Directions for South Australia – Economic Platform

“South Australia must become a place where we build things again. Let’s harness the skills of our people and do it.”

Introduction:
In these times of broad macro-economic change, South Australia can strengthen its local economy by focussing on the micro-economic picture.   It is important to Dignity that this focus includes putting people at the centre of all that we aim to achieve.   There is constant reinforcement through the media that we are living in increasingly uncertain times and the best move for our state is to grasp the opportunity to control those aspects of the economy where we can make a difference.   In so doing, we will strengthen both our people and our economy and increase our resilience against market fluctuations.

To boost South Australia’s economy and improve the lives of South Australians, Dignity recommends that we explore and exploit the potential of:

• Growing Small to Medium Enterprises (SMEs) in the new economy
• Universal design / universality
• Accessible and ageing tourism
• Excellence in education / apprenticeships
• Training for new jobs in healthcare and social assistance
• Planning for more people with disabilities (PWD) in the workforce
• Identifying and removing barriers to public sector employment for PWD
• Increasing social inclusion / diversity in the workplace
• Growing opportunities for PWD in the Arts
• Greater range of financing small entrepreneurs, e.g. microfinance, peer-to-peer etc.
• Replacing gambling as a source of revenue
• Boosting innovation and entrepreneurship

Stemming economic irrationalism
The Dignity Party believes we should listen to rational economic advice from bodies such as the South Australian Centre for Economic Studies (SACES).  Their recent paper, Development Strategy for Reinventing South Australia, contains a succinct historical analysis of the State’s current economic situation and some well-considered recommendations for overhauling the South Australian economic environment with a focus on the role of government.

Dignity supports further consideration of the SACES recommendations including:

• More effective evaluation of public policy and programs, including industry assistance
• An independent, State-based Productivity Commission
• Reforms to the way government services are funded and delivered, such as greater roles for NGOs and Local Government
• Better integrate government services including public housing and social programs
• Investigating better ways to address ‘wicked problems’ than with short-term and administratively costly grant programs
• More comprehensive funding and delivery of health services, including GPs, hospitals and aged care.

‘Buildelaide’ – learning from Mittelstand, SMEs in the new economy
How could SA learn from the German experience of growing small (up to 20 employees) to medium sized (up to 500 employees) enterprises (SMEs) as a major sector of its economy?  The Mittelstand entities are characterized by their stable employment, labour intensity, high growth, export-orientation, entrepreneurship, innovation, specialization, flexibility, and their skilled, vocationally-trained workforce.  The Mittelstand has historical roots in medieval craft guilds and carries on the tradition of craftspersons.  The political and economic environment that supports Mittelstand is characterized by a ‘comparatively constructive relationship between the state, employers and employees in Germany.’

With the decline of traditional large manufacturing firms, it is likely that SMEs will form much of the base of manufacturing in SA.  In addition, while employment in manufacturing has been falling in several subsectors like motor vehicles, pulp and paper, structural metal and furniture, some small manufacturing areas have grown significantly.  These include transport equipment and specialised machinery and equipment.  As SACES stated,
It is likely this employment growth is occurring in generally small and very specialised or adaptive firms … servicing other growth sectors in agriculture, horticulture and mining, particularly in production and logistics; and healthcare.
SA can encourage and support the development and growth of SMEs in these niche areas using appropriate public policy to promote the right conditions for growth, rather than trying to ‘pick winners’.  We can also support such growth by embracing the digital economy and promoting prudent innovations in capital funding and digital payment technologies.

New manufacturing
SA could incubate and develop manufacturing in niche markets such as aids and equipment for people with disabilities.  There is a growing potential due to the introduction and expansion of the National Disability Insurance Scheme (NDIS).  Existing examples include Technology for Ageing and Disability SA Inc. (TADSA) and portable ramp manufacturers.

SA should expand opportunities for initiatives such as hubs or incubators for start-up businesses.  For example, Hub Adelaide and Renewal SA projects offer incentives to entrepreneurs and businesses to start and develop in SA.

Digital economy
Cryptocurrencies are innovations in electronic payment using encryption techniques to regulate the generation of units of currency and verify the transfer of funds.  They do not rely on access to a central third party (like a bank) to process payments securely.  While BitCoin has attracted controversy, the technology that enables digital currency, a distributed ledger (block chain) is a significant innovation that is becoming mainstream.   Digital currency is providing another means of payment for crowdfunding campaigns and for investment in SMEs.

Alternative financing models

Microfinance
There is a need for low-cost financing for PWD who are, or wish to be entrepreneurs.  What learnings can be gained from overseas or Australian models of microfinance to improve the economic viability of people of lower socioeconomic status (PWD & others)?
From origins in Bangladesh in the mid-1970s, modern microfinance has grown as a means of alleviating poverty in the developing world, particularly for women (albeit not without some criticism).  In Australia, not-for-profit organisations such as Good Shepherd and Many Rivers provide no-interest or low interest loans to individuals and communities.  They are in partnership with major banks, NAB and Westpac respectively.  In SA, Anglicare, Uniting Communities and others are microfinance providers to low-income people.
In recent decades the concept has spread to developed economies as one of a range of new means of financing for small entrepreneurs.
Entrepreneurs in both developed and developing economies now use microfinance, crowdfunding, and peer-to-peer innovations individually, or in combination, to exploit opportunities they identify but for which more traditional financing is not readily available.

Crowdfunding
Over the past decade new ways for SMEs to attract funding have grown quickly.  Such funding avenues may overcome the banking sector’s more conservative attitude to lending since the Global Financial Crisis.  Crowdfunding is “a method of collecting many small contributions, by means of an online funding platform, to finance or capitalize a popular enterprise.”

Modes of crowdfunding include:
• Rewards-based, which attracts online investors by offering them a reward such as a discounted product.
• Debt-based, also known as peer-to-peer (P2P) lending or marketplace lending.  Investors earn a small percentage of repayments.
• Equity, to attract investment capital for an enterprise or infrastructure project.
• Donation-based, to attract donors to charities and philanthropic causes.

Innovation and entrepreneurship
There are two prongs to the importance of entrepreneurship in this economic framework.  One is the need to encourage PWD as entrepreneurs and business innovators.  The other is to harness entrepreneurs generally as both innovators and manufacturers of health and disability products and services as well as employers of PWD.

The University of South Australia (UniSA) and the University of Adelaide both offer degree courses in Innovation and Entrepreneurship.  UniSA’s website states:

Through the study of innovation and entrepreneurship, you will develop the enterprising mindset crucial for finding creative, innovative and useful solutions in business and social enterprises.

The Australian Government’s National Innovation and Science Agenda includes a range of assistance for startups and entrepreneurs.   The Agenda includes help with commercialisation from the CSIRO Innovation Fund, crowd-sourced equity funding, tax breaks to encourage investment, accessing venture capital, and incubators and accelerators.  The primary focus is on providing access to the best advice and networks to solve entrepreneurs’ problems, ensuring long-term growth and success.

Universal design
As our nation/state designs public policies and programs with universal objectives, intent and application, we could adopt universal design for everything we plan, build, use, manufacture and export.  The Norwegian government is working towards the country being universally designed by 2025.
Universal design means that everything should be designed for everyone.  Universal design is defined in the United Nations Convention on the Rights of Persons with Disabilities (ratified by Australia on 17 July 2008), as follows:
“Universal design” means the design of products, environments, programmes and services to be usable by all people, to the greatest extent possible, without the need for adaptation or specialized design. “Universal design” shall not exclude assistive devices for particular groups of persons with disabilities where this is needed.

Implementing Universal Design in SA could mean that all public transport is accessible, all new and newly modified buildings have an accessible main entrance, all public housing is accessible for all, accessible car parking to enable ease of access for PWD, Information and Computer Technology is accessible by all users, and education facilities are accessible by all.  Having a universally designed State could greatly boost our domestic and international tourism.
Universally designed buildings and public spaces would also be likely to reduce the incidence of injuries due to falls.  Currently more than 40% of injuries needing hospital admissions in SA are caused by falls.  This is ten times higher than the injuries caused by motor vehicle accidents.  65% of these fall injuries are suffered by people aged over 65.

Accessible and ageing tourism
Mandating Universal Design for public transport, airports and hotel accommodation would enable SA to market itself as an accessible tourist destination.  Priority would also need to be given to adapting tourist attractions such as outdoor environments, sporting facilities, cellar doors, monuments and buildings of natural and cultural significance to be universally accessible.

Excellence in education / apprenticeships
SA could promote itself as a centre of inclusive and excellent education, to foster and develop the abilities of all people with disabilities to lead dignified lives and participate in the economic life of the community.  Excellence in education should extend to greater availability of apprenticeships for people with disabilities.

Training for jobs increase in healthcare/social assistance and retail
The healthcare and social assistance industry employs more people than any other industry in Australia (11.6 percent of the workforce in 2011) and a greater proportion in South Australia (13.6 per cent).  The SA Training and Skills Commission (TaSC) predicts that this industry will continue to grow and employ 18.3% of the workforce by 2025.

The TaSC has also highlighted the training implications of the NDIS projecting that it will create an additional 3,000 jobs in SA’s disability sector.  The TaSC points to the risk that the sector may not have the ability to meet the demand for skilled disability service workers.

The SACES Economic Issues Paper No. 49, “Development Strategy for Reinventing South Australia” states: It has not only been manufacturing employment that has fallen as a proportion of total employment, but industries including manufacturing, mining and quarrying, electricity gas and water, and construction (in 11 developed countries) … This is a long wave phenomenon.  The services sector which no doubt includes growth in services to each of the industries above and the remarkable growth in essentially “human service development” has experienced strong and continual growth since the 1960s (from less than 50% to nearly 80% of total persons employed, Australia-wide).  

Planning for more PWD in workforce
People with disabilities are grossly under-represented in the workforce.  According to the ABS, the labour force participation rate for working-age people (15-64 years) with disability in 2012 was 52.8%.  In the same year, the participation rate for working-age people without disability was 82.5%.   Research suggests that increasing employment of PWD would have significant benefits for the economy.

The economic modelling presented in this report (The economic benefits of increasing employment for people with disabilities, August 2011.  Deloitte Access Economics) suggests that closing the gap between labour market participation rates and unemployment rates for people with and without disabilities by one-third would result in a cumulative $43 billion increase in Australia’s GDP over the next decade in real dollar terms. The modelling also suggests that GDP will be around 0.85% higher over the longer term, which is equivalent to an increase in GDP in 2011 of $12 billion.

The Productivity Commission Inquiry Report, Disability Care and Support, July 2011 (that launched the NDIS), needs to be put into the South Australian context.  What can SA gain economically by following the Productivity Commission report model in terms of workforce participation of PWD and family carers?
Businesses should be encouraged to hire people with disabilities (e.g. by reducing payroll tax).  In the building sector (particularly private dwellings), how can we diversify the workforce and include universal design to improve safety and accessibility for all?

Identifying and removing barriers to public sector employment for PWD
The UN Convention on the Rights of People with Disabilities commits States Parties (including Australia) to safeguard and promote the right to work of people with disabilities, by taking appropriate steps, including employing people with disabilities in the public sector.

As Hon Kelly Vincent highlighted in March 2015, the South Australian State Government employs only 1.24% of people identifying as having a disability, the lowest level of any Australian state, territory or Commonwealth bureaucracy.  South Australia’s performance is significantly lower than Queensland (5.0%), Victoria (4.0%) or the Australian Public Service (3.0%).  Representation of employees with disabilities in the APS has been in decline since 1997.

The main barriers to employment of people with disabilities are the attitude of employers.

It makes good business sense to employ people with disability. Evidence has shown they tend to:
• take fewer days off, take less sick leave and stay in jobs for longer than other workers
• have fewer compensation incidents and accidents at work compared to other workers
• be more affordable, as recruitment costs are often lower
• build strong relationships with customers
• boost workplace morale and enhance teamwork.

Social inclusion / diversity
Recent research by Deloitte  suggests that improving diversity in the workplace and actively making the workplace more inclusive, leads to improved business performance.  Thus, at an enterprise level, employing a greater proportion of people with disabilities in an inclusive workplace could have broad benefits.  These would be in addition to the economic benefits projected in the research cited above.

The Arts
The Dignity Party advocates for greater support for PWD to be involved in the arts.  What opportunities exist for PWD in ‘niche’ arts sectors?  For example, equipment/staging, electronic games, animation, tournaments?  Capitalising on major arts initiatives, e.g. staging of large productions, concerts, festivals?

What current opportunities exist for people with disabilities in creative industries in SA?  The Victorian Government report, Picture This; Increasing the cultural participation of people with a disability in Victoria concluded:
During the community consultation there was a detectable underlying mood of hope and optimism that the findings of this research, in conjunction with the National Arts and Disability Strategy, would lead to significant positive outcomes for people with a disability – as audience members, creators and arts workers. 

There is scope for increasing the participation of people with disabilities, as employees, volunteers, trainees and audience or consumers, in all sectors of the arts and other creative industries as they exist.

Opportunities for people with disabilities could also be increased in the existing sectors through growing the significance of the creative industries in the economy.

In addition, a more holistic approach to creativity and culture and their application to the economy as a whole may have the potential to increase employment generally.  In combination with other initiatives, this could have spin-offs for more employment and other involvement of people with disabilities.

Replacing gambling as a source of State revenue

Poker machines were introduced to South Australia in 1994.  InDaily journalist Kevin Naughton wrote in 2014 that
… two decades on, welfare advocates and one of the state’s key economic analysts argue the social and economic cost to the state has been enormous, with more than $12 billion being fed down the gullets of the state’s gaming machines in that time.  Women have borne a huge burden, with evidence that a large proportion of female prison inmates are there as a consequence of pokie addiction.

In 2017, The Conversation published an article by two academics analysing 42 studies of the social impact of poker machines.  The authors wrote that “current annual losses on pokies in pubs and clubs for Australia amount to $633 per adult.  ($545 per adult in SA.)”  

The SA Government revenue from poker machines was $284 million in 2015-16.  This is a large amount but it is only about 1.5% of all State Government revenue.
As an example, one way of replacing the revenue from poker machines would be to add a small additional tax to alcohol.  According to the ABS, South Australians consume about 1 billion standard drinks of alcohol per year.   Charging a State tax of less than 30 cents on each standard drink would replace the current revenue from poker machines. This, or equivalent measures need to be discussed in the next parliament.

Dignity proposes that South Australia establish a staged plan to eliminate poker machines so that the damage they cause to problem gamblers and their families can be stopped.
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Action:

Dignity Party supports rational ways to grow the South Australian economy and increase opportunities for our disadvantaged citizens to fully participate.
In South Australia we must:

• Grow SMEs, build new manufacturing in niche markets, boost innovation and entrepreneurship and open up a wider range of financing sources
• Apply Universal Design and take advantage of accessible and ageing tourism
• Excel in education and training for new jobs in healthcare and social assistance
• Plan for more people with disabilities (PWD) in the workforce, increase diversity in the workplace, remove barriers to PWD in the public sector and in the Arts
• Replace gambling as a source of revenue

Dignity Party OPPOSE irrational economic policies and decisions.

Dignity Party PROPOSE building on SA’s growing healthcare and social assistance industries with a truly inclusive workforce.

References:

South Australian Centre for Economic Studies (SACES). “Development Strategy for Reinventing South Australia”, Economic Issues Paper Series Number 49, January 2018.

Jörg Meyer-Stamer / Frank Wältring.  “Behind the Myth of the Mittelstand Economy.  The Institutional Environment Supporting Small and Medium-Sized Enterprises in Germany”, Institute for Development and Peace at the Gerhard-Mercator-University Duisburg, Report 46/2000.

SACES. ‘Where Do We Go From Here? South Australia’s Economic Prospects Going Forward and the Role of Government.’ Economic Issues Paper Series Number 45, July 2015.

http://www.bankofengland.co.uk/banknotes/Pages/digitalcurrencies/default.aspx

Garry Bruton, Susanna Khavul, Donald Siegel and Mike Wright. “New Financial Alternatives in Seeding Entrepreneurship: Microfinance, Crowdfunding, and Peer-to-Peer Innovations,” Entrepreneurship Theory and Practice, January 2015.

David M. Freedman and Matthew R. Nutting. A Brief History of Crowdfunding Including Rewards, Donation, Debt, and Equity Platforms in the USA. 22 June 2015

Australian Department of Industry, Innovation and Science. National Innovation and Science Agenda.  http://www.innovation.gov.au, 5 December 2015.

SA Health. Falls Prevention. http://www.sahealth.sa.gov.au, 2016.

Australian Institute of Health and Welfare (AIHW). Admitted Patient Care 2015-16; Australian Hospital Statistics. https://www.aihw.gov.au, 2017.

SACES EIP No. 49

Australian Bureau of Statistics. 4433.0.55.006 – Disability and Labour Force Participation, 2012.  Released 5 February 2015.

www.Business.gov.au

Deloitte Australia and the Victorian Equal Opportunity & Human Rights Commission, Waiter, is that inclusion in my soup?; A new recipe to improve business performance. Research report, November 2012.

Office for Disability, Victorian Department of Planning and Community Development, https://creative.vic.gov.au, 2010.

Kevin Naughton, “Counting the Cost: 20 years of Pokies in SA”, InDaily, 18 July 2014.

Martin Young and Francis Markham  “Three charts on: Australia’s addiction to poker machines”. The Conversation. https://theconversation.com, June 27, 2017.

4307.0.55.001 – Apparent Consumption of Alcohol, Australia, 2015-16, http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/4307.0.55.001 , 1 September2017