Starick: Premier Peter Malinauskas’s dream run hits major economic hurdles

The past few years have been charmed for Premier Peter Malinauskas – but some major obstacles have emerged.

Thrust to power in a landslide in early 2022, Premier Peter Malinauskas has enjoyed a dream run.

His government has chalked up a few popular successes – AFL Gather Round, LIV Golf and returning the Adelaide 500.

There’s been a few policy breakthroughs, like forging a historic university merger. Easing the housing crisis has replaced fixing the ramping crisis – a dramatically unfulfilled election promise – as the government’s flagship agenda item.

Wisely, Mr Malinauskas has enthusiastically embraced the opportunities afforded by the $368bn AUKUS nuclear-powered submarine construction and the $5bn Northern Water project unlocking BHP’s far north copper expansion.

The Premier’s ongoing popularity has been aided by his political acumen and a weakened Liberal Opposition.

LIV golf boss Greg Norman and Premier Peter Malinauskas during LIV Adelaide at The Grange Golf Club. (Photo by Asanka Ratnayake/Getty Images)

But a crucial factor underpinning Mr Malinauskas’s dream run has been shattered. Over the past three to four years, the state economy has been booming and jobs growth has been unprecedented.

Now, though, a slew of surveys shows the state is hitting some major hurdles.

“After a stellar run, the SA economy is now facing a slowdown, with its Stateometer index moving below trend for the first time in more than four years … After this solid run, it seems SA may be following other states into a slowdown,” says the ANZ Stateometer report released on Thursday.

The report’s headlines for SA make uncomfortable reading: “annual wages growth has peaked; extremely tight housing market; underlying business investment drags.”

Premier Peter Malinauskas announcing South Australia's Housing Road Map in a major speech at the Adelaide Convention Centre. Picture: Keryn Stevens

But ANZ is not alone in these grim forecasts.

SA Productivity Commission chairman Adrian Tembel, presenting to an American Chamber of Commerce in Australia event on June 26, said the state’s employment growth over the past three years had been “unprecedented”, resulting in the lowest unemployment rate since the early 1970s.

But wages have not boomed and SA workers have suffered a 5 per cent real wages cut in the past three years.

Mr Tembel cited figures from the June 6 state budget forecasting public sector workers, who comprise almost 15 per cent of SA’s workforce, would suffer an average 4 per cent real wage cut during the next four years.

“It is a bleak outlook … While this is occurring, the state’s loss of its likely better educated young people, after a temporary Covid pause, has resumed. Net interstate migration loss returned late last year for the first time since the commencement of Covid,” he said.

Mr Tembel added that the Productivity Commission’s outlook was more optimistic than flat budget forecasts, particularly over naval shipbuilding, copper demand, Chinese trade and population growth. “This will all collectively, in our view, likely support growth and employment,” he said.

South Australian Productivity Commission chairman Adrian Tembel forecasts a 4 per cent public sector workers real wage cut during the enxt four years. Picture: Matt Loxton

Unfortunately for Mr Malinauskas, who is spending some school holiday time with his young family, the economic tide is turning as his government approaches the launch pad for the next election, to be held on March 21, 2026 – little more than 20 months away.

There are 37 weeks until the traditional kick-off for signature policy releases a year out from the poll.

In March, 2021, Mr Malinauskas unveiled plans for a $593m hydrogen power plan to generate thousands of jobs. This followed the then-premier Steven Marshall unveiling ultimately ill-fated plans for a $700m arena in Adelaide’s Riverbank precinct.

Like countless mortgage holders, Mr Malinauskas will be praying for interest rate cuts to ease pressure on households and businesses. As the Liberals have highlighted, many small businesses are struggling and several prominent ones have closed.

Big job boosts from AUKUS submarines or BHP’s proposed expansion will not flow before the 2026 election.

The economic trend is now no longer the friend of the Malinauskas government. This means testing times are ahead, just as the long battle for power starts to be waged in earnest.

Originally published as Starick: Premier Peter Malinauskas’s dream run hits major economic hurdles