Vanishing state
Wednesday, November 26, 2003
South Australia may be known officially as the festival state but the reality is that it's still in a right state. Efforts are being made to garner economic credibility but it must be a worry when Croweater jokes start to outnumber Tasmanian gags, as Patrick Carlyon learns.
s the absence of airport air bridges. There are few buildings that soar for the sky. ­Several cranes - a crude measure of economic ­prosperity - pierce the skyline. For all the gloomy predictions, the past 12 months have been relatively kind to Adelaide.

In Salisbury North, home to serial killers, roof tiles glare and tin roofs rust. Beaten-up Falcons share the roads with ­hotted-up Commodores. This is widely considered the "daggy" part of Adelaide where single mums gather for cheap housing. But you wouldn't know it talking to Salisbury mayor Tony ­Zappia. House prices have more than doubled in the past six years and chronic unemployment has dropped. Sleeves rolled up, thoughts pinging, Zappia spends 40 minutes explaining the gradual transformation. His excitement is plain. He could go on for hours.

Roger Rowse drives a taxi 12 hours a day through the Adelaide streets. He makes about $7 an hour but he doesn't do it for the money. The former Adelaide city councillor has an opinion on everything. Football. Politics. The "arty-farty left-wing ­chardonnay set". No, Rowse argues, South Australia isn't stuffed after decades of ­stagnation, and who better to judge the public mood than a taxi driver? "We're starting not to feel embarrassed about ourselves," Rowse says. "We're starting to feel good about ourselves."

Car-making, wine and food underpin the state's export growth. Aquaculture and other niche markets have started to take off. Access Economics, in its latest quarterly report, describes South ­Australia's recent surge in investment, machinery and equipment as "especially intriguing". ­Factors suggest that "business is now betting that South Australia is coming of age and that its economy is finally shaking off the ­ravages of the 1980s and the first half of the 1990s". Yet the report is uncertain that the growth will last.

Premier Mike Rann isn't getting complacent. His blend of cautious economics and social reform has put his popularity, according to a recent poll, at 94%. But he doesn't take the numbers too seriously - after eight years as opposition leader, he knows better than to get carried away. He attributes his appeal to being honest with the public.

Rann admits the state is economically screwed without fundamental shifts in policy and attitudes. He was confronted with Mitsubishi's most recent threat to leave on only his second day in office last year. A combined federal-state grant of $85m convinced the manufacturer to expand research. Yet the case highlights the state's precarious hold. If Mitsubishi had left, according to some estimates, unemployment rates in the state would have risen a full percentage point for up to the next 10 years.

Rann, once speechwriter to his mentor, Don Dunstan, tends to round his vowels like another Adelaide local, Alexander Downer, but he talks tough about his vision. No more corporate welfare. No more half-baked recipes that never rise. Rann appointed an economic development board (EDB) last year. It's an impressive list of names which includes Bob Hawke, Carolyn Bart and film director Scott Hicks. The board's first job was to write a report summarising the past 10 years.

The State of the State was clear-cut. Too many reports had been commissioned and ignored. Leaders had avoided presenting hard truths to constituents. There could be no more "alibis, excuses or buck-passing".

Board chairman is Robert Champion de Crespigny, the former Normandy Mining boss, who isn't known for tiptoeing around the truth. De Crespigny has hinted at a return to business but until he does, he will spruik South Australia to sceptical business leaders across Australia. "I've never known a place that really could change and do something and it is only us who holds ourselves back," he tells The Bulletin.

Rann and de Crespigny are playing with few natural advantages, but de Crespigny is keen to promote the benefits of cheaper living. Young business owners, he says, could sell their house in Melbourne, buy the comparable property in Adelaide for about 60% of the cost, and pump 40% into their business. But he acknowledges that the battle ahead is about more than numbers: "I think the great pity is that it's seen far more negatively than we would care for it to be seen ... but the only way to change that is performance."

Adelaide was considered a rich city at the start of the 20th century. Its grand buildings of that era were financed with mining windfalls from Broken Hill and Kalgoorlie. Only 20 years ago, Adelaide was virtually run by a "club" of eight or nine men who perpetuated the conservative values of the landed gentry. They sat on the major company boards and built prosperity on protectionist policies. The directors tended not to seek out ideas from the east, or from the west, which grew and passed South Australia some time in the 1980s.

In 1992, a major report by an international consultancy found successive governments, including the legendary Dunstan reign, had failed to lay economic structures. The Bannon government was described "by and large, [as] shooting any bird that flies past". South Australia flinched when globalised competition and tariff reductions tapped. Enterprise had been stifled by conservatism. Strengths became weaknesses.

Since then, South Australia has limped ­further behind the rest of the country. Rann calls the 1990s a "call centre-led recovery" that saw education retention rates dwindle. He wants export earnings nearly tripled in the next 10 years. Of 71 EDB recommendations of the EDB, 70 have been passed. A venture capital board has been established and infrastructure, such as fibre-optic cabling, will be installed. Annual progress "report cards" will be issued.

Rann's ambitions have been tempered by budgetary constraints. The priority is an improved credit rating and his government trimmed nearly $1bn in spending over three years. Now Rann introduces himself at business meetings with a spiel: "I'm really keen on helping you but I know you won't be asking me for money because you won't be getting any."

Six main areas have been identified - education, finance, export capability, ­gov-­­ ­ernment efficiency, infrastructure and population. Some $39m was allocated to these goals in the 2003-04 budget. But the recommendations are high on rhetoric.

Some promise little more than a review and some business leaders aren't convinced by the patter. "It's all very well to set targets," a close observer says. "The feeling among ­business people now is that you've got to have more than rhetoric."

Every local seems to have a theory on how to fix Adelaide. Like all economists, both the weekend kind and the wealthy, they join dots that others don't always see. That more people equals more demand equals more jobs. That the Adelaide-Darwin railway will open Asian trade links. That the new venture capital board will inspire young entrepreneurs to invest. That the thirty­somethings will want to return home.

Rann envisages a return to before the eastern cringe set in, to the Dunstan era when, he says, other states looked to South Australia for social innovations, law reform and education. The distinction between now and then, of course, would be closer attention to the state's economic levers in a globalised world. "I guess my ambition is to lead and not to follow, to be a destination again, not a home town that kids have to leave," he says.

But first things first. Plans for a $240m airport redevelopment were announced not long ago. New air bridges and all. It might not be much. But it could be a start in South Australia's battle of perceptions.

It's a great place but it needs people and growth.