1. Presented by Darryl Gobbett
Visiting Fellow
The South Australian Centre for Economic Studies
Adelaide and Flinders Universities
Mayors’ Summit for Jobs Growth
7 August 2015
Local Government Scope for Action

2. SA Centre For Economic Studies - Adelaide and Flinders Universities
The Environment for Jobs and Economic Development
• Accelerating pace of change
• Technology, Demographics, Social structures, Attitudes, Economies, Industries
• Declining costs of information, communication and transport
• Increasing importance of global value chains
• Re-emergence of China and India
• Impacts on Supply, Demand, Finance, Politics, Law, Attitudes, Value Chains etc
• Global populations increasingly urbanised, middle class & ageing
• Inflation and Interest Rates staying low for a long time
• Low financing costs, business asset deflation, impacts on business decisions
• Increased value of cash flow generating infrastructure
• Income & Company tax rates staying high as they fall overseas
• Australia and South Australia growing slower than average
• Productivity, real income growth, return on investment, employment, taxes, revenue

3. SA Centre For Economic Studies - Adelaide and Flinders Universities
South Australia’s Growth by Income

4. SA Centre For Economic Studies - Adelaide and Flinders Universities
SA Jobs growth
• SA Centre for Economic Studies Issues papers 44 and 45
• Private sector employment has declined through 2014 and 2015
• Male FT employment down to 2007 levels
• 25,000 plus jobs gone in manufacturing since 2009: Broader impact than just
automotive
• Growth is occurring but not offsetting losses in Manufacturing
• Agriculture
• Mining (now in short term decline)
• Manufacturing: Food and Beverages and Specialised Machinery
• Professional Services
• Health Care and Social Assistance now 115,200 jobs, 14.3% of SA employment
• Likely most growth in Small Business employment
• SA small business has higher than national average survival rates (ABS Cat 8165 2/3/2015)
• Not enough small businesses being created, so numbers are falling

5. SA Centre For Economic Studies - Adelaide and Flinders Universities
SA Jobs growth: Change is Happening
Source: ABS
Average Employment
May 2013 - Feb 2015
Growth since
2005/07
Hospitals 30,200 0%
Medical and Other Services 34,200 29%
Residential Care Services 22,800 38%
Childcare Services 8,400 53%
Other Social Assistance 17,800 20%
Food Product and Beverage Manufacturing 23,900 20%
Specialised and Other Machinery and Equipment Manufacturing 5,100 21%
Other Transport Equipment Manufacturing 3,600 81%
Adult, Community and Other Education 7,700 50%
Pre School Education 3,400 40%
School Education 34,900 7%
Tertiary Education 17,500 10%
Legal and Accounting Services 14,200 25%
All SA Employment 802,900 8%

6. SA Centre For Economic Studies - Adelaide and Flinders Universities
Value Chains and Human Capital
• SA will not be a comparative low cost producer, regardless of $A
• Industrial Relations, Attitudes and Public sector policies and practices
• Global Economies of scale largely out of our reach
• Global Production increasingly large, flexible, changing value chains
• Being part of the chain and specialising is a driver of value, wealth and employment
• But also
• Increasing demand for high quality, clean, “provenance certain” goods and services
• Global and local opportunities in small scale specialisation and comparative advantage
• Where will “you” fit in the Value Chain?
• What Value will “you” add?
• How does your Value Add be Sustained or Adapt?

7. SA Centre For Economic Studies - Adelaide and Flinders Universities
Value Chains and Human Capital
• Some different SA business “for instances” competing interstate and
overseas through “created” comparative advantage
• The chocolate makers: Haighs, Bracegirdles, Cocolat
• Balco, Beerenburg, Bickfords, Coopers, Maggie Beer, Thomas Foods
• Redarc (automotive electronics); Seeley International (air conditioning)
• Rising Sun pictures (Computer graphics – X-Men Days of Future Past)
• Nova Systems (engineering and management services)
• Superguardian, Cavendish, SPAA (Self Managed Superannuation)
• 550,000 funds, 1m members, $595b of assets at March 2015
• SA businesses can compete globally and grow
• Often in goods and services where SA would not have been the most obvious base
• SMSF admin and industry representation, chocolate etc
• Other times being based on SA and regional strengths and advantages
• Acquaculture, wine, meat processing, malt, defence services, rural machinery
• Aged care, Adult Education, Tourism

8. SA Centre For Economic Studies - Adelaide and Flinders Universities
Value Chains and Human Capital
• Human Capital is an important part of the success
• Understanding the specific need or opportunity
• Doing specific things very well
• Market Position, Focus and Branding, Research and Development
• Staff selection and Training
• Regional growth theories now emphasise the local human capital
• SACES Dec 2013 Report to the LGA
• “Old approach” emphasises top down, centrally driven & funded one size fits all policies
• New approach emphasises role of local “actors” acting in response to local opportunities
• Digital networks and reduced transport costs have redefined “Local”
• This offers bigger opportunities than threats
• Local Government has considerable scope and capacity to act

9. SA Centre For Economic Studies - Adelaide and Flinders Universities
Value Chains and Human Capital
• SA businesses can compete and grow
• Far more benefits regionally in helping them than competing for big firms
• Less likely to move away due to head office/global corporate activity
• Less likely to be playing you off against other jurisdictions
• Less likely to be asking for significant ongoing support
• More likely to use other local businesses and inputs
• More likely to be supportive of local institutions, charities etc
• More local embedding of intellectual property
• Can be part of the global value chains
• Public sector funding & resources more likely to be available for
supporting local activities
• Competing on a national and international stage
• Corporate welfare is not a priority
• Benefits provided to some businesses/regions have to be paid for by someone else

10. SA Centre For Economic Studies - Adelaide and Flinders Universities
Regional Primary Economic Drivers
• Skilled People and High levels of Human Capital
• More benefits in raising low skill levels than lifting number of highly skilled people
• Entrepreneurship
• Starting at school
• Innovation (technological and non-technological)
• Equipment embodying technology
• Quality of other inputs/intermediate goods/business environment
• Physical and Social infrastructure, incl roads, ports, education, social services,
recreation, arts etc
• Regulation and public policy, including land use planning, environment, waste disposal
etc
• Local Government does/can play important roles in each
• Infrastructure, Zoning and land use
• Local procurement policies and buy local programs
• Employment and Training
• Local business extension, education and support activities, including across jurisdictions

11. SA Centre For Economic Studies - Adelaide and Flinders Universities
• Ask local businesses
• What constrains their growth?
• What threatens their survival?
• What are the areas Local Government can influence, assist?
• Prioritise those actions where there can be a quick local benefit
• Be prepared together to ask for more responsibility
• Location of State and Federal Government employment and offices
• Decentralisation of policy ideas generation, decision making and policy
implementation
• Build better paid and more skilled employment
• Spinoffs for local business, education and training, empowerment
Some Possible Paths for Action

12. SA Centre For Economic Studies - Adelaide and Flinders Universities
• Work together to make a difference on bigger issues
• Programs to benefit a number of regions or all of SA
• Investment in Health Care and Residential Aged Care, Export infrastructure
• Education priorities
• Entrepreneurship in Schools and RTOs
• Aged Care, Child Care, Manufacturing, Tourism
• Water, sewerage and energy costs and investment
• Small business funding and banking relationships
• Tax policy and Public sector funding distribution
• How possible changes to the tax system would impact the regions
• Revisit formal share of tax revenue for Local Government
• Wages policies, eg penalty rates
• Your efficiency and program and service delivery
Some Possible Paths for Action

13. SA Centre For Economic Studies - Adelaide and Flinders Universities
Thank You