04 December 2012

Adelaide skyline. iStock_000001830149

Twenty one years ago South Australia faced a watershed.

While there was a new confidence and hopefulness with the foundation of the University of South Australia on January 1 1991, making it the third university in Adelaide, just months later the State was blindsided by a knockout blow – the collapse of the State Bank.

This single event was to rent political and banking careers asunder and to leave a debt that ran into billions. For South Australia it was a loss of Everest proportions. It cast a psychological pall over the State for years to come: a sense that recovery would be almost impossible.

Once known for high art, thriving manufacturing, cultural breadth and adventurous social policies – overnight South Australia had become the Cinderella state.

It wasn’t until 2004 that the State’s credit rating was returned to AAA by the Standard & Poor’s Rating Agency.

But two decades on from the collapse, there are coffee shops you can visit where none of the clientele has ever heard of the State Bank crisis.

Instead, the economic buzz for most young people revolves around the high earnings from fly-in fly-out mining jobs; houses, how to get one or how to invest in them; and the impact of the global financial crisis. As one of the few countries in the world to have weathered the first phase of the GFC, the still strong Australian dollar turns the chat to how much more it can now buy online.

It is a different world.

It is faster, technologically and socially more connected, and one where there is access to more information, more quickly than at any other time in history.

The debt that so shocked Adelaide in 1991 pales into insignificance in a world where whole nations teeter on the brink of bankruptcy.  It is also increasingly globally competitive – a world in which a single qualification will probably not suffice for anyone wanting to soar the heights in their careers and in which having a single career is less and less likely.

Since 1991 there have been three changes of government federally and the higher education sector has faced retractions in funding, changes to funding models and finally, a first step into a fully competitive model. Students and fees have increased and the international student market has burgeoned.

For the first time in a while we have measured our education system against other OECD countries and found ourselves wanting, not so much in the quality of our system, but in our rate of engagement. The Review of Higher Education, conducted by UniSA’s own former Vice Chancellor Professor Denise Bradley, has highlighted that as a nation we need to increase participation in higher education or face being left behind, not only by the OECD member countries but also by our significant regional neighbours in China, India, Japan, and Malaysia.

What is clearer than ever before is that the fortunes of industry and our economy are intricately entwined with education and population.

Speaking at the one year anniversary of UniSA College, established to enhance secondary education participation rates, the Governor of South Australia, His Excellency Rear Admiral Kevin Scarce said that, while the South Australian economy may still continue to benefit from mining, as a sparsely populated state we need to understand we will never have the economies of scale that can provide an automatic competitive edge.

In 1991 there were about 1.4 million South Australians and today there are just over 1.64 million, a steady but small growth rate at just 0.8 per cent.

“We’re fortunate to have an abundance of mineral resources but that alone can’t provide a stable economy in the long term,” His Excellency said.

“A couple of years ago the State’s Economic Development Board estimated that the State would need more than 130,000 new workers leading into 2017–18 and another 206,000 would be needed to take the place of retiring workers.

“The projections also showed that 80 per cent of new jobs would require post-school qualifications and half of those, some 50,000 jobs, required a bachelor’s degree or similar qualification.

“Universities and the wider community will need to think outside the box to meet this demand.”

While South Australia has strength in the minerals, defence, electronics and agricultural sectors, he said, it would be vital to diversify and invest in research and development in these areas and others.

“It is a huge challenge for higher education, not only in providing qualified graduates, but in ensuring that their study programs are globally relevant, competitive and industry-relevant.”

The State Government’s case for investment in South Australia strongly reinforces a focus on mining but also on diversifying both into high-value manufacturing, clean technologies and renewables, and in defence, bioscience, information, communications and technology as well as wine, food and education.

The metals sector still leads exports at about $4 billion annually and traditional primary industries, meat and wheat are all in the top five for exports. Building the capacity to value-add to these industries and develop new industry strands will be significant for the economic growth of the State.

University of South Australia Adjunct Professor of Economics, Richard Blandy says the truth is, in South Australia, most jobs are being generated in the services sector.

“Even combined, mining, manufacturing and agriculture provide less than 20 per cent of our employment,” Prof Blandy says.

“That is not to say the income from these physical production industries isn’t vital but it puts some perspective around the impact of mining profits in a state context.”

He says the broad services sector is where jobs are generated, and South Australians are brilliant at delivering services – from property and business management through to finance, insurance and communications and then health and education services.

“We are not different from other economically advanced locations in this,” Professor Blandy says, “but without outstanding service sector delivery, people would leave South Australia and go elsewhere.”

Olympic Dam.But now, with the one development that was set to dramatically turn SA fortunes around off the agenda, the Olympic Dam mine expansion, Prof Blandy says government, business, industry and indeed the wider community need to start thinking innovatively if South Australia is to avoid once again being tagged a Cinderella state.

“Adelaide may well have been judged the fifth most liveable city in the world, but our quality of life in the longer term is at risk if we don’t work out how to become more competitive and attract more growth,” Prof Blandy says.

“We are at an important crossroad, in one direction lies the perpetual slow-lane and the other offers opportunities to develop a sustainable path to growth and progress.

Prof Blandy says South Australia had made steady progress since the State Bank collapse but it had not been without some setbacks. In particular, the contraction of Australia’s manufacturing sector has had a significant impact on South Australia’s economy because the State started with a particularly large share of Australia’s manufacturing.

“BHP Billiton’s Olympic Dam expansion had been talked about for so long, people had begun to count on it and now that the project has been postponed indefinitely we need to re-strategise quickly,” he said.

Prof Blandy says we need to come to terms with facts. The past 12 months have seen a real slow down in employment rates and just a few month ago SA’s credit rating was downgraded to AA+.

“It is time to once again look at our strengths and see how we can maximise their potential,” he says.

South Australia enjoys a large number of vibrant small businesses across all industry sectors, now offering substantial future economic prospects if the State can nurture these by reducing their costs.

“We may have to reach into the past for ideas on a model that will give the State a competitive edge nationally and further afield,” Prof Blandy says.

He cites SA Premier from 1938 to 1965, Tom Playford, who used methods to make SA competitive by keeping wages down, providing cheap public transport and low-rent public housing which combined helped reduce the CPI in the State. The result was a period of faster economic growth than other states.

“What is clear is we need new ideas and perhaps even radical

ideas to avoid slow economic shrinkage,” he says.

Prof Blandy believes the three local universities (as well as satellites of Carnegie Melon and University College London) have an important role to play in providing a supply of excellent skills for the local economy and the research to support the development of new technologies and new industries.

“The universities have a vital role to play in fostering niches of global excellence attractive to footloose global academics, students and enterprises searching for valuable ideas and technologies, wherever these may be around the planet,” Prof Blandy says.

And as we grapple with the almost daily reframing of global economic fortunes – the ‘butterfly effect’ impacts of slowdowns in the Chinese economy, the management of interest rates in Australia and dashed hopes for a mining boom, Prof Blandy says we’ll need clever thinking, good planning and strong leadership to thrive.

“We need to understand that there is no fairy godmother, we need to do the hard yards if we want to transform the State.”

Education's economic integration

With a proud history of educating professionals and creating and applying knowledge and as the largest university in the State, the University of South Australia has played a major role both in educating the local workforce and in delivering research that is relevant to key industries locally and nationally in the past 21 years.

In its own right education is contributing significantly to the SA economy. Combined, SA’s three universities are delivering more than $1.6 billion in revenue annually and that contribution is on the rise.

But over and above the cash flow, UniSA is making a contribution that builds depth and strength in the community through the knowledge delivered by research and through the skills of its some 7000 graduates each year. 

In 2005 UniSA’s Ian Wark Research Institute won the largest single Australian Research Council Linkage Grant to lead the foundation of the Australian Mineral Science Research Institute, a $22 million project partnership with 24 local and international collaborators from government and industry.

The Institute has provided technological and scientific leadership in particle science and engineering, supporting innovations that improve energy efficiency, enhance frugal water use and waste management in minerals processing, devise improved minerals processing, and develop new and better materials. Research at The WarkTM continues to contribute many millions to the mining and minerals processing industry.

UniSA forged an important partnership with University College London (UCL) in 2010 to deliver a specialist MBA to international gas producers SANTOS, headquartered in Adelaide. The MBA is designed to build important management skills for the company, aligning UniSA’s expertise in management and online education delivery with UCL’s expertise in resources education.

UniSA’s relatively new research centres and institutes – The Mawson Institute and the Barbara Hardy Research Institute – are actively engaged in research to support innovation in “next generation” manufacturing technologies and innovations.

Their work feeds into the automotive, biomedical and renewable energy sectors, and across the board is working to deliver energy savings for industry. 

In defence, UniSA has been making an important contribution through both education and research. 

The research conducted through the Institute for Telecommunications Research into pioneering improved and innovative wireless communications for conflict settings has been significant. And UniSA’s Defence Systems Institute has played a key role in building skills in systems engineering through special graduate programs such as the Master of Military Systems Integration program, designed specifically to lift capacity in the defence services industries.

UniSA Deputy Vice Chancellor Research, Prof Sakkie Pretorius says it is only when you really start to make an inventory of a university’s contribution that you begin to see how significant it is to the economy and the community.

“If you took the Universities out of South Australia the void would be enormous,” he said.

by Michèle Nardelli

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