The good news is that Business SA chief Nigel McBride believes the SA economy will be OK – in the medium to long-term.
The bad news, he says, is that we have “major, major problems” that threaten the survival of key industries over the next one to three years.
Speaking alongside Premier Jay Weatherill at the CEDA ‘state of the state’ forum yesterday, McBride warned that some of our traditional industries were in for a rough ride – and the automotive industry might not survive.
“In the medium to long term I have an enormous optimism for this state,” McBride told the business audience at the Adelaide Convention Centre.
In the short term, however, government support was needed to “buy time” for businesses to transform in the face of enormous “seismic” shifts.
“What I’m concerned about today is the very short-term – for the next one to three years,” he said.
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“How do we get through this very, very difficult time for business. And the reason it’s going to be a very difficult time is because every single sector of our business and industrial community is at a crossroads.”
The answer, he said, was a mix of industry collaboration to, for example, improve infrastructure for the mining sector on Eyre Peninsula, and continuing government support to allow industries to transform.
He said the auto industry was “probably” heading towards being “an unsustainable industry” and that one day the industry might shut down its local manufacturing.
“But we’ve got to continue the co-investment in my view from federal and state governments because otherwise this massive supply chain that so many businesses rely on won’t have time to diversify and innovate,” he said.
“We’ve got to continue to support them so they’ve got time to reinvent and diversify.”
His worries extended to the defence industries, which also needed to diversify, but most of our critical business sectors were under pressure.
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“Bottom line is that retailing, manufacturing – all of these critical sectors – are going through massive, seismic shifts. And what we need to do is work out how we can support these key sectors through the next one to two years.”
McBride said business and consumer confidence was low and the peak business body had an obligation to do what it could to boost sentiment.
However, he added, “we need to call a spade a shovel and we need to understand there are major, major problems”.
While he said he was hoping for more business stimulus spending from the State Government, the biggest issue was the federal tax system.
“As much as I wanted more from the budget for business … the truth is that within the incredible constraints of a ridiculously duplicated tax system, there’s very little that any State Treasurer can do.”
Rarely, for a non-government leader, he also praised the desalination plant.
He said South Australia was in a “prime position” to contribute to global food security, and he pointed to predictions that by 2020 the emerging middle class in China would be spending trillions on premium products, including food and wine.
“We’ve future-proofed our water security with the desal plant,” he said. “There’ s a lot of naysayers out there who say ‘you’ve spent too much money’. There’s an old saying that what was dear today is cheap tomorrow and the days when the drought comes back – and I hope it doesn’t – we’ll be thanking whoever thought of the desal plant …”
Earlier, Weatherill took the opportunity to sell last week’s Budget, returning to his now familiar themes that the long-term economic future was bright, that debt was not so bad, and that there were risks to the local economy in trying to shift more quickly back to surplus.
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