Make it big Adelaide Phase 1 / Acknowledge Make it Make it big Adelaide Phase 1|Acknowledge Adelaide
Australia’s cities have a bright future. And as a city, Adelaide has a stake to claim in unlocking the nation’s enormous potential for social and economic prosperity.
The South Australian Government cannot achieve this alone. Business leaders have a pivotal role to help transform our economy – and the community has a big part to play in contributions that stimulate the growth and development of our wonderful state.
Deloitte believes this is an opportunity to work collaboratively and to co-create a plan that delivers a bright and strong future for Adelaide and South Australia.
Let’s shape Adelaide together and build a future where our children – and their children – can flourish.
This is the first in a series of reports. Deloitte is committed to working with industry, the community, and government to develop and deliver a set of practical solutions that help to strengthen the South Australian economy. We welcome your involvement, encourage you to join in the conversation, and look forward to working with you on this journey. Make it big Adelaide Phase 1|Acknowledge Make it big Adelaide Phase 1|Acknowledge
Vision 03
Executive summary 04 1 Why Make it Adelaide? 06
Make it Adelaide Action 4 2 South Australia’s doing it tough 07 3 But not as tough as what you’d think 09
Make it a plan Adelaide 4 Our burning platform 12 Answer 3 5 How do we do it? 16
Make it your Adelaide Ask 2
Make it big Adelaide Acknowledge 1
Phase 1 Make it big Adelaide > Acknowledge is the first of a series across the themes of Acknowledge, Ask, Answer and Action. The broader narrative will act to recognise South Australia's challenge, seed the impetus for change through conversation, and develop a plan that outlines where and how we can take action to accelerate our economic and population growth. 1 Make it big Adelaide Phase 1|Acknowledge Make it big Adelaide Phase 1|Acknowledge
No small matter. ‘It’s just like a big country town’ For too long, too many of us have been telling ourselves a set of truths we hold as self-evident: That you can’t make it in Adelaide. That we’re from a small city with a small destiny. That anyone with a good idea will leave, and anyone who doesn’t will be left behind.
‘God’s waiting room’ What’s worse is that we tell these ‘truths’ to other people.
To our interstate colleagues, who decide not to invest here. To our old friends, now in the east, who choose not to come home. We tell them ‘Everybody’s inside, sitting in the same to our kids. And worst of all, they listen.
It’s time to change that. chairs they were sitting in last year’ We know that South Australia isn’t as small as we talk about, that we’re already a state home to 1.7 million people and a $100 billion economy.
We believe in the city that makes the world’s best wine, built the globe’s ‘Adelaide is small’ best cricket ground, and hosts the best arts festivals on the planet.
We believe in the grand city, that William Light laid out between hills and ocean in 1836, a radical city where Catherine Helen Spence demanded the right to run for office, a growing city where Sir Thomas Playford built industries for workers and brought workers for industry, and the cutting- edge city where Don Dunstan set the agenda for the rest of the country.
There’s a big future for all of us. There’s a job ahead to build that future. And big choices to make it happen. There’s much we need to do as leaders in business, in government, and in the community to make it the big Adelaide we want.
A big Adelaide in ten years won’t have the same industries as in the past, or even as what we have now. We won’t do business or run our governments in the same way.
It’s time to lay out a plan for what a big Adelaide will look like and what we all need to do to make it there.
The future is what we make it. And we will make it Adelaide.
2 3 Make it big Adelaide Phase 1|Acknowledge Make it big Adelaide Phase 1|Acknowledge
However, the return of strong population In addition to these sectors where we can growth will be the most robust indicator surf the waves of global growth, we think Executive summary of sustainable improvement to our state’s there are four other sectors specifically for economic health. The reality is that both South Australia to focus on. These sectors public and private capital chase where build on our existing strengths to grow people choose to live – as we’ve seen as services sector jobs: a headwind for Adelaide. Ensuring our existing jobs continue to be based in •• Defence industries Adelaide and that we’re able to attract •• Creative industries the best and brightest will be ever more •• Health and medical industries reliant on scale in the future. •• Professional and information technology services. Our future Adelaide’s economy has been offices having moved to the eastern The star of our economy will be a new In addition to these eight cylinders, doing it tough for some time states. Only 5.9 per cent of medium Two things we’re not doing engine of growth firing up, fuelled mainly South Australia needs to continue to Since the mid-1980s, Adelaide and South and large businesses in Australia are by new private sector investment. In honour develop other sectors. Improvement Australia’s economy has trailed the rest based in South Australia – well below This isn’t the first time someone of our industrial heritage, like a V8 Monaro, in global markets could spur growth in of Australia. The manufacturing industry, our population share. has written a report about the we think there’s eight cylinders. None of mining, particularly further developments which once provided 1 in 5 jobs in South economic future of South Australia. these sectors will come as too much of a in copper and iron ore. Australia, is now much less important. While these problems have been tough These reports generally take one surprise, but they shouldn’t – we’re most And while the other big manufacturing for the South Australian economy for of two approaches. likely to succeed in the future by leveraging We think that the time is right to link a plan state, Victoria, has found new high-powered some time, unless we act now, this is a the competitive advantages that we have now. for population growth to the acceleration of engines of growth in the services sector, problem which is likely to get worse. On One approach they take is to offer these industries, and further underpinning we’ve been stuck behind in third gear. current trends, Deloitte Access Economics a silver bullet. Some hero single The third instalment in Deloitte’s Building this transition to a growth economy will forecasts that natural population growth project or industry which will solve the Lucky Country series looked at industries be the advantages presented by our city. The focus of the public debate in the space – births over deaths – will fall to almost all of our problems. That’s not what where global growth is strong and Australia Adelaide’s liveability, cost effectiveness has often been limited to the decline of the zero in the longer term, further limiting this report will do. The truth is, the has a significant advantage against our and access to the attributes that make manufacturing sector. But the gap which our opportunities locally. scale of South Australia’s economy competitors. Four out of the ‘Fantastic our nation so attractive to the world are has opened up is driven by more than that. is surprisingly large – there’s over Five’ sectors offer significant global growth now continually recognised. But let’s not Big cities are getting even bigger as fast- We have to act now 800,000 jobs and $100 billion in opportunities for South Australia: just pat ourselves on the back for these growing services industries cluster there. to make a difference product every year. Even the largest accolades, let’s use them to accelerate This is happening all around the world – This future is not inevitable. Demographics single project will inevitably be just •• International education our growth and attract and retain the not just in Sydney and Melbourne. are destiny, but there’s still time for one part of a broader story of our •• Energy and gas people we need to ignite these cylinders us to keep more of our young people state’s prosperity. •• Tourism and ensure Adelaide’s place as a globally Don’t get us wrong – far from what the and to attract more of the world’s best •• Agribusiness. competitive, mid-sized city at the heart doomsayers say, Adelaide’s economy and brightest. The other thing they say is that of our state. isn’t crashing anytime soon. There is still the future comes down to the In fact, South Australia’s performance in modest growth. But it’s not setting any land We believe that we can turn it around. South Australian Government, each of these sectors is already at least a Let’s be positive about the size and speed records either. Both our population And we’re willing to put a number on it. either as the saviour or to stop solid ‘not bad’. We’ve grown fairly quickly strength of our economy and make and economy have, on average, grown Our aspiration is that we increase the messing up. And the Government in each – but there’s still a lot of room for the right investment decisions over the more slowly than the rest of the country number of people who choose to live has an important role to play, growth. To take one example, our share of medium term to facilitate this growth. for over 30 years. in South Australia to 2 million by 2027. making sensible investments in tourists and international students is below After all, over the next decade, South To get there, we need to meet the national infrastructure, industry and our what you would expect from our share of Australia’s gross state product will The most practical effect of this are the growth rate of 1.4 per cent per year. To cities and towns, educating our kids the national population (which, not to labour cumulatively be worth more than a choices that people make about their own be clear, this is not a forecast – things will so they have better skills to do the the point, isn’t really what it used to be). trillion dollars – let’s demonstrate that lives. The number of young people aged need to change to reach a population of best jobs, and creating an economic we can make the right decisions, push between 15 and 34 in South Australia is 2 million by 2027. environment that supports private In each of these sectors, we believe we through our risk averse culture and lower now than it was in the mid-1980s, investment. But it’s a supporting must identify opportunities to lead the rebuild our corporate sector. despite the fact that the population is Why focus on people? After all, these actor – it shouldn’t be seen as the star. nation, not come middle of the pack. around 340,000 people larger. people will ultimately be attracted to live The sixth Building the Lucky Country Over the balance of this year we aim to in this state by better jobs and stronger report, What’s over the horizon? Recognising facilitate discussions with the key players We’ve also seen this effect play out in industries. There’s no point pursuing opportunity in uncertainty finds that South in each of these domains to develop the make-up of the private sector. The population growth on paper if those Australia is particularly well positioned to a plan that outlines where and how economy is now heavily reliant on small people don’t have good jobs or their benefit from a third Asian boom, due to we can accelerate our economic and and medium enterprises and private kids don’t have good futures. our premium food and wine exports, population growth. companies, with many corporate head as well as success in retail, wholesale trade and transport. 4 5 Make it big Adelaide Phase 1|Acknowledge Make it big Adelaide Phase 1|Acknowledge
Why Make South Australia’s 1 it Adelaide? 2 doing it tough
Why are we doing this? We see the next five months as an We know our economy Other ‘makers of things’ have We believe fundamentally that South opportunity to work collaboratively with is in a state of transition disappeared from our minds almost Australia can have a stronger future, these key stakeholder groups to develop a We’ve all heard the story. The South completely – apparel, whitegoods, We want but we need to act now to secure it. plan that creates an Adelaide in which our Australian economy is in a state medicines, to name a few. children can choose to flourish in. This will of transition. Our once dominant to work For Adelaide to compete on a global stage help us to form a set of practical solutions manufacturers are shutting up shop – This may be the story we tell about our we need to accelerate population growth we can all own and deliver to drive our from the recent closures of Holden state, but it’s not just happening here. in our state and retain talent to support state forward. and Caroma to the now-historical together to the growth of our key industries. Mitsubishi plant and the BHP shipyards It’s happening in Victoria, which once Following this consultation process, in Whyalla. Many more companies have had a very similar economy to our own. create an We see business and community leaders we will create a plan which lays out these undergone restructures, leading to job And it’s happening in cities all over the as having a pivotal role to help transform practical solutions and what we need to losses or redeployment interstate. world, like Austin, Portland and Glasgow. the South Australian economy. With our do to get there. Adelaide in strong links to the business community in Adelaide, we believe that Deloitte is How can I get involved? Chart 2.1: Manufacturing shares of output, 1990–2016 which our best placed to facilitate and become The future of South Australia is everyone’s the catalyst for action – government responsibility. We want you to join us on 16% cannot do this alone. this journey. children 14% What does the process look like? We will speak to key stakeholders flourish. We are working on practical solutions to within the business community and 12% the problems that are before us, and want government, as well as engage the wider to engage with industry, government and South Australian community, to help us 10% the community to be part of this journey. formulate a robust plan to grow our state. 8%
6%
4%
2%
0 1990 1991 1992 1993 1994 1995 1996 199 1998 1999 2000 2001 2002 2003 2004 2005 2006 200 2008 2009 2010 2011 2012 2013 2014 2015 2016
South Australia Victoria Australia
Source: Australian Bureau of Statistics (ABS)1
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This all comes down to a couple of points: So, what’s the difference between South Our services sectors haven’t grown fast •• We need other industries to pick up Australia and Victoria? enough to make up for the decreasing the slack. Manufacturing won’t reach role that manufacturing plays in our state. But not as tough those lofty 1970s heights again, nor will It’s pretty simple: Victoria has a burgeoning advanced manufacturing create as many services economy, and the fastest growing There’s another story here too: the jobs as the old factories of the past. population in Australia to boot. story of agglomeration. The economies as what you’d think •• With so many other cities dealing with of agglomeration are effectively 3 the same challenges as we are, we can Chart 2.2 shows industry value added clustering effects, where the productivity look around the world for great ideas per person in South Australia compared to of knowledge workers rises when they to shape our thinking on what to do – Victoria. We do well just where you’d expect are in close proximity to each other. and what not to do. us to – agriculture, thanks to our wine and The World Bank suggested in 2009 that produce; health care, linked to our ageing developing economies are entering a ‘new But agglomeration and its best friend – population; public administration; realm’ of agglomeration where proximity services – will have a far greater effect and mining. matters not just for access to markets, We’ve been outpaced by per capita is also lower than all Australian on our state going forward but for access to ideas.3 the rest of mainland Australia jurisdictions except Tasmania, and it’s well We might be in a state of transition, but But what’s more interesting are the Our declining manufacturing sector, below the national average.4 that won’t be the case forever. While the areas where Victoria beats us, fair and We see the effects of agglomeration the collapse of the State Bank and the decline of manufacturing in South Australia square. Financial services, professional playing out in Australia today. Sydney recession we had to have: all contributors This pace has translated through to has been slow and steady, this specific era services, information media and and Melbourne are getting bigger as the to South Australia’s slowing economic slower employment growth compared of adjustment is coming to a close. Most of telecommunications, and property faster-growing services industries cluster growth over the last three decades. to the rest of the nation. South Australian South Australia’s traditional manufacturing and rental services. there. Workers congregate in big office unemployment rates have generally has already left, and those industries which towers, technology parks and inner-city Over the past few decades, we’ve tracked above the national average remain – like advanced food manufacturing And that’s consistent with Australia’s universities to collaborate and share ideas – been outpaced by the rest of Australia since the 1990s, with the difference in and defence – are better adapted to the comparative advantages as a developed, even though technology allows us to (excluding Tasmania) – and the gap is underemployment rates (part-time workers current economic climate. high wage country. We perform best in communicate more easily than ever before. becoming more pronounced over time. wanting additional hours) even more areas which are skilled or capital intensive, And this is happening all over the world – Between 1990 and 2016, South Australia stark. Since 1986, South Australia’s trend But we’re not just experiencing the like services or mining. High labour costs think London, New York, San Francisco grew by an average 2.3 per cent each year unemployment rate has been on average loss of manufacturing – we’re feeling mean that sectors relying on lower skilled and Shanghai. – compared to 2.7 per cent in Victoria and 0.8 per cent higher than the national the downsides of living in a smaller city. workers are less competitive globally. 3.1 per cent across Australia. Our income unemployment rate – see Chart 3.1.6 Victoria’s going through the same transition But South Australia hasn’t transitioned as we are, but they’ve weathered the towards these areas as well as Victoria change much better as a whole. or the other states.
Chart 2.2: Differences between industry value added per capita – South Australia vs. Victoria, 2016 Table 3.1: Average annual economic growth in Australia, selected years
Agriculture, forestry and fishing Health care and social assistance Average annual GSP growth 1990–2016 2000–2016 2010–2016 Public administration and safety ining New South Wales 2.5% 2.1% 2.5% Electricity, gas, water and waste services Victoria 2.7% 2.6% 2.0% Other services Administrative and support services Queensland 4.0% 3.8% 2.6% Transport, postal and warehousing Construction South Australia 2.3% 2.3% 1.6% Arts and recreation services Accommodation and food services Western Australia 4.7% 4.9% 5.1% anufacturing Retail trade Tasmania 1.9% 1.8% 0.7% Wholesale trade Education and training Northern Territory 3.5% 3.6% 4.2% Rental, hiring and real estate services Australian Capital Territory 2.6% 2.7% 2.2% nformation media and telecommunications Professional, scientific and technical services Australia 3.1% 2.9% 2.7% Financial and insurance services
-$2500 -$2000 -$1500 -$1000 -$500 $0 $500 $1000 $1500 Source: ABS5 Source: ABS2
8 9 Make it big Adelaide Phase 1|Acknowledge Make it big Adelaide Phase 1|Acknowledge
And our share of the nation Chart 3.1: South Australian and Australian trend unemployment rates Chart 3.3: Employment growth, year to March 2017 over previous year But we’re still growing – just slowly has declined as a result Despite all the doomsday talk, South Employment growth (persons) Slower growth rates and higher Australia is still here – and still growing. 14% 120,000 unemployment year after year all add up in the end. The combined effect of Our economy grew by 1.9 per cent last 12% 100,000 industrial decline and fiscal turmoil in year, matching Western Australia, almost the 1990s drove a population exodus meeting Queensland and far exceeding 10% 80,000 from South Australia. Those who left were Tasmania to boot.10 South Australia came predominantly young people and young third in jobs created in the year up to 8% 60,000 families who did not return. Remarkably, March 2017, trailing only Victoria and even today, there are fewer individuals New South Wales. 6% 40,000 aged between 15 and 34 living in South Australia than there were in the mid-1980s. And it’s important to remember that in 4% 20,000 our discussions at home, interstate and As a result, our share of the nation has abroad. We haven’t crashed the car – 2% 0 declined dramatically. South Australia’s we’re just stuck in third gear. 0 share of Australian gross domestic -20,000 product (GDP) was 7.5 per cent in 1990.8 V C NSW SA ACT NT TAS QLD WA 1990 1991 1992 1993 1994 1995 1996 199 1998 1999 2000 2001 2002 2003 2004 2005 2006 200 2008 2009 2010 2011 2012 2013 2014 2015 2016 201 Today, we only represent 6.1 per cent – coupled with a similar decline in our share 7 11 of the national population. This trend is Australia South Australia Source: ABS Source: ABS forecast to continue into the future.
Chart 3.2: South Australia’s share of national output and population
9%
8.5% South Australia came third 8% in jobs created in the year .5% up to March 2017. %
6.5%
6%
5.5% 198 -88 1990-91 1993-94 1996-9 1999-00 2002-03 2005-06 2008-09 2011-12 2014-15 201 -18 2020-21
Output Population Source: ABS9 and Deloitte Access Economics
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Our burning An extra 290,000 people 4 platform will need to choose to call South Australia home by 2027.
2 million people by 2027 That’s why we need 2 million people by 2027. Chart 4.1: Baseline and target population growth Our aspiration is that we increase the number of people who choose to live The future is what we make it. And we will Po la on ll ons in South Australia to 2 million by 2027. make it Adelaide.
The current population of South Australia What needs to happen? 1 is 1.71 million. We’ve chosen population as our key metric because the return of strong We’re not as far off as you might think. population growth will be the most But we have a long way to go, and it won’t robust indicator of our state’s growing be an easy path. and sustainable economic health. To be 1 clear, this is not a forecast – things will
Why people? need to change to reach a population 1 Without people, economies just don’t of 2 million by 2027. work. We need people to produce things, 1 consume things and to organise things in So what needs to happen to get there? ways that robots just can’t do. We need to double our population 1 More than that, we need enough people growth from now to 2027
so that Adelaide remains a significant city To reach a population of 2 million, an 1 in Australia’s economic life. There will always extra 290,000 people will need to choose be places that are bigger than Adelaide, but to call South Australia home by 2027. 1 this is a matter of critical mass. Economies of agglomeration will work in our favour This represents an additional 142,000 if enough people with the right skills and people over and above baseline 1 ambition live here and share ideas from government forecasts. To put it another
one side of the city to another and beyond. way: nearly 13,000 extra people will 1 Our services industries will cluster and grow need to live in South Australia each year 11 1 1 1 1 1 1 1 1 1 here – not in Sydney or Melbourne – if we compared to what the middle of the give knowledge workers and businesses range forecasts suggest. a reason to do so. Baseline Target This translates to nearly doubling our The reality is that both public and private population growth compared to what we capital chase where people choose to live. see in the baseline. Our population would Ensuring our existing jobs continue to be need to grow at 1.4 per cent each year – based in Adelaide and that we’re able to equivalent to the Australian growth rate – attract the best and brightest will be ever compared to 0.8 per cent under the more reliant on scale in the future. Without baseline scenario. The baseline is built scale, we won’t develop our services on the same assumed parameters as the sectors. And without services, we miss Department of Planning, Transport and our opportunity to fill the hole left by Infrastructure (DPTI) medium series and traditional manufacturing and decades ABS’ series B population forecasts, but of slower growth. updated to reflect South Australia’s most recent population performance. Source: Deloitte Access Economics, Department of Planning, Transport and Infrastructure12, ABS13 12 13 Make it big Adelaide Phase 1|Acknowledge Make it big Adelaide Phase 1|Acknowledge
Chart 4.2: Natural population growth, Australia and South Australia There are fewer individuals 8,000 1 6,000 aged between 15 and 34 ,000 154,000 living in South Australia than 6,000 132,000 there were in the mid-1980s. 5,000 110,000
Hitting 2 million by 2027 requires South We need to make a compelling case to 4,000 88,000 Australia to grow well above its best results young South Australians that you can have in history. That may seem unachievable a successful future in Adelaide. That we’re at the outset. Deloitte Access Economics a small city with big opportunities. That 3,000 66,000 modelling shows that the South Australian people who stay can make it big, and that population will reach 2 million in early people who leave are missing out. 2039 in the baseline scenario. 2,000 44,000 And attracting the best But if the population stars align – international and brightest to our state migration, interstate migration and natural We don’t just want to keep our young 1,000 22,000 increase – we can get there. International people here – we want to attract more migration was particularly strong in 2009 than our fair share of the world’s best and 2010, net interstate outflow was and brightest. 0 0 relatively minor (and even positive) in 1990 2002 2006 2011 2016 2020 2025 2030 2034 2039 2044 2048 2053 2058 2062 206 and 1991, and natural increase was more International migrants are great for positive in the 1980s. the economy and our community. They South Australia (LHS) Australia (RHS) Source: Deloitte Access Economics can boost the working-age population, The required level of growth is broadly contribute to taxes and bring necessary in line with each component matching its skills to our shores.14 Researchers at the best performance – all at the same time. University of New England found that What if nothing changes? There are also flow on effects. While At the same time, the baby boomers the social benefits of migration far exceed There are fewer young people in some young people do return in their 30s, are ageing. While we are currently facing And that means keeping our the costs, especially in the long term.15 South Australia today than there many remain interstate when they have the challenges of an ageing population, young people here were in the mid-1980s children. This affects our birth rates down those baby boomers will one day reach For many years, too many young South There are also broader benefits of the track, and further accelerates our the end of their natural life. Australians have left seeking better futures attracting migrants to South Australia. It’s a harsh truth. ageing population. interstate and overseas. Migrants retain important connections These two factors combine to mean that with their home country, which can be Fewer people aged between 15 and 34 And demographics mean our natural natural population growth will slow and They leave with degrees from some of the important for trade links. Studies have live in South Australia today than in the growth is slower than ever before eventually fall to almost zero. On current world’s top universities. They take with shown that for some countries – including mid-1980s, despite the fact that the Fertility rates have been declining for forecasts, the number of deaths will them their skills, their innovative ideas and our neighbour New Zealand – a greater population has increased by around many years in developed countries. Since nearly equal the number of births in South their passion. They leave our festivals, our stock of migrants from a particular country 340,000 people in that time.17 1976, the total fertility rate in Australia has Australia. Without any other intervention – wine regions and our affordable living – and leads to more trade with that country.16 been below ‘replacement level’ – meaning people leaving or people arriving – South most importantly, their family and friends. The continued exodus of young people that the average number of babies born Australia’s population would stagnate. A targeted migration scheme could is having an effect on our population to a woman is insufficient to replace herself And yet they still go. also impact those sectors of the South and on our economy. The median age and her partner. Despite an increase in Australian economy where we have in South Australia is 40, the oldest of any the late 2000s, fertility rates are once again This needs to change. a comparative advantage, like energy mainland state.18 Young people taking on the decline. The current total fertility and gas or tourism. their productive capacity with them is rate is 1.8 babies per woman in South bad for our economy. Australia, above only Victoria and the ACT.19
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These international students would bring Tourists spent $6.3 billion in the state in Our agricultural producers face pressure vibrancy to the city and beyond, as well 2016, with 432,048 international visitors to serve an ever-growing market with How do as innovative ideas and entrepreneurial and 6.2 million interstate overnight visitors limited resources. Retaining our natural businesses to support our economy. – representing growth of around 6 per cent advantages of clean air and high-quality compared to 2015.27 But only 4 per cent of soil in this environment requires expertise we do it? How can we attract new international Australia’s international visitor nights were and innovation. If we fail to make the most 5 students to South Australia? How do we spent in South Australia in 2016 – far below of this opportunity for both our education ensure students currently studying in South our population share, and nowhere near and agribusiness sectors, this bounty may Australia share their experiences back doing justice to our beautiful state.28 We instead accrue to our competitors. home and beyond? How do we encourage need to do more to leverage the assets more students to remain in South Australia that we have – Kangaroo Island, our What actions can we take to attract the beyond their studies? festivals, world class wine and our regions. necessary workforce to further enhance our leading position in this sector? What The star of our economy will be new engines of growth firing Energy and gas What additional infrastructure projects activities or policies will drive rapid export up, fuelled by new private sector investment. In honour of our At a time when energy security is a will assist us to accelerate the growth we growth of our quality food and wine? crucial issue in Australia, South Australia have seen? International hotels? More eco- industrial heritage, like a V8 Monaro, we think the engine has plays a critical role in continuing production tourist developments in our wine regions? Our industries: the important eight cylinders – competitive advantages and those strategic in Australia and across the world. While Additional international airlines or routes? ones where we still need to grow industries where we have lots of room to grow. We also need to a lot of the focus of the public debate has In addition to those sectors where we can use our city’s advantages to accelerate our growth and attract been on energy supply, in the medium Agribusiness surf the waves of global growth, we think to long term, the focus will shift to the Agriculture, food, wine and forestry there’s four other sectors specifically for and retain the people we need to ignite our cylinders and secure resources opportunity of South Australia’s accounted for $5.3 billion in exports for South Australia to focus on. These sectors Adelaide’s place as a globally competitive, mid-sized city. gas and renewables. South Australia in 2016, and made up build on our existing strengths to grow around half of our merchandise exports.29 our economy. South Australia has the country’s largest We have a diverse agricultural base – from Our industries: focusing on Each extra international student enrolment onshore oil and gas reserves: the Cooper wheat to livestock and seafood. Adelaide Defence industries our competitive advantages in higher education contributes $43,700 and Eromanga Basins in the state’s was recognised as a Great Wine Capital South Australia is the home of the The third instalment in Deloitte’s Building in total value added and 0.33 FTE jobs to north-east, which also straddle south- in 2016, as a gateway to 18 wine regions only state-based defence agency in the the Lucky Country series looked at industries South Australia.21 west Queensland.24 In 2016, we spent and a producer of almost 80 per cent of country, Defence SA. World leaders like where global growth is strong and Australia $122 million on oil and gas exploration, Australia’s premium wine. South Australia’s BAE Systems, Lockheed Martin and has a significant advantage against our 34,200 international students were representing nearly 9 per cent of food processing industry has also emerged Raytheon all form part of a state-based competitors.20 Four out of the ‘Fantastic enrolled in South Australian educational expenditure across Australia in seasonally as our largest manufacturing industry, defence cluster in Adelaide’s north. This Five’ sectors offer significant global growth institutions in 2016 – and not just in adjusted terms.25 Unconventional oil bolstered by increasing demand in south- cluster allows small-and-medium-sized opportunities for South Australia. universities. Around half of students were and gas exploration has also expanded east Asia. From boutique producers like local employers, like Levett Engineering, enrolled in English language intensive in the state – requiring specialist Beerenberg and Maggie Beer, to large to play key roles in supplying large These industries are things we’re already courses, vocational education and training, technology and expertise to extract. South players like Thomas Foods International, defence procurements. In the city’s west good at. There’s a lot of room for growth, school and non-award courses.22 Australia also has high potential in the South Australia has developed a reputation at Techport, ASC is developing South but there are also challenges ahead. renewable energy sector: if South Australia for high-quality produce. Australia’s engineering and manufacturing We believe we must – and can – identify South Australia has natural advantages were a nation, it would rank second only to expertise, building 12 new submarines in opportunities to lead the nation. in attracting students: a relatively Denmark in terms of installed wind power In the sixth instalment in Deloitte’s partnership with French company DCNS. affordable, high standard of living and on a per capita basis.26 Building the Lucky Country series, we By 2020, work will commence on nine new None of them stand alone. In fact, it’s a large stock of student accommodation. recognised that South Australia would Future Frigates at Techport. the synergies between each sector where But significant opportunities remain Given our natural advantages in gas, as be one of the greatest beneficiaries of many of the most exciting opportunities lie. across the sector – we make up well as clean and renewable energies, how renewed booms in Asia, partly due to the How do we ensure that we develop a 7.1 per cent of Australia’s population, do we become global leaders in the energy growth potential for our niche food and sustainable services industry in South International education but captured only 4.8 per cent of the networks of the future? How can we do more wine exports.30 Australia with a life beyond these International education is South Australia’s international student market in 2016. to translate our strengths in these sectors construction projects? largest services export. Deloitte Access If South Australia’s international education into knowledge jobs servicing the world? However, agribusiness faces an Economics found that international market grew by 15,200 enrolments by unexpected problem: a shortage of education and training contributed 2026, we would match our population Tourism skilled graduates. Less than 1.5 per cent $954 million to the South Australian share – and if we grew a little faster than Adelaide and South Australia are great of Australian university students pursue economy in 2015, and provided over the rest of the country, we could ‘punch tourism destinations – and we’ve been agriculture and environmental courses.31 7,500 full-time equivalent (FTE) jobs. above our weight’ and capture 10 per cent recognised for it. Adelaide made the top of the national market.23 ten cities in Lonely Planet’s Best in Travel 2014 list, while South Australia was listed in the top ten regions in 2017.
16 17 Make it big Adelaide Phase 1|Acknowledge Make it big Adelaide Phase 1|Acknowledge
Creative industries Our people: making Adelaide a Older generations are also sceptical of what South Australia is already known as the place where people want to live, Adelaide has to offer. Entrepreneurs who’ve Festival State – with the largest Fringe work and grow had to move away from Adelaide note that festival in the southern hemisphere, the What features make cities The other half of the equation is our investors are risk averse and that it’s hard well-recognised Adelaide Festival and people. We need to retain people who to secure funding – meaning that we lose Adelaide Writers’ Week, and Australia’s only attractive to young and grow up in South Australia and attract entrepreneurs to chase capital elsewhere. World of Music, Arts and Dance (WOMAD) more people to live here too. This will festival. These events attract world-class only occur when Adelaide is considered If we can change our mindset – from risk musicians, artists, and performers. Year- experienced workers? a more attractive place to live and work. averse to risk taking, from encouraging round, the city sees over 1,100 live music We need to offer something more. more of the same to encouraging innovation, gigs per month in 200 venues, and we’ve from scaring our entrepreneurs away to raised artists as diverse as Sia Furler, Living smarter and more densely giving them a place to stay – who knows Jimmy Barnes and the Hilltop Hoods. Adelaide is a mid-size city in terms of what Adelaide might achieve? population, but it’s spread out over a But our creative potential goes beyond relatively large area by world standards. How can we better use Tonsley to encourage Mad March – with arts and recreation Some people want a traditional house on an Adelaide culture which takes more risks? services contributing a total of $853 a quarter-acre block, but others don’t. Plus, How can we support entrepreneurs and million to our economy in 2015-16.32 continuing to grow out without growing up start-ups? How can we encourage university Adelaide is developing its reputation – will stretch public infrastructure thin. The graduates to incubate their business ideas but, as in some of our other key South Australian Government’s 30-Year in Adelaide? industries, we face a shortage of Plan for Greater Adelaide recognises this locally-grown talent. reality, with policies to increase population With better connections to the The challenge now is how we can establish The cost advantages for middle and back density while minimising congestion.35 world, not just to the east coast Aligned to the magnificent cultural and grow health and biomedical businesses office support, the liveability of our state Adelaide needs to have a global outlook boulevard of North Terrace, this often which are driven by both the research and high skill levels give South Australia Adelaide also needs to get smart. Smart if it’s to thrive in a globalised world. We undersold aspect of Adelaide’s character undertaken by, and the talents of, our local plenty of room to grow its base of white- cities use existing and new technologies often find ourselves focused on what and economy presents significant researchers. The innovative research collar workers. to better meet people’s needs – like the the eastern states are doing and how opportunities for investment to sustain undertaken at our universities is well internet, real-time data collection and we can better connect with Sydney and our leadership and enhance this critical placed to be exported across the world, Information technology services are analysis, software and sensors. Adelaide Melbourne. But our future customers component of our liveability. with collaborations between businesses, also well placed to become a strength is already on this path, with the opening aren’t based in Sydney – they’re located hospitals and other research institutes for Adelaide. Adelaide is set to become of the Smart City Studio, a collaborative across the world. New technologies, Do we really understand the intersection set to benefit the broader community. Australia’s first Gig City, with 14 locations project between the Department of State cheaper international shipping and free between our creative and cultural assets in Adelaide to receive internet speeds Development, Adelaide City Council and trade have created new opportunities and the impact on tourism, international How can we further support health research of up to 10 gigabits per second – which Cisco. The studio ran a trial for smart street for South Australians. We’ve seen this education and the attraction of service and commercialisation in South Australia? is set to benefit start-ups and other lights which use smart LED technology to already in the wine industry – with thanks industries? What investments would How can we leverage the investment in our businesses. And growth in our higher save energy and maintenance.36 to innovative production techniques and provide acceleration of this dynamic? universities and SAHMRI? education and research sectors, alongside the popularity of South Australian shiraz. collaborations between government, What else can we do to become a ‘smart Health and medical industries Professional and information universities and businesses are helping to city’? What features make cities attractive The opportunities of the future are on The South Australian Health and technology services develop an ecosystem where innovations to young and experienced workers? our doorstep. Innovative South Australian Biomedical Precinct on North Terrace Adelaide might not be a national hub for can be shared and commercialised. companies are already integrated into is set to become one of the largest health professional services, but it’s impossible A culture that takes more risks the world economy from their Adelaide and life sciences precincts in the southern to ignore the value of the sector. Together, As the global professional services industry Australia often places highly in world headquarters. We must look beyond hemisphere. The new Royal Adelaide professional, financial, and real estate evolves through the use of technology, which rankings for ease of opening a business,37 the east coast to target export markets Hospital, the South Australian Health and hiring services contributed over components can we attract to Adelaide to as well as showing a high level of business and attract investment and confidence and Medical Research Institute (SAHMRI), $14.5 billion to South Australia’s economy leverage our economic advantages? What start-up activity by world standards.38 from abroad. the University of Adelaide’s Medical and in 2015-16. 33 In 2016, Deloitte Access else can we do to develop and attract However, the exodus of young people Nursing School and the University of South Economics identified in the BankSA Trends global technology firms to Adelaide? chasing opportunity elsewhere indicates How can we better connect to Asia? How Australia’s Centre for Cancer Biology will economic bulletin that employment in How can we enhance collaborations a widespread belief that you can only can we support South Australian businesses form the cluster. SAHMRI 2 is also on the professional services – from scientists between government, universities and make it outside Adelaide. to market overseas? cards following the Federal Government and veterinarians to lawyers and computer the private sector? announcement in the 2017 budget for programmers – had grown by 62 per a proton beam therapy facility. cent over the past 20 years, compared to 24 per cent growth across the board.34
18 19 Make it big Adelaide Phase 1|Acknowledge Make it big Adelaide Phase 1|Acknowledge
1. Australian Bureau of Statistics, Australian National Accounts: State Accounts, 2015-16, cat. no. 5220.0 21. Deloitte Access Economics, International education in South Australia (July 2016, commissioned by the South (18 November 2016). Australian Department of State Development) < https://www2.deloitte.com/content/dam/Deloitte/au/Documents/ Economics/deloitte-au-economics-international-education-in-south-australia-060916.pdf>. 2. Australian Bureau of Statistics, Australian National Accounts: State Accounts, 2015-16, cat. no. 5220.0 (18 November 2016). 22. Department of Education and Training, International Student Data 2016 – Pivot tables
3. World Bank, ‘Scale Economies and Agglomeration’ in World Development Report 2009: Reshaping 23. Deloitte Access Economics, International education in South Australia (July 2016, commissioned by the South Economic Geography (World Bank, 2009)
4. Australian Bureau of Statistics, Australian National Accounts: State Accounts, 2015-16, cat. no. 5220.0 24. South Australian Chamber of Mines and Energy, Oil & Gas Production
5. Ibid. 25. Australian Bureau of Statistics, Mineral and Petroleum Exploration, Australia, Dec 2016, cat. no. 8412.0 (27 February 2017). 6. Australian Bureau of Statistics, Labour Force, Australia, Mar 2017, cat. no. 6202.0 (13 April 2017). 26. Department of State Development, South Australia’s renewable energy future (2016)
27. Tourism Research Australia, Travel By Australians: December 2016 Results of the National Visitor Survey 8. Australian Bureau of Statistics, Australian National Accounts: State Accounts, 2015-16, cat. no. 5220.0 (29 March 2017)
9. Australian Bureau of Statistics, Australian National Accounts: National Income, Expenditure and Product, Tourism Research Australia, International Visitors in Australia: December 2016 Quarterly Results of the Dec 2016, cat. no. 5206.0 (1 March 2017). International Visitor Survey (15 March 2017)
28. Ibid. Australian Bureau of Statistics, Australian National Accounts: State Accounts, 2015-16, cat. no. 5220.0 (18 November 2016). 29. Australian Bureau of Statistics, International Trade in Goods and Services, Australia, Mar 2017, cat. no. 5368.0 (4 May 2017). 10. Australian Bureau of Statistics, Australian National Accounts: State Accounts, 2015-16, cat. no. 5220.0 (18 November 2016). 30. Deloitte, Building the Lucky Country #6 – What’s over the horizon? Recognising opportunity in uncertainty (2017)
31. Department of Education and Training, Higher Education Statistics – 2015 12. Department of Planning, Transport and Infrastructure, Population Projections and Demographics
32. Australian Bureau of Statistics, Australian National Accounts: State Accounts, 2015-16, cat. no. 5220.0 13. Australian Bureau of Statistics, Population Projections, Australia, 2012 (base) to 2101, cat. no. 3222.0 (18 November 2016). (26 November 2013).
33. Ibid. Figure comprises professional, scientific and technical services; financial and insurance services; and rental, 14. OECD, Migration Policy Debates – Is migration good for the economy? (May 2014) hiring and real estate services.
34. Deloitte Access Economics, Trends – Blue skies for ‘white collar’ professions (November 2016) 15. Kerry Carrington, Alison McIntosh and Jim Walmsley, The Social Costs and Benefits of Migration into Australia (2007)
37. World Bank, Ease of doing business index < http://data.worldbank.org/indicator/IC.BUS.EASE.XQ>. 18. Australian Bureau of Statistics, Australian Demographic Statistics, Jun 2016, cat. no. 3101.0 (15 December 2016).
38. Office of the Chief Economist, Department of Industry, Innovation and Science, Australian Innovation System 19. Australian Bureau of Statistics, Births, Australia, 2015, cat. no. 3301.0 (8 November 2016). Report 2015 (2015) < https://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/ Australian-Innovation-System/Australian-Innovation-System-Report-2015.pdf>. 20. Deloitte, Building the Lucky Country #3 – Positioning for prosperity? Catching the next wave (2014)
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Make it Adelaide Action 4
Make it a plan Adelaide Answer 3
Make it your Adelaide Ask 2
Make it big Adelaide Acknowledge 1
Phase 2 Make it your Adelaide > Ask is set to engage South Australian business, government and community leaders. Together we will engage in workshops and summits to develop sector based interim findings and shape a vision for the South Australian economy. Our final report will synthesise the refined ideas and diverse insights collected throughout this journey. For more information visit www.deloitte.com.au/makeitadelaide www.shapingfuturecities.com.au
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