SA EPO: Competitive industries and job opportunities essential for future of SA economy

To ensure the future of the SA economy, we must build on existing strengths to help industries adjust to structural change in our economy and ensure we have strong competitive industries, Federal Minister for Finance and Deregulation, Penny Wong has told a CEDA EPO audience in Adelaide.

To ensure the future of the SA economy, we must build on existing strengths to help industries adjust to structural change in our economy and ensure we have strong competitive industries, Federal Minister for Finance and Deregulation, Penny Wong has told a CEDA EPO audience in Adelaide.

Outlining the Federal Government's Industry and Innovation Plan, Ms Wong said the Government will support Australian industry to increase exports, win greater shares of overseas business, back Australian businesses to grow and create jobs, and encourage businesses to use locally produced goods and services.

"Central to the strategy is establishing Industry Innovation Precincts to foster innovation through collaboration. These facilities will become catalysts for a smarter economy," she said.

Ms Wong announced one of the precincts will be based in SA and will focus on defence manufacturing.

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Sean Keenihan
President (SA)
Australia China Business Council

Warren Hogan
Chief Economist

Sarah Martin
SA Political Reporter
The Australian

"We are already building and maintaining both Air Warfare Destroyers and Collins Class submarines and attracting multi-million dollar contracts from overseas, and with this new investment, we will be able to further grow this sector.

"Our investment will enable firms to seek out new opportunities to grow their market share, innovate and utilise new technologies and tap into the country's best minds to take their business forward.

"The Government will also expand the Innovation Investment Fund program to provide additional money in new venture capital.

"SA has world-leading defence manufacturing capabilities which this Government wants to support and build on. That's why we have committed to building 12 submarines, to be assembled here in SA."

She said the plan will ensure the future economy is flexible and adaptable and will build on the capabilities of people and innovation of business.

"We want workers to be sure enough of their skills and training to see opportunity in change; confident that they will continue to be able to find a job and provide for their family," she said.

Australia China Business Council, President (SA), Sean Keenihan said SA needs to broaden its economic relationship with China beyond bulk commodities.

He said SA must broaden its engagement with China and as its largest two-way trading partner; SA has the ability to capitalise on its growing middle class.

Mr Kennihan said this is essential as China's middle class is expected to reach 20 to 25 per cent of global consumption by 2020.

There is untapped potential for coordinated and strategic engagement with China, he said.

"Sectors of the (SA) economy are at different stages of maturity, there is no one size fits all solution approach to dealing with China," he said.

Mr Keenihan said the SA China Engagement Strategy, a joint collaboration between the SA Government and the Australia China Business Council, outlines strategies to engage with China.

Some key actions include:

  • Establish and promote SA's value proposition for China;
  • Promote local government relationships and coordinated government and industry activity;
  • Build China literacy in SA; and
  • Refocus government resources to support the strategy.

Like Mr Keenihan, ANZ, Chief Economist, Warren Hogan said the Chinese middle class has economic potential for not only the Australian economy but also the world economy and the world cycle.

Long term, China wants a modern balanced economy which involves SMEs, the private sector and consumers, and they are looking for this to occur this year, he said.

"China controls China's destiny. They are a self-funded development model. They have a huge surplus. They pay for their investment," he said.

"Last year they wanted to slow their economy and maybe they slowed it a bit too much. Global slowdown didn't help their margin. They have turned that around."

Mr Hogan said a risk in China, is if China recovers too quickly, they will have to put interest rates up or tighten monetary conditions, and won't allow that broadening of the recovery into the private or consumer sector.

"For the world economy this is critical, not so much for Australia, we are getting our bit of China now because of commodities," he said.

He said in 2013-14 Australia is not going to get strong levels of growth from investment in mining, Australia has to look elsewhere for growth.

Business has to invest in Australia outside of mining in metropolitan areas where most of the economies are, and that's a challenge, Mr Hogan said.

The Australian, SA Political Reporter, Sarah Martin said the defining issue of Julia Gillard's leadership is Kevin Rudd with polling predicting a wipe out of the Gillard Government.

She said Kevin Rudd has used the election announcement to draw attention back to him, and with a Nelson poll showing the Gillard Government is 30 per cent down in the primary votes; Labor would lose 26 seats if this is reflected in September 2013 at the election.

Ms Martin said key issues for the Federal Labor Government during the election campaign will be big ticket reforms such as the National Disability Insurance Scheme and the Gonski report, and we may see an adjustment of the mining tax.

She said the Coalition has pursued a small target strategy and we should expect to see more pressure on the Coalition to release policies as well as more campaigning on the carbon tax promise.

As this is a dual election year in SA, with the Federal election in September 2013 and State election in March 2014, Ms Martin said the change in SA Liberal leadership will give the State a strong political contest in the election with the economy, the cost of living and jobs to be the major issues.

She predicts Labor will highlight that their $9 million infrastructure spend is creating job across the State whereas the State Opposition will argue this spending is putting a handbrake on the economy and is adding to the State's debt and deficit position.