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Adelaide - heaps indifferent! (Part 2)

By Malcolm King - posted Wednesday, 21 May 2014


Events have gone considerably more pear-shaped since 2013, let alone since the late 1980s, so it's worth revisiting. The models reckon SA's Gross State Product (GSP) will grow from 2011-2025 by between 2.7-3.9 per cent. Last year the state's GSP was 1.3 per cent and 1.8 per cent the year before. The historic rate over the last 20 years was 2.7 percent.

The first scenario was the 'Long Boom', which was predicated on high demand for our resources. The modelers completely misread the production cycle in China's ore use but so it goes. 'Smart Recovery' had slower economic growth but then picks up as the world economy improves and the government implements a 'knowledge economy'. Anyone got a second hand one for sale? The 'terms of trade' scenario is nasty as resource prices fall, mainly due to increasing supply from other competing nations.

The modelers said the final scenario, the 'Ring of Fire', was improbable. It was characterized by multiple economic, political and environmental shocks. This scenario is what happens if SA does nothing. There will be increased volatility, low business and consumer confidence and a push for increased protectionism. Very nasty. Johnny Cash fans know just how nasty and existentially confronting that old 'Ring of Fire' is and currently, that's the future of SA.

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Growth in employment, GSP and productivity will head south at a rate of knots over the next twenty years. GSP will hover around the 1.5 per cent mark for the next four or five years before dropping as low as 1.2-1.0 percent over the next 20 years. There is no comfort for SA even if the global economy improves as it fundamentally relies on GST revenues and manufacturing. It has a very low export profile. The real grief comes when public services are cut because the state budget can't afford them and we start to see urban decay.

Criteria for urban decay:

  • The size of population is going down.

Adelaide's is almost flat. The combined exodus of young people, a low birth rate and the continuing fall in migrant numbers, will tip the state's population in to negative growth within ten years.

  • Average income of residents is falling

Not yet. Salaries are growing at about 3-4.0 per cent, although note the Valley of Death scenario. There will still be income, but fewer income earners.

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  • The poverty line rises to one is six people

One in eight South Australians are currently living below the poverty line.For a single adult that's $258 per week, or $752 for a couple with two children. Greece is one in five. Youth unemployment in SA is the worst I have ever seen it and I remember the Fraser years.

  • The population is getting older
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About the Author

Malcolm King is a journalist and professional writer. He was an associate director at DEEWR Labour Market Strategy in Canberra and the senior communications strategist at Carnegie Mellon University in Adelaide. He runs a writing business called Republic.

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