An economic thinktank says SA can get by with five less ministers and consider council amalgamations to boost the economy

UP to five ministers should be ditched to cut energy and water costs - or state risks remaining in the economic doldrums, the South Australian Centre for Economic Studies says.

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THE South Australian Government should ditch four or five ministers and cut energy and water costs or risk the state remaining in the economic doldrums, the South Australian Centre for Economic Studies says.

In a report released on Wednesday, SPACES is also calling for consolidation of local government, pointing out that 19 of SA’s 69 councils have fewer than 3000 ratepayers.

The SACES report, Regulatory Load in South Australia and Impact on Economic Activity, says SA ministers are responsible for less than half the amount of public servants as ministers in other mainland states.

A government spokesman said the report was “long on simplistic generalisations and short on facts to support them’'.

Adelaide University associate professor Michael O’Neil, who co-authored the paper, said SA could operate with just nine or 10 ministers.

The Government is already arguably operating with two more ministers than it would normally have, with Independent MP Geoff Brock and Liberal turncoat Martin Hamilton-Smith joining the government in return for ministerial posts.

Independent MP and minister Geoff Brock

Former Liberal leader and minister Martin Hamilton-Smith.

The cost of each new minister has previously been calculated by the Advertiser at $2 million per year.

Mr O’Neil also said the government should look at abolishing state parliament’s upper house, the Legislative Council.

“While our State already has the second lowest number of government ministers in Australia, 14 ministers is still relatively high when you consider the size of the population being governed,” he said.

“Reducing the number of ministers would likely provide savings in ministerial expenses and co-ordination costs, creating efficiencies.”

Mr O’Neill said the State Government was pushing for a lot of support from the Federal Government in areas such as defence spending and a potential bail out for Arrium, but needed to look at reforming its own inefficient processes.

“If I was the Commonwealth I’d tell the government to have a good solid look at its backyard,’’ he said.

“If you want to transform the economy and manufacturing you’re probably going to have to transform your whole institutional processes. Have a think about whether you need an upper house, have a think about whether you need 69 members of parliament, whether you need 69 local governments.’’

Mr O’Neill said the $168 million O-Bahn extension was an example of political expediency trumping good economic decision making when it came to infrastructure

“It’s basically targeted at four or five marginal seats in the northeastern suburbs,’’ he said.

Mr O’Neill said the money would get a much better return on investment in regional areas.

“If we walk around saying we’re broke and we’re wasting money on stuff like that then I think the Commonwealth would be quite right in saying ‘get your act in order’.’’

The report indicates the Weatherill State Government appears to be failing in its mission to cut regulation and make SA an attractive destination for investment.

On the contrary high electricity and water costs are working in direct opposition to the government’s stated desire to grow its agricultural, food processing and advanced manufacturing industries.

“Our report shows the overall cost to South Australian households of water per kilolitre has been consistently higher than the other mainland States and growing generally faster than interstate,” associate professor O’Neill said.

“The Essential Services Commission of SA (ESCOSA) is required to use values determined by the South Australian Treasurer when setting water prices. The price per kilolitre is often higher than it should be in order to provide SA Water with an agreed rate of return.

“As a result, South Australia has the nation’s highest metropolitan water usage prices ($3.63 per kilolitre) and highest water supply charges ($71.60 per quarter). Compare that with Western Australia ($2.86 per kl), and even with Los Angeles, California (between $2.52 to $3.14 per kl), which has been drought affected for several years.”

The report has also criticised the State Government’s overall efforts at red tape reduction saying its research had found:

— South Australian government regulation reduction activities are, at least in the perception of the business respondents, being outweighed by the cost of new regulation;

— the overall burden South Australian business faces from regulation is above the national average and therefore SA is likely to be below Australia on the Global Competitiveness Rankings; and

— the adverse impact on business decisions or investment activities is likely to be growing.

The report also casts doubt on the government’s budget projections which it says could be suggested to be “‘heroic’ assumptions about the growth in the major items of own — source revenue and, in turn, the return of the net operating balance to surplus.’’

Opposition treasury spokesman Rob Lucas said the Liberal Party had committed to reducing the number of ministers to 13.

More broadly he said the report was a “damning indictment’’ of the State Government’s economic performance.

“That’s highlighted in particular by the refenerces to water and electricity costs, and in particular on the impact on the food processing sector which is supposedly one of our growth sectors.

“The Government has clearly abandoned tackling red tape through its removal of the Competitiveness Council.’’

Mr Lucas said the Liberal Party would introduce a state version of a productivity commission if elected to help tackle over-regulation.

The Government spokesman rejected the claim that SA water prices were the highest in the nation, and said electricity prices were influenced by the behaviour of suppliers interstate.

“The report ignores dramatic tax cuts announced in the last State Budget, which will make South Australia the lowest taxing State in the nation.

“It also fails to acknowledge significant cuts to business costs and improved return to work outcomes flowing from the total reform of the Return to Work scheme in South Australia.

“The State Government also has eight fewer ministers than Victoria and New South Wales.”