THE EDUCATION AND TRAINING ISSUE
Quarterly snapshot
of South Australian
business and economy
powered by Business SA
and Statewide Super.
Quarter 2, 2016
THE PULSE
CONTENTS
Welcome to the second
issue of The Pulse,
a quarterly partnership
of news and information
between Business SA
and Statewide Super.
Mixed messages on the economy............................... 4
The launch of The Pulse in March was very
well received. It delivered relevant insights
from Business SA’s Survey of Business
Expectations (SOBE) which has been tapping
the mood of South Australia’s business
community for the past 15 years.
In this issue, we draw on that heritage and
valuable data to look at the trends of such
key economic indicators as business
confidence, market conditions and the
state of the labour market.
Each issue of The Pulse will be themed.
Inside these pages we explore the vital
subject of education and training with the
SOBE analysis complemented by expert
commentary. In addition, we share stories of
enterprises and individuals that are taking an
innovative approach – and getting results.
Read on and keep up to date with what’s
really happening in the State.
Payroll tax exemption would boost jobs.................... 5
Business confidence and market conditions............ 6
A complex labour market............................................... 8
Learning by productive failure.................................... 10
Keeping workplaces injury free.................................. 12
An empowering apprenticeship................................. 14
The Pulse Economic Barometer.................................. 16
It’s time for bold action on the economy ................ 18
Training away stereotypes...........................................20
The power of training.................................................... 22
The sky is the limit......................................................... 24
Business SA voice heard on policy............................ 26
Quarter 2, 2016
The Business SA- Statewide Super Survey of Business Expectation has a 15-year heritage. In this
issue of The Pulse we have leveraged that historical data to reveal trends in business confidence
and trading conditions in South Australia over the past decade.
While long-term trend shows declining business confidence in South Australia, a closer look at
the past two years indicates survey respondents are becoming more positive after a low point in
late 2013.
Working in partnership for
South Australia’s future.
3
EXECUTIVE SUMMARY
Mixed messages on the economy
Business conditions remain volatile and
financial performance in the March quarter fell
short of expectations, according to Business
SA’s latest survey of members.
However, the quarterly Survey of Business
Expectations (SOBE) also revealed that the
526 survey respondents expected general
business conditions and sales revenue to
bounce back in the three months to 30 June.
The SOBE, an opinion-based survey, taps
Business SA members’ views across a broad
range of economic and financial measures to
establish indices of confidence (at State and
national levels), general business conditions
and sales revenue.
The indices are backed by data reflecting
member perceptions of movement in specific
elements of financial performance including
sales, costs, profitability, employment, capital
expenditure and training expenditure. Against
a neutral baseline of 100 points in the SOBE
indices, a result above or below the baseline
represents the relative optimism or pessimism
respectively of survey respondents.
The March quarter SOBE results contained
some mixed messages on the economy
and business conditions.
Confidence
While confidence in the South Australian
economy has lagged confidence in the
national economy in recent times (as
depicted in the graphs on the following
pages), views of the performance of the
State and national economies were both
weaker in the latest survey.
The SA Confidence Index was down 2 points
to 92.2 in the March quarter while the National
Confidence Index dropped 9.2 points to 121.7
from the December 2015 high of 130.9 points –
the highest level the Index had been since March
2014 and the second highest the Index had been
in the 15-year history of the SOBE.
Conditions
The perception of South Australia’s trading
environment also came off a high in the March
quarter with the General Business Conditions
Index down from 105.9 points in the December
quarter 2015 – the first time the Index had been
over 100 since March 2010 – to 96.4 points.
When members were asked to look ahead
in the December quarter SOBE last year,
they expected business conditions to improve
with an anticipated strengthening of the Index to
109.5 points in the March quarter but the latest
results fell short of that mark.
However, that positive sentiment remains with
March quarter respondents predicting a rebound
in trading conditions and an Index of 102.3
points for the June quarter.
The SOBE data relating to sales performance
told a similar story in the March quarter.
After the Total Sales Index recorded its highest
level since June 2008, at 108.9 points, in the
December quarter 2015, survey respondents
expected a further increase in the March quarter
and an Index of 115.5 points. However, the
outcome in the opening three months of this
year was an Index of 96.4 points.
Consistent with the perception of general
business conditions over the next three
months, survey respondents are expecting
a significant jump back into positive territory
with a sales index of 108.5 points predicted
for the June quarter.
The full results of the March 2016 Survey
of Business Expectations can be found
on Business SA’s website at:
survey.business-sa.com/reports.
Business SA - Statewide Super Survey of Business Expectations
Payroll tax exemption would boost jobs
More than half of the respondents to Business
SA’s quarterly survey would hire extra staff
if the State Government restored a payroll tax
exemption on apprentice and trainee wages.
The positive incentive provided by the
exemption was confirmed by 55 percent of the
526 respondents to the March Quarter Survey
of Business Expectations (SOBE).
Importantly, 30 percent of those considering
taking on more staff said they would hire
someone immediately and a further 46 percent
said they would do so within six months.
Another 21 percent would hire within a year.
Business SA continues to lobby the State
Government to restore the payroll tax exemption
which was dropped in the 2012-13 Budget
only two years after it had been introduced to
encourage a greater uptake of apprenticeships
and traineeships.
In its submission to the State Government
on the Budget – to be delivered on 7 July –
Business SA noted that South Australia’s
youth unemployment at March 2016 stood
at 17.5 percent, more than twice the general
unemployment rate of 7.2 percent.
investment in training over the coming 12
months with only around 5 percent signalling
that their training outlays would decline. Fortythree percent of respondents reported that their
investment in training would remain unchanged
in the coming year.
The SOBE also found that 23 percent of
businesses surveyed exclusively used non-TAFE
training providers compared to just 8 percent
that solely used TAFE. A further 15 percent
used both.
This training usage by businesses in South
Australia is not reflected in the State
Government’s allocation of 90 percent of 51,000
subsidised training places to TAFE in 2015 – a
decision that had direct implications for the
non-government training sector and resulted
in downsizing of non-government training
providers.
Business SA maintains that the heavy
weighting of subsidised training
towards TAFE must be redressed.
The submission went on: “Notwithstanding
Business SA’s broader concerns about the
impact payroll tax has on hiring decisions, it is
clear that young people in particular are bearing
the brunt of South Australia’s weak economic
performance and that the State Government
must use its primary policy lever of payroll tax
relief to redress this situation”.
The SOBE also revealed that a third of
respondents planned to increase their
Payroll tax exemption would boost jobs
5
CONFIDENCE INDEX
The Survey indices reflecting confidence and expectations of market conditions are derived by
asking respondents to describe the performance of the South Australian and national economic
conditions and labour market over the next 12 months.
SA CONFIDENCE INDEX
SA Confidence Index
140
Confidence Index
SASACONFIDENCE
INDEX
(past
years)
(last 22years)
120
100
100
80
90
Mar-15
Mar-16
Mar-13
Mar-14
Mar-11
Mar-12
Mar-09
Mar-10
Mar-08
Mar-07
Mar-06
60
80
70
Mar-14
Mar-15
Mar-16
Since the global financial crisis, business confidence in South Australia’s economy has been
mostly trending downward. While there was a short spike in confidence which began in 2009 and
peaked in 2010, this was predominantly due to the boost provided by the Federal Government’s
economic stimulus package. Following the 2012 decision by BHP to shelve its Olympic Dam
expansion, business confidence has continued to fall and has only rebounded marginally in the
past two years, albeit coming off a low base.
SA CONDITIONS INDEX
SA Conditions Index
SA CONDITIONS INDEX
130
120
110
100
90
80
70
60
SA Conditions
(last 2 years)
(past 2 years)
110
100
90
Mar-15
Mar-16
Mar-13
Mar-14
Mar-11
Mar-12
Mar-09
Mar-10
Mar-08
Mar-07
Mar-06
80
70
Mar-14
Mar-15
Mar-16
The reason for some improving confidence over the past two years has been a slight uplift in
business conditions in South Australia evidenced by a 17.5 percent fall in insolvency rates. The
retail sector’s year on year growth currently tracking at 4.1 percent [1] is also indicative of the
resilience of local consumers who are providing strong support to an otherwise weak economy.
Recent State Government decisions to cut commercial stamp duty, including for business transfers,
can also explain some improved confidence in the business sector.
[1]
ABS, Retail Sales, March 2016
Business SA - Statewide Super Survey of Business Expectations
NATIONAL AND SA CONFIDENCE INDEX
Confidence Index
140
130
120
110
100
90
80
70
60
Mar-06
Mar-07
Mar-08
SA Confidence
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
National Confidence
In contrast to local business confidence in the State’s economy, confidence in the national
economy has remained strong over the past decade, particularly influenced by the mining boom
growth from Queensland and Western Australia and more recently, housing led growth from both
New South Wales and Victoria. Interestingly, confidence in the national economy has actually
decoupled from that of South Australia since late 2013 but that trend appears to be showing some
signs of correcting.
What is evident from Business SA’s most recent survey is a decline in business confidence in
growth prospects for the national economy which fell by 9.2 index points against confidence
in South Australia’s economy which only declined 2 index points. Notwithstanding, the general
level of business confidence in South Australia’s economy is still 24 percent lower than that of
business confidence in the national economy.
Source: Business SA Quarterly Survey of Business Expectations 2006-16
7
MANY FACTORS AT PLAY IN
A COMPLEX LABOUR MARKET
Population growth is an important influence
on the ability of businesses to hire professional,
skilled and unskilled employees.
The recent NAB State Update noted that
SA’s population peaked in 2009, and since
then has slowed with lower net overseas
migration and people leaving SA to take up
opportunities interstate.
In order for local business to be able to grow
and flourish the State needs to keep more
graduates and skilled employees here and
attract interstate and international immigrants,
ensuring SA’s population growth rate matches
the national average.
The South Australian unemployment rate,
as at April, was 6.8 percent – the highest
unemployment rate in Australia and
compares with a national unemployment rate
of 5.7 percent.
However, the State also recorded an increase
in the participation rate in April, which reflects
more people looking for work. The youth
unemployment rate in April dropped from
17.5 percent to 14.4 percent and compares
with a national youth unemployment rate of
12.3 percent.
A high youth unemployment rate and a
high unemployment rate may indicate why
businesses are reporting that it has become
easier to hire unskilled labour, particularly with
an upturn in the participation rate in South
Australia, which shows more people entering
the job market.
Access to skilled labour is very important for
the growth of South Australian businesses
not only in terms of being able to attract and
retain graduates but also for enterprises to
be able to access the training they need for
their employees.
Business SA’s State Budget Submission 2016
called on the State Government to allocate
funding to allow Skill Sets to be utilised by
businesses in priority skill areas.
Skill Sets are not qualifications, rather single
units of competency, or combinations of units
of competency, taken from an endorsed training
package. Skill Sets play a very valuable role
in addressing immediate and transitional skill
needs and enable employees to up-skill and
employers to undertake training that meets a
specific skill need in their business at that point
in time.
The Training and Skills Commission
recently undertook an Industry Priority
Qualification Survey (IPQ Survey) that surveyed
850 employers, individuals, unions, registered
training organisations and industry groups and
asked them to identify priority qualifications in
their industry or sector.
The survey found that of the 1100 qualifications,
Skill Sets and Accredited Courses identified as
a priority by industry, 224 Skill Sets were
identified as a priority and 26 Skill Sets were
marked as high priority.
This identification of Skill Sets through the IPQ
Survey, even though the current policy settings
of WorkReady do not enable Skill Sets to attract
a State Government subsidy, shows that
businesses value Skill Sets as a flexible and
responsive training option.
Skill Sets provide an immediate way to address
skill requirements and ensure that business and
the economy can grow and thrive.
Business SA - Statewide Super Survey of Business Expectations
We asked: How would you rate the change in availability of labour between
the last quarter and the current quarter - easier, the same, harder?
SOURCING PROFESSIONAL LABOUR
40%
30%
20%
10%
Mar-06
Easier
Mar-15
Dec-15
Mar-16
0%
Harder
SOURCING SKILLED LABOUR
50%
40%
30%
20%
10%
Mar-06
Easier
Mar-15
Dec-15
Mar-16
0%
Harder
SOURCING UNSKILLED LABOUR
30%
20%
10%
Mar-06
Easier
Mar-15
Dec-15
Mar-16
0%
Harder
Source: Business SA Quarterly Survey of Business Expectations 2006-16
9
LEARNING BY
PRODUCTIVE FAILURE
Professor Martin Westwell
In the ancient city of Hangzhou, I recently
attended a UNESCO meeting to discuss the future
of education across the Asia-Pacific region.
One Chinese official praised the way in which
the nation’s face-saving culture allows people to
interact with mutual respect and so collaborate
effectively. She went on to say that they have
created a situation in which China’s scientists
were forced to lie and make up their results!
Glances passed between the English-speakers
in the room who heard a translation. Surely the
translator had made a mistake. This was
surprisingly intemperate language from a Chinese
official at an international UNESCO event.
But the translator had got it spot on.
The official continued... claiming the
“corruption of the Academy of Sciences”
was caused by the face-saving culture due
to the inability to fail, or at least an inability to
been seen to fail. She could see that Chinese
scientists need to learn how to fail. Not the
crushing failure of defeat, but the “productivefailure” of responding to an unfamiliar challenge,
of not getting it quite right and going back for
more, recognising that learning has taken place
along the way and the second time will be
better. She could see that Chinese children
need to learn how to fail productively and puts
this at the centre of their education reform.
In my head, the alarm bells started to go off.
If the Chinese kids get good at productivefailure then what will be the consequences
for Australian kids, for South Australians and
for my own two boys? How will our kids be
useful in an increasingly global labour market
against Chinese kids who can roll their sleeves
up and have a go?
In the past, education and training provided
young people with some of the knowledge and
know-how necessary for their future jobs as their
lives and careers unfolded. As problems popped
up, they would know what to do having been
educated or trained to the appropriate level and
some retraining may be needed along the way.
Then the world shifted. Knowledge and knowhow still retain a great deal of value but are no
longer sufficient. “Knowing what to do when
you know what to do” sounds like something
Donald Rumsfeld would say and is useful when
the task at hand is simple, familiar and largely
routine. That is, a job that will be taken by a
computer or a robot.
Now the world demands that, to some extent,
we all need to “know what to do when we
don’t know what to do”. It is here that the need
for productive-failure really kicks in. If our
education and training systems teach young
people only to act when they know what to do,
we will produce a generation who will not be
able to deal with a workplace full of complex,
unfamiliar and non-routine situations. They will
sit in the corner until someone tells them what
to do. Meanwhile, the young people back in
China will be making sure that the labels on the
world’s products no longer say “Made in China”
but “Created in China.”
Of course, on the other side of the coin we do
not want our school leavers or graduates to
throw all caution to the wind and just have a go
at anything. The “how hard can it be” school of
brain surgery, diesel mechanics or accountancy
does not produce many successes.
Somewhere in the middle are young
people who can respond to, and anticipate,
change in a business. They find opportunities
to try things in a different way with strategies
in place to dampen down any negative effects
and amplify the positives. They find a safe
space to innovate and fail. And fail again.
Each time learning how something new can
build on the existing value within a business.
The challenge for us is to make the most
of these opportunities for our own kids.
Our education systems around the world are
trying to respond to the challenge of developing
young people who have a dynamic, productive
disposition in addition to their knowledge and
know-how. In many ways, the public system in
South Australia is ahead of the game.
Professor Westwell is Director of the Centre
for Science Education in the 21st Century at
Flinders University
The Results+ strategy from the Department
of Education and Child Development is a
statewide focus striving for higher achievement
for all children in their test results through
developing a productive disposition to learning
and students’ response to unfamiliar situations
where they do not know what to do.
Our own South Australian Certificate of
Education (SACE) is grabbing international
attention in this regard too. By 2020, it is
likely that ten percent of the young people
who receive a SACE will be Chinese students
studying in Chinese Schools. These schools,
students and parents see the value in our SACE
Research Project and the unusual opportunity
to combine academic and vocational learning
into one certificate.
Through the strengths of our
South Australian public system
Chinese parents and students
see the opportunities to
develop in their young
people productive failure
and the ability to deal
with complex,
unfamiliar and nonroutine situations.
Professor Martin Westwell
11
BUSINESS SA
WORKING FOR…
SA POWER NETWORKS
An empowering apprenticeship
As one of wildest storms to hit Adelaide in
years raged in early May, SA Power Networks’
Jessica Wooley reflected on life as a
maintenance electrician.
Ms Wooley’s initiative and work performance was
recognised in 2015 with SA Power Network’s
Playford Medal for Apprentice of the Year, the first
time the medal had been awarded to a woman.
Ms Wooley also received the ultimate accolade, the
SA Training Awards Apprentice of the Year, in 2015.
An average day at work will find Ms Wooley
conducting maintenance work on transformers,
circuit breakers, isolators, and protection systems
that are at the heart of an electricity substation
and keep the power flowing.
“Stormy days can be painful or interesting because
they always bring faults in the network, and faults More recent times have seen Ms Wooley leading
are another way to learn new things,” Ms Wooley
a team of up to four members as SA Power
told The Pulse.
Networks gave the 23 year-old more responsibility.
The young electrician, who was awarded
Apprentice of the Year in 2015, had, as a child,
always been fascinated by the fact that her
father Nick, an SA Power Network’s linesman,
“had the power to turn the power back on in
weather like this”.
Ms Wooley dismisses suggestions that she
has achieved a lot as a female in a traditionally
male-dominated environment.
“A lot of people say to me: ‘Oh my gosh, you are
a woman in a trade’. But I don’t see it as a magical
thing. Yes, I’m a woman but it shouldn’t be that
big a deal really - not nowadays anyway.”
Her father’s encouragement to consider an
apprenticeship, at a time when Ms Wooley was
looking to move from her home on Kangaroo Island “There are women everywhere but perhaps it’s not
to Adelaide, turned out to be timely and sage advice. that common for one to be Apprentice of the Year.
“I think there’s sometimes a perception, not that
Ms Wooley successfully applied at SA Power
girls don’t know much but that apprentices don’t
Networks to commence an apprenticeship in
know much because they have obviously just
‘electro-technology’ – more commonly known
come
through training.
as an electrician’s trade – at TAFE SA in 2011,
graduating four years later with an outstanding
“As you start your job you are at the bottom
academic record of ten distinctions and five credits.
of the ladder, and that’s to be expected because
everyone else does know more than you.”
And she has not stood still since. Building on
her training achievements, Ms Wooley took her
ideas and energy into the workplace and, with
experience gained in undertaking maintenance
work in electricity substations, designed an
innovative electronic calculation sheet for
measuring transformer test results which has
been incorporated into SA Power Networks’
Quality Management System.
The perception of apprentices not having much
to offer an employer is clearly misplaced with
regard to Ms Wooley.
“I definitely try my hardest at everything that I do.
Whereas a person might go to work to be at work,
I come to work to actually prove that I can do
things, learn things and find new ways to fix things
even though I was only an apprentice.”
“That was a big thing for me”.
Despite leaving Kangaroo Island as a shy 17 year-old, Ms Wooley is now a
confident, self-assured individual intent on enhancing her leadership skills
with front-line management training in-house at SA Power Networks.
Ms Wooley puts that ambition in simple terms – “I like to be in
charge”. It all started with an apprenticeship. “I would definitely
recommend anyone to do an apprenticeship,” she said.
“The hands-on learning as an apprentice keeps you actively
engaged compared to sitting in a classroom where you are
staring at a teacher continually – they might be talking but
you don’t have much involvement.
“In a trade you are being told what to do as you are doing
it, so that knowledge definitely sticks a lot better.”
An apprenticeship has set Jessica Wooley on an
exciting and rewarding career path. It’s a training
option to be considered by both employers and
job-seekers alike.
To discover more about SA Power Networks,
visit www.sapowernetworks.com.au.
Member name: SA Power Networks
Location: Keswick
Members since: 1986
Services used: Training,
policy, publications
For further information
apprenticeshipsupport.com.au
or call 1300 363 831
Apprentice of the Year, Jessica Wooley at work in a substation
13
BUSINESS SA
WORKING FOR…
ST ANDREW’S HOSPITAL
Keeping workplaces injury free
Health and Safety Representatives (HSRs)
are on the front line of a workplace’s Work, Health
and Safety (WHS) regime. Trained to observe the
workplace, engage with colleagues, understand
legal responsibilities and identify and reduce
risks, HSRs make a valuable contribution to the
continuous improvement in an organisation’s
WHS systems.
St Andrew’s Hospital is a complex workplace
involving a diverse mix of patients, staff, and
the general public performing many roles, often
under extreme pressure. As such, it has a higher
WHS risk profile than many other workplaces.
“The role of an HSR is well defined and these
people are of course, at the coalface of our WHS
systems,” St Andrew’s Workplace Health and
Safety Manager, Cos Lamberto, told The Pulse.
By representing workers in their work group,
the HSR provides a means for workers to raise
safety issues within their workplace, and follow
a process to resolve them,” he said.
“While this sounds straightforward, the reality
is that in many organisations, HSRs sometimes
find themselves stuck in an unenviable and very
uncomfortable position of trying to navigate
tension and different views of workers, managers
and the organisation, and the perception that
their role is merely ‘lip service’.”
HSRs are much more than ‘lip service’ at
St Andrew’s. A recent analysis of manual
handling tasks undertaken by HSRs with a view
to reducing the risk of workplace injury saw
the replacement of stainless steel meal trolleys
with new light weight plastic trolleys resulting
in a 24 kilogram lighter pushing force required.
To discover more about St Andrew’s Hospital,
visit www.stand.org.au.
Business SA plays a key role in training HSRs for
St Andrew’s Hospital. It offers training courses
for a wide variety of workplaces that can be tailored
for individual members and clients. Further details
of the training available for the three year terms
of HSRs and refresher courses can be found on
Business SA’s website or by calling Business SA’s
Employer Solutions Sales Manager, Cindy Jackway,
on (08) 8300 0247 or [email protected].
Member name: St Andrew’s Hospital
Location: Adelaide
Members since: 1998
Services used: Training, Business
Advice Hotline, publications
Chief Executive Stephen Walker with Choo Yap-An
15
ECONOMIC
BAROMETER
SA LABOUR FORCE
Trends for March 2016 quarter
Your need-to-know about the SA
economy followed by an economic
overview from Statewide Super’s
Chief Investment Officer, Con Michalakis
Welcome to the March
Quarter of the SA
Economic Barometer
South Australia’s economy stalled in the
March quarter with State Final Demand growth
of zero percent after a downward revision
in December quarter 2015 growth from
0.4 percent to 0.3 percent, according to
ABS seasonally adjusted figures.
The official statistics accord with Business SA’s
March quarter Survey of Business Expectations
where both confidence and conditions retracted,
by 2 percent and 9 percent respectively.
Considering export growth is flat, Business SA
is also expecting the final Gross State Product
figure for 2015-16 to be quite subdued, showing
less than 1 percent growth. By contrast, the
Australian economy is currently growing at
3.1 percent year-on-year.
Unemployment rate
Down 0.1% to 7.2%
Participation rate
Down 0.1% to 62.2%
Full-time employed
Up 5,000 to 531,100
Part-time employed
Down 2,800 to 280,700
Youth Unemployment
Up 1.3% to 17.5%
SA RETAIL TURNOVER
Trends for March 2016 quarter
On a brighter note, unemployment did fall
marginally over the March quarter but still
finished at 7.2 percent, the highest of the States
and Territories. The retail sector remains the
most buoyant sector in the economy, growing
by 1 percent in the March quarter to be up
4.1 percent year-on-year. However, the relatively
strong retail level demand is not translating to
broader economic demand which is reflected
in Adelaide’s CPI increasing only 0.7 percent
year-on-year.
Total SA retail turnover
Up 1% for quarter and up 4.1% year on year.
Key movers for quarter
Key movers for quarter – Clothing
retailing (up 8.9 percent) and
hardware, building and garden
supplies retailing (up 6 percent).
SA RESIDENTIAL
BUILDING APPROVALS
SA CPI
Trends for March 2016 quarter
Trends for March 2016 quarter
Total dwelling units
Down 0.4 percent for quarter and
Down 4.2 percent year on year.
Private sector houses only
Down 2.5 percent for quarter and
down 1.4 percent year on year.
Total dwelling units
(excluding private houses)
Up 3.9 percent for quarter and
down 9.8 percent year on year.
Key movers for quarter
Down 0.3 percent for quarter
but up 0.7 percent year on year.
Electricity (+4.9%), secondary
education (+4.3%) and
automotive fuel (-11.6%).
SA BUSINESS
CONDITIONS
& CONFIDENCE
SA EXPORTS
Trends for March 2016 quarter
Trends for March 2016 quarter
SA Merchandise exports
Down 11.9 percent for quarter and
down 0.3 percent year on year.
Business Confidence
Down 2 index points to 92.2
points but up 6.4 points year
on year.
Business Conditions
Down 9.5 index points to 96.4
points but up 7.8 points year
on year.
17
ECONOMIC
BAROMETER
Con Michalakis
Chief Investment Officer
It’s time for bold action on the economy
There can be no question that now is the time
for action in our state. To invoke the language
of economist John Maynard Keynes – it’s time
to give the market’s ‘animal spirits’ something
with which to work.
The South Australian economy has an attitude
problem. However this could be turned around
with some bold decisions that would kick-start
the action we need.
But first, what sort of picture does the
March quarter ABS data paint for the state’s
economy? I won’t repeat all the data that is
on the preceding pages but, in summary:
• Unemployment is down slightly but so too is
the participation rate – which is a concern
because people are giving up on the search
for jobs.
• Inflation is heading downwards – which raises the possibility of deflation which can
be positive or negative for the economy.
• Business confidence is volatile but is
trending up in the past two years, and
• State Final Demand seasonally adjusted for SA
over the past year was a weak 0.5 percent.
South Australia has received some good news
in recent times with the submarine and naval
patrol boat decisions and various transport
promises in the Federal election campaign. But
these major projects are some years away and
the underlying confidence in the economy does
not look good for the State’s short to medium
term outlook.
The softness in the State’s economy in the
next two years is effectively a vacuum left by
the demise of mainstream manufacturing and
the fact that some of the major naval projects,
for example, will not produce a lot of economic
stimulus until they begin.
We can fill that gap with major, shovel-ready
infrastructure projects. And we have a unique
opportunity to do so.
The ten-year bond rate hit a 122-year low
in mid-May. The market is saying the
Commonwealth Government can borrow at
somewhere between 2.2 and 2.3 percent over
ten years.
Governments should take advantage of that
outrageously low borrowing rate and use it.
It’s a one-off, low-capital-cost opportunity to
lock in a low rate of borrowing, issue some
bonds and put the capital to work on major
infrastructure projects.
The private sector will respond and do the
work. That will generate growth which, in turn,
creates jobs.
There are a number of infrastructure projects
which, if funded, could be brought forward to
fill the looming gap in economic activity.
The Northern Adelaide Irrigation Scheme
(NAIS) is just one example of economically
productive infrastructure that could receive
a green light if funding was available.
South Australia has a competitive strength
in food and fibre production and state and
federal funding for the NAIS would open up
about 3,600 hectares on the Northern Adelaide
Plains for intensive horticulture and livestock
production using wastewater from an upgraded
Bolivar treatment plant.
It needs Keynes’ ‘animal spirits’ that can be
helped by government spending to generate
demand. Governments then step away and let
the private sector do the work.
The short-term health of the SA economy
requires such bold and ambitious action.
The increased food and fibre output would
coincide with the opening of key markets
through Asia from the recently negotiated free
trade agreements with countries like China.
The ‘debt and deficit’ critics might decry
increased borrowings but the political aversion
to public debt when it is well-employed and
contributing to growth is hard to sustain. There
is no sound economic argument for balancing
the books for its own sake. We can, and should,
put capital to work for the greater good.
There are also people who will argue that
increased borrowings would jeopardise efforts
by the State Government to regain the much
coveted AAA credit rating. But if we fund
infrastructure, create jobs and generate
growth, the deficit will look after itself,
and the AAA credit rating will follow.
The South Australian economy,
in ‘economic-speak’ looks
like a classic case of
aggregate demand.
19
BUSINESS SA
WORKING FOR…
BARKUMA INC
Training away stereotypes
At any given time, with the inclusion of mental
health, 25 percent of Australia’s population has
a disability.
This startling statistic was shared with The Pulse
by Geoff Blackwood, CEO of Barkuma Inc, whose
driving force is to break down stereotypes
surrounding people with a disability and encourage
inclusion – both in society and the workplace.
“They’re people who vote and pay taxes, they’re
consumers, and they’re potential employers and
employees,” Mr Blackwood explained.
Barkuma is a member based, not-for-profit
organisation that provides a range of services
to assist people with a disability to live and work
in the community.
It’s not. It’s in employment, education and training.”
“There is huge scope for growth for roles in
disability, aged care and community services,”
Mr Blackwood said.
According to Barkuma, hospitality is the main
employer of people with a disability, followed by
roles in administration. Horticulture, transport and
construction were identified as potential growth
industries for employing people with a disability.
“The thought of an
apprenticeship or
traineeship for someone
with an intellectual disability
is no longer just a pipedream.
It’s simply about how you
train them and ensure they
can transfer the skills
they’re learning to the job,”
Mr Blackwood explained.
Established in 1967 by a group of parents in
Adelaide’s northern suburbs, Barkuma has grown
“Disability can be isolating. Providing employment
to employ more than 260 staff across five sites in
gives people a sense of purpose and allows them
metropolitan Adelaide (including two factories at
to feel included.”
Elizabeth and Holden Hill) and currently provides
services to over 800 people with disabilities.
To discover more about Barkuma,
visit www.barkuma.com.au
Barkuma is also a registered training organisation,
offering people who have English as a second
Through the Australian Chamber of Commerce
language, are long term unemployed and those
and Industry, Business SA is a proud participant
who have been made redundant – particularly in
in the Mentally Healthy Workplace Alliance –
the manufacturing industry – the opportunity to
a collaboration of thirteen business groups,
reskill through studying an accredited Certificate
government agencies and support organisations
III or IV in Disability, Mental Health or Individual
like beyondblue and the Black Dog Institute –
Support (Disability).
which promotes the development of healthy
“Barkuma has factories – why not use the skills of
those who have worked in manufacturing all their lives to now support people with a disability
working in that environment? People just assume
disability support is just in schools or in the home.
workplaces across the nation.
Member name: Barkuma Inc
Location: Adelaide
Member since: 1998
Services used: Publications,
PAYpacks, training, events
Barkuma trainee, Rebecca Touzeau, with Chief Executive Geoff Blackwood
21
STATEWIDE SUPER
SPOTLIGHT ON…
REDARC
The power of training
One of South Australia’s manufacturing success
stories, Redarc, has created a culture of continual
learning and development for workers at all levels
of the award winning organisation.
Redarc, based in Lonsdale, is an advanced
electronic manufacturer with annual revenue
of approximately $40 million and employing
more than 130 staff. It manufactures a range
of power conversion products including battery
management systems, electric brake controllers,
inverters and custom electronics that are
supplied to the automotive, mining, defence,
agricultural and marine industries.
The success of the 2014 Telstra Australian
Business of the Year is reflected in increasing
sales and ever expanding international markets.
In the past twelve months Redarc has expanded
its markets and established supply agreements
with Navman USA and Portable Power
Technology UK.
This level of continued growth and market
expansion would be impossible without a
constant focus and investment in research and
development together with employee training
and development.
The majority of staff on the production floor
arrive without qualifications or experience so all
staff need to undertake training. The foundation
training focuses on language, literacy and
numeracy (LLN), which addresses the initial
requirements to underpin a manufacturing
qualification. Training is conducted during
normal business hours and staff are paid for
their time participating in training.
To get a sense of the scale of Redarc’s
commitment to employee development,
prospective employees need to look at the
company website. There they’ll find a values
set that includes: “We will encourage the
personal development of all Redarc team
members to ensure we nurture our innovative
company culture.”
“No matter the entry point into the organisation,
employees will be encouraged and supported
to participate in continued training and
development,” Redarc Chief Executive Officer,
Anthony Kittel told The Pulse.
“This varies depending
on the individual’s needs and their current skill set.
We have some employees
who are supported with language, literacy and numeracy and others who are participating
in postgraduate study
including MBA qualifications,” he said.
“As an advanced manufacturer we need a highly
skilled and empowered workforce. We have an
unrelenting passion for learning and building
a team-based culture. We regularly develop
our staff, and without embracing new training
methods, the quality of our products and
services wouldn’t be at the level that they are.
“Several years ago we participated in a three-year
training partnership with TAFE South Australia
supported by funding through the Australian
Government. The program enabled TAFE staff
to work with us to customise training and
delivery approaches, specifically tailored to the
needs of our employees and within the context
of our business.”
“From day one it was my intention to create
a company that valued life-long learning
and encouraged every individual to
identify their passion and become
the best they can be in their field.
Ultimately, it is this that will
lead us to global success,”
Mr Kittel said.
Redarc is also committed to developing students
into professional and capable members of the
community, and they proudly offer high school
students an opportunity to undertake a period
of work experience. There is an opportunity
for undergraduate engineering students to
undertake their industrial experience within
the manufacturing facility in Lonsdale, South
Australia. Through their annual Vacational Work
Experience Program, students gain hands on
experience and are exposed to real life projects,
whilst being rotated through the production,
testing and R&D areas of the business.
Redarc’s Matthew Rankine with work experience student, Issak Sulda, from Marcellin Technical College
23
BUSINESS SA
WORKING FOR…
FLIGHT TRAINING
ADELAIDE
In 2015, FTA was presented with the
Grand Master’s Australian Medal from
HRH Prince Andrew, Duke of York, for their
significant contribution to international airline
pilot flying training.
The sky is the limit for training
FTA is also a five-time State winner of the
Business SA Export Awards and winner of a
national Australian Export Award.
South Australia is viewed as the ideal
environment for aviation training, according to
Flight Training Adelaide CEO, Johan Pienaar.
“South Australia has clear skies, good weather for
most of the year, and clean air. We also have vast
airspace and geography, which means we are not
as congested as any other training environments,
making us a very attractive prospect when
it comes to training safety and quality,”
Mr Pienaar explained.
Located at Parafield Airport, Flight Training
Adelaide (FTA) currently employs 177 staff,
including flying instructors and ground school
instructors and, at any point in time, has
between 260-280 students studying and
living at the college.
FTA has a fleet of over 30 modern aircraft,
including single engine, twins and aerobatic
aeroplanes and helicopters, as well as
seven simulators.
Their training ethos is focused on producing
future airline and helicopter captains, rather than
simply training cadets to obtain a licence.
“Our biggest achievement is in the legacy of what
we do. We have a success rate of 97 percent
of students who pass the course and nearly
everyone who passes goes on to become airline
co-pilots and captains.
“We also train 40 flying instructors per year at this
college and I employ 50 percent of those flying
instructors into my own business every year,”
said Mr Pienaar.
“You have people working tirelessly day after day, providing a high quality product to some of the best airlines in the world, so you want to give the people the reward they deserve for
the hard work they put in and you want to put the
company on the map for
what it does – and the Export Awards gave us
exactly that opportunity.”
“It has given us more influence in the industry –
all of our customers sat up and paid attention,”
Mr Pienaar said.
As for the future of training in the aviation
industry, according to Mr Pienaar, the worldwide
requirement is 20,000 new pilots per year for the
next 20 years, based on current aircraft orders.
“All the reputable flying schools in the world at the
moment can only supply 12,000 pilots per year.
That’s 8,000 pilots that are probably not going
to train at the best schools in the world, but
they’re going to be sharing the airspace with us.
So I reckon that’s where the market growth lies,”
Mr Pienaar explained.
“I think the growth of aviation training is exponential.”
To discover more about
Flight Training Adelaide,
visit www.flyfta.com
Member name:
Flight Training Adelaide
Location: Parafield Adelaide
Member since: 2008
Services used: Training,
publications, events
Johan Pienaar with
Cathay Pacific aviation students
25
BUSINESS SA:
WE’RE HERE FOR GROWTH
Business SA continues to successfully advocate
on behalf of members and the broader business
community on the issues that lie at the heart of
corporate competitiveness and success.
All of our advocacy, business advice, training
and membership support are best summed up
by our catchphrase: Working for your business,
working for South Australia.
Our recent policy successes supporting that
goal include:
Nuclear Fuel Cycle
Business SA CEO, Nigel McBride,
travelled to Finland, France and the
United Kingdom in April on a nuclear
fact-finding mission and continues
to play an influential role in the public
debate following the publication of the
Nuclear Royal Commission’s report.
Business SA has led the debate on South
Australia’s potential role in nuclear waste
storage since first calling for a mature
conversation on the issue in its pre-State
election Charter in 2010.
Gas pricing
Business SA lobbied for a reduction
in capital expenditure in the recent
consultation process for Australian Gas
Networks’ 2016-21 regulatory proposal.
The Australian Energy Regulator’s final
decision reduced AGN’s claim by $242.9
million over the next five years, resulting
in a $750 fall in the average annual small
business gas bill from 2016-17.
Water pricing
Business SA continued to advocate for
restraint in SA Water’s revenue recovery
which subsequently flows to water prices.
We welcomed the final determination
by the Essential Services Commission
of SA in June that that will reduce the
per kilolitre water price for businesses
by 3.6 percent while sewerage charges
will fall by 13.7 percent and 13.2 percent
for metropolitan and regional customers
respectively.
Business SA’s recent State Budget 2016-17
submission highlighted key recommendations
for Government to assist business-led economic
growth including:
e-introducing the payroll exemption
R
for apprentices and trainees which was
abolished in the 2012/13 budget to arrest
our high rate of youth unemployment.
ocking in the existing 50 percent
L
payroll tax rebate for small businesses
with payrolls between $600,000 and
$1,000,000 for another three years to
encourage jobs growth.
Bring forward scheduled cuts
to stamp duty on commercial property
transfers to effectively abolish by
1 July 2017 in order to expedite potential
business transfers and restructures.
Expand ESCOSA’s role to identify and prioritise infrastructure proposals and
ensure transparency of assessment and
an independent cost-benefit analysis.
Prioritising limited resources to invest
in growth enabling infrastructure like the
Northern Adelaide Irrigation Scheme
which will deliver both environmental and
economic outcomes.
Establish an Export Ready Program
to bridge the services gap between setting
up a business and transitioning it into a
position where it is ready to export.
BUSINESS SA
2016 EXPORT
AWARDS
Celebrating exporting excellence in
South Australia by recognising the most
dynamic and innovative businesses
in the State.
APPLICATIONS CLOSE 25 JULY 2016
AWARDS CEREMONY 5 OCTOBER 2016
APPLY NOW
BUSINESS-SA.COM/EXPORTAWARDS
Business SA
ABN 14 725 309 328
Level 1, 136 Greenhill Road
Unley SA 5061
P : (08) 8300 0000
E : [email protected]
W : business-sa.com