16/09/2021

The COVID-19 pandemic has delivered many twists and turns and seemingly unthinkable occurrences.

None more so than the reversal of an interstate “brain drain”, which many South Australian parents over the past 4 decades had baked into their future life plans.

It was a given they would be regularly visiting their adult children and grandchildren, who had settled into the bigger cities of Sydney and Melbourne after growing up in Adelaide.

But a combination of regular extended lockdowns in Melbourne and now Sydney, the growth of start-up companies in Adelaide in relatively new industries such as space, artificial intelligence and cybersecurity, and house prices which are less than half of the stratospheric levels reached in the eastern states capitals, has made the lure of home in South Australia so much more appealing.

South Australian Premier Steven Marshall is wary of making too many sweeping statements about how the state thus far has fared relatively well in managing the pandemic. It can turn quickly.

A short and sharp lockdown for a week in late July after the Modbury outbreak of the delta variant in Adelaide’s north-eastern suburbs did however end on time, even though restrictions were eased only slowly over several weeks and some curbs are still in place.

It was in marked contrast to the agonising extensions of lockdowns in both Sydney and Melbourne, as the delta variant proves almost impossible to stop. The work from home structural shift has also played into the hands of a smaller city.

Many believe the lower density of a city with a population of around 1.3 million is an appealing factor.

The larger blocks of land in Adelaide where a suburban stand-alone house with a reasonable-sized backyard is still achievable for most people aspiring to take a step onto the property ladder, rather than be forced into a multi-storey apartment block like many youngsters starting out in Sydney or Melbourne.

For Premier Marshall, the reversal of the brain drain is an important symbol that shouldn’t be under-estimated, as he attempts to broaden the economy while also capitalising on its traditional strengths in the defence industry, agriculture, manufacturing and wine.

The Lot Fourteen hi-tech precinct on the site of the former Royal Adelaide Hospital on the stately boulevard of North Terrace, adjacent to the Botanic Gardens, is at the centre of the new economy.

It is the location of the new Australian Space Agency and more than 100 other start-ups and businesses with a heavy focus on the digital economy.

“Our plan to create jobs and stop the brain drain to other states is working. We’ve not only turned the tap on net interstate migration off, we’ve actually reversed it,” Premier Marshall says.

He says in the past 6 months around 780 people have moved back to South Australia.

“The net gain in the March 2021 quarter was the largest net gain since this series began in 1981,” he says.

Third most liveable city

Contrast that to the regular annual exodus of between 29,000 and 31,000 people out of the state in the 1990s, after the local economy was flattened by the then government-owned State Bank of South Australia going bust in late 1990 following a wild and woolly lending spree in the exuberant late 1980s.

Premier Marshall also trumpeted proudly the rankings of the influential The Economist magazine which rates the “liveability” of 140 cities around the world.

The Economist Intelligence Unit measures the criteria of stability, healthcare, culture and environment, education and infrastructure.

It also scrutinised how well each city responded to and contained the pandemic.

South Australia had the infamous 3-day lockdown in November 2020 after a flurry over a worker at a suburban pizza outlet at Woodville in Adelaide’s western suburbs, which was quickly curtailed after confusion and panic over just how a chain of transmission had happened.

Fighting the pandemic has brought serious stresses and strains to South Australia’s public finances and pressure on the health system.

“The global COVID-19 pandemic has presented us with challenges, but also tremendous opportunity,” he says.

“According to the Economist, in the past 3 years Adelaide has been transformed into the most liveable city in the nation, and the third most liveable city in the world,” Premier Marshall says.

He acknowledges that an appealing lifestyle, affordable housing, a rich cultural life and being surrounded by the picturesque wine regions of the Barossa Valley, McLaren Vale, Adelaide Hills and the Clare Valley isn’t enough.

An economy with some extra grunt and ability to create meaningful jobs is crucial.

“There is a growing momentum within the national and international business community that South Australia is the place to be. A lot of high-tech and high-growth companies have recently chosen our state as the place to do business,” he says.

Premier Marshall points to big corporate names, including Amazon, Google and MTX setting up small parts of their operations in South Australia in the past 12 months.

On 6 September, there was extra momentum when Deloitte officially announced they would set up a National Centre of Innovation and Technology to specialise in automation, analytics and hi-tech sectors, with the unit likely to be at the centre of up to 500 new jobs.

He’s hoping that the flow-on effects will keep rolling. He talks a lot about the “innovation ecosystem” at Lot Fourteen.

Landing the Australian Space Agency in 2018 for the Lot Fourteen precinct was a big coup.

The spin-offs are vast. Small but nimble space start-ups, including Myriota and Fleet Space Technologies based in South Australia, are making solid strides in their fields of launching brick-sized nano satellites to power the “internet of things” for a range of commercial players across industries including agriculture, mining and logistics.

Global credit ratings agency Moody’s has been keeping a close eye on the public pursestrings of governments around the world, which have been bent out of shape by the pandemic. But it is generally fairly complimentary about South Australia’s situation.

John Manning, vice-president of Moody’s Investors Service, said there had been no change to the rating of Aa1, with a stable outlook since the State budget handed down in May.

“Uncertainty over international border closures, vaccine rollouts and ongoing global trade tensions point to an uneven recovery, however South Australia will continue to benefit from strong support from the Commonwealth and revenue exposure to Australia’s broader economic recovery,” Mr Manning said.

“These strengths continue to underpin its rating.”

Sourced from the The Australian Financial Review South Australia Focus Report.