Michael McGuire: Increasingly it seems the Government is mounting a reverse takeover of the private sector in SA

THE answer to the state’s long-term economic health surely cannot rely on bribing international or local companies to come to Adelaide or homegrown companies to stay here, writes Michael McGuire

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SOUTH Australia is in danger of becoming a company state, Adelaide a company city. In the late part of the 19th century company towns were operated and built by a single organisation. In the US, these places tended to be built by the great industrialists of the age.

The railway businessman George Pullman set up Pullman near Chicago. Chocolate bar maker Milton Hershey started a town in Pennsylvania, also named after himself. There were plenty of others, some more successful than others. Pullman’s efforts ended so badly he had to be buried in a lead-lined mahogany coffin which was sealed in concrete to ensure his former townsfolk couldn’t resurrect his body and rip it to pieces. That’s gratitude for you.

The way things are going in South Australia, the place may need to be named Weatherill or Jaysville, although the question of whether he will need a concrete-lined coffin will only be answered sometime after March 17.

At the moment there appears to be only two types of business in South Australia. Government and government-funded. There are somewhere around 106,000 people who are regarded as public servants in the state.

That headcount grew by about 2 per cent last year.

Undoubtedly, the vast majority are working hard and helping the state along the way. The point is not so much to criticise them but to merely highlight how much of the workforce they represent. In total, there are around 827,000 people with a job in SA, according to the ABS.

And now increasingly it seems the State Government is mounting a reverse takeover of the private sector in South Australia as well.

A trawl through government press releases just since the start of the year shows the government has handed out more than $100 million in grants and loans to a wide variety of private sector companies.

Now part of this is easy to read in a political sense. For a long time one of the government’s biggest problems was the state’s unemployment rate. Month after month every time the ABS released its latest stats there was an agonised government response when SA again recorded the nation’s highest unemployment rate.

Making life even harder was the government’s own promise before the 2010 election to create an extra 100,000 jobs by 2016. It fell short by approximately 86,100. Jobs then were a problem. In a political as well as an economic sense.

The solution, as with so many other problems, is to throw more money at the problem. It was a return to the “picking winners’’ philosophy that this Labor government had spent the first half of its administration smashing the previous Liberal government for doing. Then it would regularly wheel out failed examples of the policy such as JP Morgan, Motorola, EDS and Westpac which were all attracted to Adelaide with government handouts.

Now when it is handing over money to multi-billion dollar companies such as Elon Musk’s Tesla and Beach Energy, it’s all about creating jobs.

Which all creates a nice little sugar hit, as well as some attractive press releases which makes it look like you are actually doing something, but has an uncertain long-term benefit.

The answer to the state’s long-term economic health surely cannot rely on bribing international or local companies to come to Adelaide or homegrown companies to stay here.

Can we afford to hand out $100 million every two months? Surely not. But what happens next? What happens when the grant runs out, or the loan is finished? Is the hand put out for more cash? Will the government pay up? Does it become a bidding war with other states? Is this more than a short-term strategy to get through the next election?

Yet, if the government ultimately believes the state economy is so moribund it cannot stand on its own two feet then its options are limited. Is it admitting the private sector cannot exist on its own in this state?

Elsewhere, the Liberal Party talks of tax cuts as some sort of panacea. But the history of trickle-down economics is patchy at best. Large corporations are shareholder and profit driven above all else.

So even when company profits in Australia have boomed, as they have in recent years, workers’ wages have hardly moved.

MICHAEL MCGUIRE IS WRITING A WEEKLY POLITICAL COLUMN IN THE LEAD-UP TO THE STATE ELECTION