OPINION
South Australian economic activity set to bounce back South Australia continues to be one of Australia’s steadiest economies despite COVID-19 challenges, with one senior economist predicting the state’s history for manufacturing might even provide longer-term growth opportunities. Shane Oliver, head of investment strategy and chief economist, AMP Capital, says South Australia has been less affected by Coronavirus than other states and territories, which will help the economy bounce back from restrictions faster. “Generally, those states that have controlled the virus with less severe lockdowns will come out of this better,” reasoned Oliver. At the end of the first week of June, South Australia had recorded just 440 cases of COVID-19 and four tragic deaths1. By comparison, neighbouring Victoria, had recorded 1,685 cases and 19 deaths. In early June, South Australian pubs, gyms, cinemas, places of worship, beauty salons and other sites were allowed up to 80 people on their premises as long as they could comply with appropriate safeguards2. SA Premier Stephen Marshall said, “Thousands of jobs throughout our state will now potentially be reactivated earlier and in greater numbers, fasttracking our economic road to recovery in a safe and responsible way.”
just yet,” said James Trimble, General Manager, Raine & Horne. “Enquiry for industrial property led the way and didn’t drop off during the period of restrictions. “There is improving enquiry for office and retail but there is not enough stock.” On the residential property front, valuation firm, Herron Todd White reports the SA markets are holding up reasonably well with days on the market for metropolitan Adelaide homes currently at 54 compared to 45 in May 20193. Interestingly, dwelling values have been resilient too, recording a 0.4% increase over the month of May4. By comparison, Melbourne values were down 0.9% in May and Sydney’s housing values dropped by 0.4%.
Oliver commented, “South Australia has done well on this front, where Victoria by contrast will experience a bit of a lag because it had more problems with [infection] clusters. South Australia should come out of this reasonably well.” In a sign of improving business optimism, commercial property group, Raine & Horne Commercial reveals that leasing enquiries for commercial property are collecting pace in Adelaide. “Enquiries from businesses are up but they are not back to the levels we saw before COVID-19
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LONG TERM CHALLENGES REMAIN Before the pandemic hit, the SA economy was expected to grow by 2.5% in 2019-20 and then slow to 2.25% p.a. in each of the three years to 2022-23. Employment was predicted to grow by 2.0% p.a. in 2019-20 and then slow to 2.25% p.a. in subsequent years. SA’s unemployment rate before COVID-19 was 5.8%5. It will be a case of wait and see how growth and employment are impacted by COVID-19. Although, in May, South Australian Treasurer Rob Lucas, reportedly said he was ‘horrified’ at the inevitable debt the state would accrue over coming years, largely due to spending on coronavirus measures6. To fight the economic impact of COVID-19, the SA Government hit hard and early with $1 billion in emergency funding including $650 million for the Jobs Rescue Package as well as the establishment of two new funds – the $300m Business and Jobs Support Fund, and the $250m Community and Jobs Support Fund. There was payroll tax relief, land tax relief and the waiver of liquor licence fees for 2020-21 for those hotels, restaurants, cafes and clubs forced to close as a result of social distancing restrictions. Since March, the Marshall Liberal Government has continued to inject money into the economy demonstrated by the announcement of $33 million for a desalination plant at Kangaroo Island7 which is expected to create an estimated 500 jobs and add over $200 million of economic value to Kangaroo Island in the next 15 years. The Marshall Government also committed $1.3 billion to an education
1
https://www.health.gov.au/sites/default/files/documents/2020/06/coronavirus-covid-19-at-a-glance-coronavirus-covid-19-at-a-glance-infographic_5.pdf
2
https://www.premier.sa.gov.au/news/media-releases/news/fast-tracking-economic-recovery
3
https://static.htw.com.au/HTW-month-in-review-June-2020-Residential.pdf
4
https://www.corelogic.com.au/news/housing-values-edge-lower-may-while-transaction-activity-partially-recovers-sharp-drop-april
5
https://cdn.aigroup.com.au/Economic_Indicators/Economic_Outlook/SA_State_Economy_Budget_2019-20.pdf
6
https://www.abc.net.au/news/2020-05-07/why-sa-could-win-race-to-covid-19-recovery/12220644
7
https://www.premier.sa.gov.au/news/media-releases/news/desal-plant-in-the-pipeline-for-kangaroo-island
8
https://www.premier.sa.gov.au/our-plan/delivering-for-south-australia/better-freight-infrastructure
9
https://www.premier.sa.gov.au/news/media-releases/news/fast-tracking-infrastructure-to-support-local-jobs
