Productivity Commission says low wages, cheap office space gives SA an edge

A new productivity report says SA’s competitive edge comes in the form of low hourly rates for workers and low-cost office space.

Low wages and cheap office space have been celebrated as economic strengths for South Australia in a new report by the agency established to monitor productivity.

The South Australian Productivity Commission has released a new report focused how the state compares, in terms of economic competitiveness, to the rest of the country.

The report, that focused on the two decades before the coronavirus pandemic, said areas of competitive advantage in SA, include:

RELATIVELY low hourly labour costs and low-cost commercial office space

ELECTRICITY supply reliability

COMPETITIVE airport charges, and

IMPROVING rail freight transit times.

However, the state was marked down for a number of reasons including

LESS educated, less mobile and older workforce than the national average

RELATIVELY low port productivity, and

INNOVATION performance below the national average.

SA Centre for Economic Studies executive director Michael O’Neil said SA needed to play to its strengths.

SA Centre for Economic Studies executive director Michael O’Neil, who helped to prepare the report, said the report shows the state needs to continue to trade on its strengths in niche markets.

Mr O’Neil said Lot Fourteen and a new Aboriginal art gallery at that site were perfect examples that the State Government should continue to focus attention on.

He listed premium wine and food as niche areas SA should continue to remain world-renowned for.

“The thing about young people is that they provide an economic dividend to an economy,” he said.

“We really need to build on the innovation and entrepreneurship opportunities that young people have taken up.”

Mr O’Neil said a focus on international students, bolstering adult education and continuing to offer opportunities for young people, like Adelaide did by opening up the small bar scene, would help to keep more young people in SA.

Property Council SA chief Daniel Gannon said the report provides insights into how the state can rebound post-COVID.

“South Australia is the beneficiary of many national competitive advantages like median house price and commercial office rents, which will hold us in good stead when residents and businesses look to re-establish in a post-COVID world,” Mr Gannon said.

“Throughout the pandemic, we’ve created an environment that is becoming increasingly attractive to future residents and workers, and it’s a ‘first mover’ advantage we need to capitalise on.

“Low office rent and labour costs can lead to deeper investment in businesses and greater long-term investment in workers.

In many ways, Adelaide is the nation’s ‘comeback capital.”