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South Australia's inexorable decline needs to be managed


No amount of parochial boosterism should obscure the reality that South Australia’s economic decline needs to be managed with radical new approaches, writes Malcolm King.

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Through ingenuity and innovation, South Australia has survived war, drought and the Depression and, in the last 70 years, built a modern metropolis.

Now the state is in peril as global forces, like wanton boys, are pulling the wings off the economy. This story is about survival. South Australia is at war with unemployment and it fights alone.

The days of Pollyanna thinking and media boosterism are over. The government and lobbyists have wallowed in a culture of denial, as vested interests indulge in risk management rather than risk-taking.

The state’s structural unemployment and under-employment problems are beyond the capabilities of the Weatherill Government, the Liberal Party or local industry to fix. There will be some jobs growth in defence and mining but no amount of tax reform, wage subsidies or abolition of stamp duty, will turn the tide.

When Holden closes in October, it kill off 80 per cent of the automotive supply chain, throwing more than 10,000 South Australians out of work. Many of these men will then face the dignity-destroying ordeal of dealing with job agencies.

In the next six months, more retailers will close as constant discounting and online shopping smashes margins. This is before Amazon comes to town, which will change the retail paradigm in Australia. This will hit hard hats and top hats alike.

Power bills will continue to soar for small businesses and domestic consumers. While the “light on the hill” may still burn brightly for the state ALP and its staff, they’re the only ones who can afford the electricity.

Thousands of people have had their gas and power disconnected because they can’t pay the bills. Old people go to bed at sunset because they can’t afford to heat their flats. Kids go to bed wearing jumpers. It’s like living in the 1930s. How is that neo-liberal “trickle-down” effect working for you now?

This is not a hard landing. It’s a crash landing.

Falling population means that the state will probably lose a federal seat in Lower House of Federal Parliament in the next five years or so. SA has already lost two seats, Hawker and Bonython, due to population decline. So there are fewer of us, we’re getting poorer and we have less representation in Canberra.

Around 7000 young people fled the state in the past 12 months and they were right to do so. Their careers depend on it. If they didn’t, the unemployment figures in SA would soar. Over the next five years, that figure will double.

This is not “whingeing”. These are facts. Among us roam superannuated dinosaurs who try to silence debate by embracing parochialism with a passion they didn’t show in their working lives. They are a part of the problem, not a part of the solution.

From January 1997 to 2007 around 107,200 jobs were created in SA. From January 2007 to 2017, 62,800 jobs were created. What happened to those 45,000 jobs? They disappeared when the workers retired or the business went bust. Many went to Sydney, Melbourne or Asia. If that trend continues, it’s “goodbye South Australia”.

No state can expect to maintain a good quality of life for its citizens with such low job growth. This is not a hard landing. It’s a crash landing.

For a start we need to urgently rethink land use and recalculate service provision to outer suburban and regional centres. We must plan for “smart decline” – a strategy used in mid-western cities in the US and in Germany to prepare for economic contraction.

Smart decline calls for South Australians to understand that the state will not return to its economic heyday within the next 30 years. We should not dismiss the possibility of future economic growth, but our principle concern is to protect the state’s most precious assets – its people.

We need an inventory of what is likely to remain of businesses, manufacturing and industry. Smart decline means not building large-scale housing in the outer suburbs where there won’t be the jobs to fund the mortgages.

Regional population numbers are falling and migrants won’t fill the gap. People struggling in the regions should be encouraged to move to the city and suburbs, where services can be concentrated and adequately funded. Many won’t come – but they should be given the option.

Smart decline will be politically unpalatable to a generation of managerial technocrats who are, in large part, are responsible for this mess…

Their properties should be bought by the government at market prices and then ploughed back in to the earth. Those who wish to stay should be given good size plots to run chooks and grow vegetables and fruit. If they decide to stay, they cannot be guaranteed the full range of services offered to those who have moved. They will have to travel to Adelaide for hospital services, which many do already.

Adelaide’s CBD has a vacancy rate of 16 per cent and it is growing at about one per cent per year. Vacant shops, houses and apartments are littered across greater Adelaide.

CBD landlords blame regulation for not adapting their buildings to attract tenants, so they leave them vacant. This cannot continue.

Landlords should be given 12 months to upgrade their properties to accommodate businesses and families from the country and outer suburbs. If the landlords don’t want to upgrade, they should pay a tax of 10 per cent per annum based on the value of the property. The day of the speculator is over.

With the cost of food and energy rising, food banks will play a crucial role in ameliorating poverty. They will become community hubs. Foodbank SA’s budget in Adelaide needs to triple as a matter of urgency.

Smart decline will be politically unpalatable to a generation of managerial technocrats who are, in large part, responsible for this mess, through their pathological inaction.

But the long-term battles against unemployment and under-employment won’t be won, unless we first implement a defensive strategy with all the vigour of a state at war.

Malcolm King, an Adelaide writer, works in generational change and is a regular InDaily columnist.

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