Adelaide: decline and fall

Source: Government of South Australia 2011 (derived from ABS 2006 Estimated Resident Population)

The ageing of the Boomers is a growth retardant. There is no will to harvest the skills of those transitioning to retirement. I will discuss the rise of a voting bloc gerontocracy and reactionary 'nay saying' in another article.

Here's a small fact that tells a larger story. In 2012-2013, 10,100 South Australian dwellings had their power cut off because they could not pay their bills. This is a jump of 50 percent from ten years ago. That's more than 6 per cent of all dwellings in the state. According to the media (always dangerous to source), the number of customers who could not pay their water bills has also increased to about 6000 customers per year. The above is evidence of structural change, not ephemeral change.

These are the preconditions for economic collapse. The socio-economic forces - including intransigence in the face of globalism and parochialism - are well documented, and especially in old manufacturing based cities. I'll leave you 'to Google', Flint, Michigan; Mansfield, Ohio; Johnstown, Pennsylvania and many more in the States, which have similar (but different) problems. Instead of adopting half-baked urban reclamation measures such as Renewal SA, see what the Germans did in Leipzig, Dresden and Potsdam.

Here comes the tipping point. Holden and a significant part of the auto parts supply chain will close in 2017. Experts put the job losses in the automotive sector and allied trades at about 15,000 people. Less than one quarter of Holden workers will find a job again in SA. Those aged 50 and over never will.

Both Holden and the Air Warfare Destroyer project will start to wind down in 2016. At the time of writing, it looks as though the new submarine project may not proceed. This means a massive evacuation of skilled workers out of the state. State Gross Product will drop between $8-$10 billion and $5 billion in wages will evaporate. More than 25,000 jobs will be liquidated with a cruel 'knock on' effect that social workers and the police see daily.

Will Adelaide die? No. Large cities of more than one million people rarely do. These scenarios are complex but liquidation of about $100 billion of GSP over the next 20 years, would not be unreasonable. Unemployment would climb to 18 per cent and property values would first stagnate and then plummet, leaving those with mortgages to fund debt on a depreciating asset.

SA desperately needs a private sector supply side solution. But while the media concentrates on puff pieces, and the public remains in the dark or fixated on attacking the unions or political parties, the situation grows worse. The real penalty will be the continuing loss of human capital.