Cheap energy has always been the secret to Australia’s success. It could be SA’s best chance now too | Alexander Downer

South Australia is facing another economic catastrophe and needs to turn fast towards the industry that could change its fortunes, writes Alexander Downer.

When I was a child, Adelaide was Australia’s third city: it was larger than both Perth and Brisbane.

Adelaide was also a heart of national manufacturing. South Australia and Victoria were the crucibles of the car industry.

Adelaide had a whitegoods factory and steel and ship building at Whyalla.

All these years later, look where we are.

Perth and Brisbane have leapt ahead of Adelaide and even Canberra and the Gold Coast are catching us in terms of population.

Manufacturing has evacuated South Australia. OK, there’s still a bit but it is only 11 per cent of the state’s gross state product and much of that is federally funded defence industries. Today the largest employer in South Australia is the health sector and the majority of that is the government.

The last great inflection point for the state was the collapse of the State Bank in 1991.

This simply blew a hole in the state’s economy. Now the steelworks at Whyalla, which employs around 3000 people and is one of the last private sector manufacturing companies in the state, is threatened with closure.

GFG Alliance and Whyalla steel works boss Sanjeev Gupta. Picture: Ben Stansall/AFP

Hopefully it will not but if it does, it will be another State Bank event.

For all the relative decline over the last 30 or so years, South Australians are basically pretty satisfied with themselves.

After all, we have a wonderful standard of living, nice weather, beautiful hinterland around the capital city.

There are plenty of sports events and over the next few weeks we will enjoy the annual Adelaide Festival and Fringe. What’s not to like?

We’re like the Adelaide Crows.

It’s an exciting night out to go to the Adelaide Oval and watch the Crows.

Okay, they haven’t been winning much for the last few years and there’s a sense of momentary but unexpected disappointment when they lose.

But still it’s great to watch AFL footy even if we don’t do very well at it. And the coach hasn’t delivered brilliant results for the team but he’s a good bloke so that’s the main thing. The Crows are a metaphor for South Australia.

Frankly we should have more ambition. Without it we won’t even be able to keep what we’ve got.

South Australia’s dominant ambition in recent years has been virtue signalling.

Billions of dollars have been spent on building windmills and solar farms in order to stop the global climate getting warmer.

This has had two results. One, it has had precisely zero measurable impact on the global climate.

And secondly, it’s given South Australia among the highest energy prices in the whole world. So not surprisingly, few companies large or small see South Australia as a particularly appealing place in which to invest.

It’s easy to take things you’re used to for granted and we are used to a steadily growing economy driven by access to affordable energy.

It was the use of affordable energy that lifted humanity out of almost universal poverty in the middle ages.

Snowtown wind farm operated by Trust Power. South Australia. August 2015. Picture: Christopher Russell

Cheap coal in England triggered the industrial revolution and countries like Australia, the United States and Canada have thrived for the last 200 years partly on the back of cheap, plentiful and accessible energy.

South Australia is blessed with energy resources.

It has gas in large quantities and it also contains the largest uranium mine in the world. We do exploit the gas and could do much better if we were more ambitious. But for political reasons that’s not happening.

What is more, we could make the most of our plentiful uranium resources.

And we could do that in a way which provides reliable energy 24 hours a day without carbon dioxide emissions.

We could build a nuclear power station on the site of the old Northern power station.

Not only would it generate electricity on a reliable basis but it would be possible to use the power station to drive the much needed desalination plant to provide water to Roxby Downs and other projects in the north of the state.

Better still, South Australia could have more than one nuclear reactor power station and instead of using the interconnectors from Victoria and New South Wales to supplement South Australian power when the wind isn’t blowing, those interconnectors could be used to send power on a constant basis into Victoria and New South Wales.

South Australia could become the battery of south eastern Australia.

Is this affordable?

Well, the cost of nuclear power has unfortunately become a party political issue now.

Frontier Economics argues that nuclear power would be 44 per cent cheaper than renewables. If that was true we should get on with it straight away.

And then there’s nuclear waste.

Well, there are nuclear power stations all over the world and more and more are being built as countries aim to achieve net zero with reliable supplies of electricity.

We have plenty of geologically sound places to store waste in South Australia, as the Scarce Royal Commission pointed out several years ago.

If we did that, not only would we have somewhere to store our own nuclear waste but we could store the waste of others, creating a safer world and massive revenue flows for South Australia

But to do these things requires real ambition. We should engage in a massive debate about that.

Alexander Downer was foreign affairs minister from 1996-2007, and high commissioner to the United Kingdom from 2014-18. He is chairman of natural hydrogen and helium gas firm Gold Hydrogen.