Deloitte Access Economics calls $50 billion Future Submarines project a Band-Aid, but says retail sales are up

THE $50 billion Future Submarines project will be a “Band-Aid over ... a large wound”, a Deloitte Access Economics report out today says.

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THE $50 billion Future Submarines project will be a “Band-Aid over ... a large wound”, a Deloitte Access Economics report out today says.

While the project is slated to create thousands of jobs and bring billions of dollars into the economy, the economists are warning that there is still a “pretty rough ride” ahead.

“The good news for the sector — and scary news for taxpayers — is that submarines have replaced cars as the Government’s new pet project,” their regular Business Outlook has found.

“That will provide some support (both for struggling South Australian industries and for the re-election chances of some politicians). But that is a Band-Aid over what will be a large wound as carmakers shut up shop and a chunk of parts makers end up following them.

“Not surprisingly, therefore, we see the next few years as a pretty rough ride.”

While they say “as evil economic rationalists” they were never enthusiastic about submarines Deloitte do concede they are a positive, not a negative for the state.

Meanwhile, the report shows population growth is at a 10-year low. That will tie into fears that SA is set to lose an entire electorate because of its shrinking share of the population.

Census figures will be used to decide whether SA should only have 10 federal seats; at one point the state had 13.

Deloitte partner Chris Richardson says “dodgy demographics” are used to talk down SA, when the underlying truth is more complicated than straight numbers.

SA has an older than average population.

An artist’s illustration of the Shortfin Barracuda submarine, which French company DCNS will build for Australia.

“And they’re retiring faster and more often than Dame Nellie Melba,” the report notes.

The carmakers are set to shut up shop and there will still be “something of a Valley of Death” in Defence as jobs tail off before the continuous shipbuilding program kicks in.

But he said that, overall, SA was not as bad as the other states always said.

The report states that while SA “did get the raw prawn” with the decline of manufacturing, it benefited from not having a mining boom, thereby not becoming part of the boom/bust cycle damaging other states.

According to the report, SA is “closer to the back of the state pack than the front of it”, but Deloitte want to “pick a bone” with that analysis.

Collins-class submarine HMAS Sheean off the coast of WA.

“Although we agree that this state isn’t exactly setting the world on fire, nor is its performance nearly as bad as it is often portrayed,” the report says.

Mr Richardson told The Advertiser: “Too many people have been ready to reach for the sackcloth and the ashes and it genuinely is not that bad.”

Deloitte argues that the unemployment rate has fallen “notably” in the past year, and that wages growth is above the national average.

“And our guess is that you’d be surprised to hear that trend retail sales growth is higher in the south than in any other state or territory,” the report found.