Adelaide lost in space as brain pool shrinks

Those of us over 50 may remember a "Lost in Space" TV episode ('The Promised Planet', 1968) where the Space Family Robinson landed on a planet populated entirely by young people. Will and Penny were whisked off to all night rave parties and dancing. They don't need old people man. Everything is groovy.

Adelaide is the polar opposite. It has the oldest population on mainland Australia and some of the worst unemployment and aged prejudice in the nation. It's a sea of pepper and salt haired folk sitting in shopping malls and eateries.

As Adelaide's economy crumbles, young people in ever increasing numbers are flocking east. In the last 30 years more than 150,000 people have left for Melbourne and Sydney. Every year about 4000 young people leave the state in search of work. Many are the cream of the crop: university educated, ambitious and a brim with new ideas.

At the recent state election, neither the ALP nor the Liberal Party debated how to tackle the sleeping elephant in the room – the state's crumbling economy. The political leaders simply picked the low hanging policy fruit instead.

I work at the intersection of demographics and higher education policy and I have seen how rampant unemployment, a dwindling working population and falling consumer confidence, can kill off a city. We are witnessing the rise of Asia and SA's 'old' manufacturing industries – through no fault of labour or management – are struggling to survive. This is a structural change and no amount of tax cuts will make a difference.

As South Australia's economy continues to contract, more young people will leave, vacant CBD office space will grow (currently 12.4 per cent) and more people will join the dole queues.

Apart from the government's projected $14 billion debt, SA's key performance indicators (ABS and Labour Force) are very worrying:

· In the final quarter of 2013, the local economy had shrunk by 1.0 per cent.

· SA's GDP is growing at 1.3 percent yet Australia is growing at 2.8 per cent.

· Unemployment rose over the last 12 months from 5.6 per cent to 6.7 per cent - twice the rate of increase across the nation. Youth unemployment in Gawler and Elizabeth is close to 20 per cent.

· Over 20 years SA's share of national employment fell from 8.3 per cent to 7.0 per cent and is trending down.

· Private investment has fallen from seven per cent in 1990 to five per cent in 2013.

· SA's slice of the national economy has fallen from 7.3 per cent to 6.3 per cent and is falling.

Rising unemployment, migration exits, an ageing population (neither major party had a policy) and flat or falling house prices, are signs that the elephant is stirring.South Australia recovered from the State Bank crisis in the 1990s by privatizing assets. Some suggest we have been paying through the nose for high power bills ever since. The only asset of any size left to sell is SA Water. There was no debate on this either.

Since the mid 1980s, a lack of competitiveness has strangled the state economy like a vine. The decision to close Holden ends the state's longstanding strategy of depending on government intervention to prop up uneconomical industries. The state must now stand on its own feet. But how can it if it's political leaders won't?

I have a theory, which is very unpopular in Adelaide. The brain drain over an entire generation has compromised the city's ability to solve complex problems. How else does one explain why the state government spent built a one-way highway costing $71 million? Realising the mistake, they are now building the other lane at a cost of about $300 million. One can almost hear the faint twang of 'Dueling Banjos'.

Unfortunately, as the Boomers and Gen X have found to their chagrin, when they return to Adelaide to look after ageing parents and hunt for work, young recruiters knock them back in favour fresh-faced candidates. Age prejudice is decidedly not groovy. They stay just long enough to put Mum or Dad in to a rest home and then vamoose, taking their 30 years of work experience and savings with them.

This phenomena is also happening in the USA. Smaller cities in the eastern states which relied on manufacturing or steel production are suffering population drain as workers flee looking for jobs. They leave behind hollowed out, tumbleweed cities with high crime rates.

In 'systems theory' speak, the City of Churches is a closed environment. It has become inward looking, fearful and denialist. I know my theory is based on some dodgy sociobiological speculation but I'm sticking by it. Adelaide is dying. It won't happen over night, but unless there is radical change, it will join the charnel house of once great medium sized cities.

Here comes the nasty bit. The Productivity Commission Research Paper (Nov 2013), 'An Ageing Australia: Preparing for the Future', says labour participation rates are predicted to fall from 65 to 60 per cent from 2012 to 2060, and overall labour supply per capita will contract by 5 per cent.

The research paper says that over the next 50 years, Federal and state governments will have to draw down 6 per cent of national GDP to pay for health, aged care and the Age Pension for the Boomers. This will finish Adelaide off unless new blood is allowed in, the recruitment culture changes and there is significant investment in Croweater land.

So next time you raise that glass of Barossa Valley wine, think of Adelaide with our ageing Boomer population, our bloated public service and our young recruiters, so fiercely patrolling their turf like Rottweiler's.

When the elephant finally awakes, old undiversified economies shake. Housing prices tumble. Young and middle aged people leave in the tens of thousands in search of jobs elsewhere. Retail revenues slide. Crime rates go up. There are mass reneges on debt and utility payments. 'For sale' signs litter the CBD. All that was once solid melts in to the air.

The great failure of the state election was that neither party created a narrative that explained to the voting public why businesses are closing down and what we need to do about it. That's a double failing: a poverty of thought and an absence of leadership.

South Australia's political leaders not only failed to engage the public on compelling economic dangers, they actually ran away from the elephant in the room.