SA Economy

[SRW]

Unfortunately with land prices so high and people paying many hudreds of thousands of dollars for houses, such a change could now only be introduced very gradually (over decades) to avoid causing economic damage. But just knowing the change would be made eventually should be enough to slow the rise of house prices somewhat.

I think the plan in the ACT to phase out stamp duty gradually over 20 years with a corresponding increase in land tax is an elegant way to go about it, and something South Australia should go about soon. The politics of it make me shudder, though.

Michael Janda again has the rundown: http://www.abc.net.au/news/2013-02-01/j ... es/4496356

[Aidan]

Why don't we just merge with WA and that way we can include ourselves as an economic powerhouse?

Last time it was suggested we merge SA and WA, it was so that we could be Going All The Way in a State Of Excitement!

[Will]

The constant doom & gloom reports don't help business confidence much either. Sure there are real issues, but the habit of constantly talking ourselves down is a self-fulfilling prophecy.

True and not true. I don't think I've ever seen a positive economic report about Adelaide/SA... Ever? Yet we are still progressing and we do see developments and employment at respectable levels... But that said... We hardly ever have any positive reports.... Why is that and what can we honestly do to address it?

Propping up Holden is most probably not the answer

I've read a few, the majority leading up to the announcement of Olympic Dam, just before BHP pulled the rug out from under the State Government.

Given we have no control over interest rates or the $AUD I could think a few things..namely.

removal of payroll tax
removal of minimum wage/award wages (I don't really like this one, but we if we reduce capital costs we will get work)
removal of land tax
removal of stamp duty
increase deductions on research and development.
Removal of hidden subsidies to outer greenfield sights.
Increase in migration visas, including taking as many refugees as possible.


Then the State requires a minimum % of management to be located in the state and incentives for the companies to provide child care services.
Maximum FIFO for staff that are not located in the State.

anyone else got any ideas?

If we reduce our tax intake who is going to pay for our essential social services?

We can't have low taxes and good social services at the same time.

[claybro]

If we reduce our tax intake who is going to pay for our essential social services?

We can't have low taxes and good social services at the same time.

Making SA into a tax haven of sorts is an interesting idea, that would have an immediate imapct on economic activity in this state. We must however get a better slice of the Federal pie to pay for "social services". Given though that the current state gov has just blown billions on a new hospital, and we currently spend more per capita on education than the other states, we may not get a good hearing.Had we cut state tax to the bone, quite possibly business would be booming, but public services would be falling down, forcing the Federal Gov to spend more money in this state, as we have recently seen in the Gonski funding system. Spending state finances on gold standard "social services" is something maybe we can no longer afford until the economic activity is there to pay for it all.

[Will]

If we reduce our tax intake who is going to pay for our essential social services?

We can't have low taxes and good social services at the same time.

Making SA into a tax haven of sorts is an interesting idea, that would have an immediate imapct on economic activity in this state. We must however get a better slice of the Federal pie to pay for "social services". Given though that the current state gov has just blown billions on a new hospital, and we currently spend more per capita on education than the other states, we may not get a good hearing.Had we cut state tax to the bone, quite possibly business would be booming, but public services would be falling down, forcing the Federal Gov to spend more money in this state, as we have recently seen in the Gonski funding system. Spending state finances on gold standard "social services" is something maybe we can no longer afford until the economic activity is there to pay for it all.

You state that we should have 'gold plated' social services until we can afford them. The problem is, what services would you cut at the moment? Furthermore, I can't see the other states being happy if we cut our social spending and expected the feds to foot the bill. They would expect the same.

Furthermore, whilst I agree that turning us into a tax haven would be good for business and improve our economic-related statistics, would this improved economic growth actually equate to improved hospitals, schools or infraestructure upgrades, considering these businesses would pay little or no tax? Would the avergae person actually notice any improvements to their life?

[claybro]

You state that we should have 'gold plated' social services until we can afford them. The problem is, what services would you cut at the moment? Furthermore, I can't see the other states being happy if we cut our social spending and expected the feds to foot the bill. They would expect the same.

Furthermore, whilst I agree that turning us into a tax haven would be good for business and improve our economic-related statistics, would this improved economic growth actually equate to improved hospitals, schools or infraestructure upgrades, considering these businesses would pay little or no tax? Would the avergae person actually notice any improvements to their life?

..

For starters, I know the RAH is a shoddy complex, but does spending over 1 billion in a new building really improve healthcare statewide? I would have thought new machinery, staff and research might have been money better spent.,Im sure the people of Mt Gambier or Bordertown or even Noarlunga could care less about the RAH, but do notice the llack of doctors in the outer areas. but that arguement has been done to death.
There are also the state beurocracies that do ....well very little really.
As for what the other states think of us cutting services to get a larger federal funding share....well NSW Vic and QLD have been at it for years. Remember our state got less in additional water funding because we had invested in water saving infastructure. Now the feds are paying NSW and VIC to achieve water savings in the MDB.
NSW QLD and VIC got the lions share of Gonski funding because they have under funded per capita in education. Once again we get a lower share of Federal funding.
Qld had no insurance plan in place for infastructure in case of natual disaster....guess what, a flood or two saw us paying through the nose in tax levies and lost infstrucutre projects to fund the repairs of one of our wealthiest states.
Finally, more business activity, results in more employment , higher wages (more disposable income) which attracts more population, building houses, roads employing even more people and federal infastructure as our economy becomes more important nationally and eventually more federal funding via GST.

[Maximus]

Im sure the people of Mt Gambier or Bordertown or even Noarlunga could care less about the RAH.

Claybro -- you get a language warning for that atrocity and are forthwith directed to this thread.

[peas_and_corn]

I think a diagram is best here.

[cruel_world00]

I always felt that saying "I could care less..." was more a sarcastic response. As if you're leaving off the end of the sentence "but I don't."

[Vee]

Great news for the local economy with local ad agency, JAM winning the national marketing contract for Mitsubishi Motors Australia. This was quite a coup against stiff competition.

Principal, Peter Joy has called it a "game changer".
http://www.adelaidenow.com.au/business/ ... 6629751294

In further good news for the creative industries, local firm, Kojo will assist with filming for a series of TV ads associated with this contract.

The NBN should greatly assist with tapping into national and international networks and further opportunities in the creative industries. We need to make these a special focus as industries transform towards a high tech, innovative, creative, green energy future in a globalised market.

[Shahkar]

SA economy worst since 1990 recession

The South Australian economy is at a 23 year low, a key economic report says.

Releasing its latest review of the local economy, the South Australian Centre for Economic Studies finds that the state economy experienced its largest downturn since the 1990 recession, prompting the need for further government stimulus.

The centre’s biannual Economic Briefing Report, is released today.

“Demand in South Australia contracted significantly over the past year,” it said.

“Real state final demand (SFD) in the March quarter was down 2.6 per cent from the corresponding period a year earlier.

“This outcome represents the largest annual fall in SFD for the historical period covered by the modern National Accounts data.”

The State Government has previously rejected the technical definition of a recession, adding that while unemployment remains steady then the economy should be regarded as stable.

The report makes a similar observation.

“While the sustained decline in demand indicates that the South Australian economy is in recession, the report’s authors note that making such a firm conclusion is complicated by the lack of quarterly data on gross state product, the welcome resumption in employment growth since late spring (which is at odds with the trend in final demand) and differing views on how to technically define a ‘recession’.

“The contraction in final demand over the past year was wholly due to a reduction in investment activity, with household consumption growing at a modest pace and government consumption expenditure essentially flat.

“The decline in investment activity was largely a consequence of lower public sector capital expenditure.

“This fall would in part reflect the withdrawal of stimulus measures introduced in the aftermath of the Global Financial Crisis.”

The report said the decision by governments to stop stimulus spending was misguided.

“There is an unhealthy preoccupation by politicians on both sides of parliament with returning the budget to surplus,” the centre’s executive director Michael O’Neil said.

“These views often demonstrate a poor understanding of the relationship between government deficits, debt and monetary policy, and there is currently a risk of government getting the timing wrong in respect of fiscal policy.”

In its outlook, the report sees little movement in economic trends.

“As a consequence of the large contraction in state final demand, lack of growth in exports and slowdown in the national economy, SACES expects that the South Australian economy will contract in the current financial year.

“Our current forecast is for GSP to fall by 0.75 per cent in 2012/13.

“Prospects for the coming financial year are somewhat brighter. The recent improvement in labour market conditions, signs of imminent recovery in residential building and generally favourable expectations for non-manufacturing business investment point to a resumption in economic growth in the short term.

“The recent depreciation of the exchange rate combined with earlier interest rate cuts will also provide a much more supportive base for economic growth going forward. Our current expectation is that Gross State Product will rise by approximately 1 per cent in 2013/14.”

Unemployment, meanwhile remains an area of concern for the State with recent monthly figures showing a slow uptick towards 6.0 per cent, the May figure at 5.9 per cent.

ABS data released yesterday show that the number of job vacancies in South Australia has declined by 42 per cent in the last 12 months, the worst decline of all states.

[monotonehell]

This is the message that people need to understand, "Government debt is not the same as household debt." And yet opposition parties all throughout history have ridden this mistruth into office.

SA economy worst since 1990 recession

The South Australian economy is at a 23 year low, a key economic report says.

Releasing its latest review of the local economy, the South Australian Centre for Economic Studies finds that the state economy experienced its largest downturn since the 1990 recession, prompting the need for further government stimulus.

The centre’s biannual Economic Briefing Report, is released today.

“Demand in South Australia contracted significantly over the past year,” it said.

“Real state final demand (SFD) in the March quarter was down 2.6 per cent from the corresponding period a year earlier.

“This outcome represents the largest annual fall in SFD for the historical period covered by the modern National Accounts data.”

The State Government has previously rejected the technical definition of a recession, adding that while unemployment remains steady then the economy should be regarded as stable.

The report makes a similar observation.

“While the sustained decline in demand indicates that the South Australian economy is in recession, the report’s authors note that making such a firm conclusion is complicated by the lack of quarterly data on gross state product, the welcome resumption in employment growth since late spring (which is at odds with the trend in final demand) and differing views on how to technically define a ‘recession’.

“The contraction in final demand over the past year was wholly due to a reduction in investment activity, with household consumption growing at a modest pace and government consumption expenditure essentially flat.

“The decline in investment activity was largely a consequence of lower public sector capital expenditure.

“This fall would in part reflect the withdrawal of stimulus measures introduced in the aftermath of the Global Financial Crisis.”

The report said the decision by governments to stop stimulus spending was misguided.

“There is an unhealthy preoccupation by politicians on both sides of parliament with returning the budget to surplus,” the centre’s executive director Michael O’Neil said.

“These views often demonstrate a poor understanding of the relationship between government deficits, debt and monetary policy, and there is currently a risk of government getting the timing wrong in respect of fiscal policy.”

In its outlook, the report sees little movement in economic trends.

“As a consequence of the large contraction in state final demand, lack of growth in exports and slowdown in the national economy, SACES expects that the South Australian economy will contract in the current financial year.

“Our current forecast is for GSP to fall by 0.75 per cent in 2012/13.

“Prospects for the coming financial year are somewhat brighter. The recent improvement in labour market conditions, signs of imminent recovery in residential building and generally favourable expectations for non-manufacturing business investment point to a resumption in economic growth in the short term.

“The recent depreciation of the exchange rate combined with earlier interest rate cuts will also provide a much more supportive base for economic growth going forward. Our current expectation is that Gross State Product will rise by approximately 1 per cent in 2013/14.”

Unemployment, meanwhile remains an area of concern for the State with recent monthly figures showing a slow uptick towards 6.0 per cent, the May figure at 5.9 per cent.

ABS data released yesterday show that the number of job vacancies in South Australia has declined by 42 per cent in the last 12 months, the worst decline of all states.

[Shahkar]

Even though reports tell us we are doing shit, a boom seems closer than ever. House prices in South Australia(or Adelaide?) had the highest growth for the first quarter of year along with NSW. Plus, we also had the second highest house approvals at 8.8%.

[claybro]

Even though reports tell us we are doing shit, a boom seems closer than ever. House prices in South Australia(or Adelaide?) had the highest growth for the first quarter of year along with NSW. Plus, we also had the second highest house approvals at 8.8%.

Don't want to bust your bubble there, but there is a high rate of houses for sale in my area, (inner south) and almost all of recent times have been sold to Chinese investors, and then rented out to either students or other short term visa holders. This is not a comment on racism as I believe without Chinese money here we would really be up the creek, but house sales do not reflect the health of the economy as a whole, particularly when locals are not the ones buying. What it does show is that SA is attractive to investors as housing is more affordable, and our education industry creates a ready made rental market. How this relates to the long term health of our economy, I am not so sure.

[zippySA]

I'd love it if you are right Shakar - but a boom for SA is seemingly a long long way off at this point. Seems all the facts point to us being in recession currently - and potentially heading towards a depression if things don't start to change. Government debt is fine - provided it is treated just like any other investor - it needs to make a return that enables you to pay back your principal and interest before you start to make a true capital return on your investment.

Way too much Government borrowing is going into areas of no return - investments that I class as social infrastructure (which before I get abused - is a fundamental for us to have and maintain) - need to be funded from recurring funding and not debt - debt for a Government and private investor is there to access money in order to generate a positive return over time - not simply to use as a credit card for troubled times.