people in the dark? Or the 2003 New York and North East USA blackout that left 50 million people without power for two days? Or the many others that don’t even make our news?
If South Australia does have a weakness, it’s the level of credibility we give to the “anti-everything” brigade.
InDaily’s opinion writer Tania Tonkin identifies her two key concerns as “not just local storms but the chance of increased national and global economic volatility”.
The storms, she states, “seem to be becoming almost a monthly event”. It’s a stretch of logic to classify the extreme tornadoes of September and the wild hail storm of November as monthly events. What we did see on display after those events was the amazing resilience of South Australia.
I live in the Hills, lost power for two and a half days and saw the wreckage first-hand. To those who are quick to criticise a delay in reconnecting power after trees have sliced through major cables, I’d suggest they contemplate being a linesperson up on a cherry picker reeling in the wayward cable while workers below are busy shifting huge timbers. SES volunteers strap themselves in against the winds while covering over a missing roof or damaged wall, responding to thousands of call outs.
On the question of business costs and competitiveness Ms Tonkin writes: “Let’s take electricity prices for example. South Australia has some of the highest in the nation. For SMEs, this has a huge impact on operating costs and undermines our competitiveness compared to other states.”
For many small businesses electricity is not, important though it is, their principal cost driver. And according to ACIL Allen Consulting 2015 Electricity Bill Benchmarks for residential customers, the average annual household bill in SA is $3175 – lower than Queensland, level with NSW and higher than Victoria.
So while there’s work to be done to get our power costs down, it’s not the end of the world. Let’s hear about solutions, not problems. If South Australia does have a weakness, it’s the level of credibility we give to the “anti-everything” brigade. They opposed the decision to build the world’s biggest copper and uranium mine at Roxby Downs, to redevelop Adelaide Oval, to embark on a deeper understanding of prospects in the nuclear industry and to change our time zone. Too often we want to “lock the gate” on new developments and new ideas.
As Minister for Small Business I remind those considering local business opportunities of the many costs of doing business in SA which are very competitive, for example:
- The cost of paying and housing staff is the most cost-competitive in the nation. Wages are lower than other states, while our disposable income remains relatively high. House prices and rentals mean that’s a low cost workforce enjoying a high quality of life.
- Industrial stability results in SA having the lowest number of days lost of all the mainland states. The difference is vast – our rate is one seventh that of Victoria and Queensland and one third that of NSW.
- Payroll tax (mentioned by Ms Tonkin as a negative) is more favourable than NSW and WA and on a par with Victoria.
- Workers and small business owners in Adelaide spend less time travelling to work and for work. That’s a big saving for business and employees. Data from the Bureau of Infrastructure shows that we gain 10 days of our lives every year compared to Sydneyites.
The State Government does its best to improve and improve again.
That’s why the Treasurer launched the very successful Job Accelerator Grant Scheme in last year’s State Budget. The Northern Economic Plan and its associated Small Business Development Grants Scheme has been a big success, with 227 jobs created through $2.9 million in support for business expansion grants and start-up assistance.
Power prices do need to come down and the State Government has announced a package of measures to put downward pressure on prices. These include:
- A $31 million grant program for large businesses to carry out energy audits and invest in energy saving technology.
- Action to secure the second interconnector to NSW which should have been built when ETSA was sold, but wasn’t.
- Using the procurement of 75 per cent of the government electricity load to incentivise the entry of new power generation into the local market in order to increase competition.
- A $24 million grant program to help gas companies extract more gas and supply it to local electricity generators first to ensure affordability of supply. Applications received exceed the value of the grants and relate to projects worth hundreds of millions of dollars in private investment.
We still have not heard any serious policies from State Liberal Leader Steven Marshall, including on power, other than a call to to reopen the brown coal-fired Northern Power Station. The station was closed and mothballed by its private owners because it couldn’t make money. Marshall also wants “lock the gate” to ban gas exploration at a time of extremely tight supply across Australia, which will drive up prices for South Australia’s gas-fired power stations. The Department of State Development advises that given the extent of decommissioning work already undertaken, Northern Power Station would likely be impossible to restart, and if were possible would cost more than $100 million.
In December I released the 2016 Annual Small Business Statement and its action plan to make SA the best place to do business, to help businesses build their competitiveness and to make it easier to find new opportunities.
The action plan tackles energy prices, aims to cut red tape, provides daily assistance to business and partners with the sector to build new markets here and overseas. It recognises that South Australia’s 140,000 small businesses are the backbone of our economy and are key drivers of employment and growth, contributing billions of dollars.
All in Government strive to provide the right business environment for small businesses to grow and prosper.
So let’s ease up on the doom and gloom. KPMG’s 2016 biennial report on competitive alternatives ranks Adelaide the most cost-competitive city in Australia. November’s NAB business confidence survey ranked SA number one and the BankSA State Monitor for 2016 recorded the highest level of business confidence in three years.
There certainly are challenges, including energy costs and we absolutely have to tackle those as a priority.
That’s why I meet regularly with the 52 small business associations that attend the small business round tables held at Parliament House.
In summary, yes, there are difficult issues we face. Instead of lamenting them, I am for trying to fix them and building on our many strengths. SA’s best years are yet to come.
Martin Hamilton-Smith is the Minister for Small Business.
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