Academic journal article The Australian Journal of Politics and History

South Australia: January-June 1997

Academic journal article The Australian Journal of Politics and History

South Australia: January-June 1997

Article excerpt

The period under review has seen the development of an increasingly volatile political climate in South Australia. The Liberal Party holds government comfortably with a 36-11 majority in the House of Assembly. The Opposition Labor Party requires a swing in excess of ten per cent to regain the Treasury benches. The Liberal Government has had a number of successes, including a benign State Budget, a clear victory on car tariffs, the possible start-up of the Alice Springs to Darwin rail link, and an effective downsizing of the state7s public sector. Nonetheless, the government appears to be struggling to tam these issues into electoral pluses.

There are obvious negatives for the government. Despite a successful four-year debt reduction programme and an aggressive policy of incentives to attract business investment operations, the state's growth rate continues to tag behind the national average. Meanwhile persistent allegations and damaging leaks indicate a governing party racked by a high degree of internal bickering and factionalism, often spilling into the public arena. The Liberal Party clearly remains bruised by the internal divisions of the long-running feud between Olsen (now Premier and Brown (former Premier).

The Liberal Party vote is suffering in the polls. While there is little doubt that the government will hold office in the "yet to be declared" election (and the timing of the poll is itself a destabilising issue), the December change of leadership from Dean Brown to John Olsen appears to have so far failed to deliver the electoral dividends many Liberal MPs presumably expected.

The South Australian Economy

Economic growth in South Australia slowed further in the year to March 1997. At 0.4 per cent growth in seasonally adjusted terms over the last twelve months, with a forecast trend rate of just one per cent -- although the State Budget papers predict growth closer to three per cent -- South Australia now has the lowest growth rate of all the mainland states. Both poor profitability and lower wages have contributed to the poor performance. Clearly the South Australian economy continues to battle against the economic disability of its reliance on the traditional base of a heavily protected manufacturing sector -- rendering the economy particularly vulnerable to any further winding back of protection levels to the textiles, clothing, and footwear, and to the motor vehicle industries -- and the relatively slow growth of the domestic market At the same time, South Australia is struggling to attract its share of the national growth in tourism and the services sector.

Nonetheless, while the state economy is still underperforming in a number of key sectors, there are some positive signs. The business and investment climate is showing evidence of improvement, particularly when measured against community perceptions twelve months ago. Private consumption growth is strong and business investment rose by forty-four per cent over the year to the end of March, well above the national figure of eighteen per cent. Unemployment appears to have stabilised somewhat at 9.8 per cent and housing approvals are showing firm growth. A number of economic projects have commenced or obtained approval in recent months, including the planned $1-5 billion expansion of the Olympic Dam mine, the gearing up for the production of the export-oriented Vectra motor vehicle at GMH, and the similar Diamonte at Mitsubishi, and the positive exploration results in the Gawler Craton area in the state's far north. These projects, however, mostly point to the hope of a better economic performance in the medium rather than the short term, given the inevitable lag between investment and job creation.

The most positive aspect of the state's economy has been the strong export sector growth, rising in the year to the March quarter by three and a half times the growth in Gross State Product in percentage terms. …

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