What Ails Adelaide in Under 500 Words

From my new home in the leafy surrounds of Surry Hills, I’ve been continuing to debate that age old chestnut of ‘What Ails Adelaide?’. And not only have I developed the following hypothesis, but I’ve managed to keep it to under 500 words. Please do let me know what you think – it is just a hypothesis.
For those who like their blog posts long, and those who like checking my research, there is an additional footnote on the ABS stats I was going through when I was writing this.


 Adelaide’s basic problem has two parts:

(1) It needs to innovate so it can compete, culturally and economically, in a globalised economy focused on the production of knowledge over primary goods or manufacturing.

(2) Innovation generally involves risk taking. Adelaide has a ‘risk averse’ regulatory environment that lessens its capacity to produce innovation and retain ‘knowledge workers’.

Adelaide thus struggles to attract the ideas and activities that would allow it to compete with other, larger and better connected cities.

This is an old problem. Adelaide was founded to be a wheat and wool feeder to the British Empire, not compete in a global, knowledge based economy. It’s too far away from everything. It did fine in the protectionist environment of Menzies but when Australia started deregulating in the 1970s, and after the dollar floated in 1983, it struggled, particularly after the State Bank collapse. People started leaving it during the Nineties for cities that competed better. That’s now reflected in the 30 Year Plan for Greater Adelaide’s comments about the lack of a ‘working age population’. (see Note 1)

Paradoxically, Adelaide is great at producing innovative thinkers and has very supportive conditions: low living costs, three universities, major festivals and the kind of cross-disciplinary collegiality that happens in a small city. It’s a good, cheap place to try out new ideas, safe in the knowledge that if they don’t work you’ll still be able to afford the rent.

It also had a bit of a head start, because Dunstan’s reforms pushed it towards a knowledge economy early with funding for major flagships producing a level of ‘cultural excellence’ beyond that available interstate. Unfortunately, over the last four decades, every other state has developed major flagships, so that no longer makes Adelaide unique.

Additionally, Dunstan’s ‘top down’ mentality is counterintuitive to the ‘bottom up’ nature of innovation. We see this in the current attitude that a publically funded mimicry of Melbourne, Copenhagen and Portland will allow Adelaide to compete with Melbourne, Copenhagen and Portland. The obvious flaw is that a ‘working age population’ would rather be in a city where they can innovate and make their own ‘vibrancy’ than live in a city where civil servants supply ‘vibrancy’ like it’s a service akin to rubbish collection or street sweeping. To be fair, this is a mistake being made by the local government sector in numerous struggling regional centres both in Australia and internationally.

This leaves us with a conundrum. South Australia needs risk takers and innovators. It can’t compete for the top of the food chain, but it can definitely compete for grassroots and start-ups, and it could grow them. It would need to let this happen organically, because that’s how innovation works. Unfortunately, the ‘risk averse’ regulatory environment, combined with a remnant faith in ‘top down’ culture left over from Dunstan, hinders its capacity to recognise, let alone grow, this smaller, less glamorous portion of the cultural environment and knowledge economy.


(Note 1) On Population Increase and Economic Strength, for Those Who Prefer Long, Dull Blog Posts
I know people will contest this with the usual ‘Everyone is going to move back!’ mantra, and I know there was an article in The Advertiser saying Adelaide’s experiencing an increase in returning South Australians as people move back from overseas because of the GFC’s impact on the labour market. And I recognise the GFC does make Adelaide more competitive globally and it’s probably still too early to see solid stats on how that will impact South Australia – but it will probably be positive, so long as housing costs stay down.
For the record, I’ve based my reading largely on the ABS 2012 Australian Economic Indicators data set, in particular the longitudinal data from 13500DO012_201207, Tables 3 and 4 on ‘Gross State Product and State Final Demand’. Economists, please do feel free to critique my approach and check my figures as I’m neither a demographer nor an economist.
I’ve looked at state by state records, which start in 1989 and go up until 2011, and the GDP stats which go back to 1964. To my eye, GDP begins to speed up in fits and bursts during the Seventies, and then pick up pace properly in the Eighties. It grows substantially in 87-88, and then responds to the “recession we had to have”, which seems to show up in Australia in 1991 (the year of the State Bank collapse). Things seem to improve in about 1994.
I was considering the rate of growth for each state. Victoria and NSW are relatively sedate because, I think, their growth happened earlier. NSW’s GSP increases by a factor of 1.71 from 1999 to 2011, whilst Victoria goes up by 1.84. Better comparisons to SA are WA and Qld, which had a similar reliance on primary goods and manufacturing and distance from global markets. Queensland more than doubled its GSP, with an increase of 2.36, from 106,215.00mil to 251,615. In 1989, SA was relatively close to WA, with a GSP of $52,043.00mil compared to WA’s $74,947.00mil, in relation to an estimated residential population of 1,371.2mil to WA’s 1,418.6mil. Except, by 2011, WA’s GSP has increased 2.43 times, whilst SA’s goes up by 1.64, and their population is up to 2,352.2mil compared to SA’s 1,638.2mil.
On the whole, SA is probably more comparable to Tasmania, which increased by a factor of 1.55 and has similar rates of birth and population growth as SA. For the record, whilst the population stats in this data set do show SA with a gradual increase, they still don’t seem to be growing as fast as most of the other states.
There’s also some interesting stuff from Kathryn David, Kevin Lane and David Ormond’s article, “The Recent Economic Performance of the States”, in the March edition of The Bulletin going through Reserve Bank’s stats. Note page 6 which shows that Tasmania and SA are the only states to have a relatively static population growth in the Nineties. It does go up slightly in first decade of the new century, whilst NSW and Vic slow down. That could be because of the rising house prices interstate, or the more active attempt to court migrants that started in SA, from memory, around 2003.
If you can offer me stats that undermine this, I’d love to be conclusively proven wrong.
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6 responses to “What Ails Adelaide in Under 500 Words

  1. The solution for the problem as you state it, is for the state government to create a regulatory body charged with the task of reducing/removing ‘risk averse regulatory frameworks and environments’. Something like a ‘cut the red tape commissioner’, or ‘the Dept of getting shit done’ perhaps the State Gov could lure you back from Syd to take up the role as the ‘OMG thats the stupidest regulation ever Ombudsman’. Each ruling will be accompanied by a 500 word report/blog post, no footnote limit.

  2. The City Council and the Government are like helicopter parents with great ambitions for their child but are too micromanaging to let the kid find out what it likes to do, what it can do and how it might do it. As a result what we get is a choregraphed performance of innovation. When I put this to the Lord Mayor in a tweet he cavilled over the word “choregraph”, preferring “curate”. Potato-Potarto, Steven.

    • Local government is no better suited to ‘curating’ the culture of a city than it is curating a major festival. If Fringe had been curated by local government, it would still be a tiny little event. Arguably they can have positive impacts by managing their regulatory processes to foster growth whilst managing risk, but ‘curating’ the city is a bit like asking the librarians to write all the books in a library. They can’t do it, and if they tried you’d lose so much diversity and quality work it wouldn’t be worth it.

  3. Pingback: On pinholes & the Under 7′s | tim horton_ blog

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