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Speaker 1: Let's talk about South Australia and here in the state.

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Speaker 1: A new report card has ranked South Australia as doing

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Speaker 1: particularly well. We've known this from things like COMSEC reports

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Speaker 1: and others, but IPA has us as the second best

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Speaker 1: state in the nation for doing business. That's the Institute

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Speaker 1: of Public Affairs recognizing essay for the lowest taxes and

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Speaker 1: red tape, which is good of other states. We're just

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Speaker 1: behind WA for business friendly conditions. But this will not

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Speaker 1: surprise you. The biggest challenge we're facing in South Australia

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Speaker 1: is soaring energy costs. And you'll sit back and say, wow,

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Speaker 1: I didn't see that coming. Daniel Wilde, Deputy Executive Director,

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Speaker 1: Institute of Public Affairs, Daniel.

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Speaker 2: Good morning, Good morning, Nice to be with you.

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Speaker 1: Likewise, so it's pleasing really that we are doing pretty

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Speaker 1: well in a whole range of factors, except well this

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Speaker 1: issue that here in essay. We've talked about this forever

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Speaker 1: in the day, cost of electricity.

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Speaker 2: That's exactly right. As you mentioned, South Australia from a

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Speaker 2: business perspective is doing pretty well. From a tax advantage point,

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Speaker 2: payroll land and stamp duty either the lowest or the

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Speaker 2: second lowest in the nation and that's really a key

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Speaker 2: factor when we talk about the ease of doing business.

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Speaker 2: Now you hit on a key point though, which is

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Speaker 2: the energy costs. And this is a real big one.

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Speaker 2: As we all know, energy really is the lifeblood of

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Speaker 2: an economy. It goes through everything and if your energy

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Speaker 2: prices are high, then it's going to be harder to

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Speaker 2: do business and get ahead. I'll give you an example.

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Speaker 2: The electricity costs for a business in South Australia are

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Speaker 2: about seventy five percent higher than across the border in Victoria,

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Speaker 2: and that's having a big impact on doing business. It

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Speaker 2: reduces the margins that gets passed on the customers as

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Speaker 2: higher prices. That means you've got less capital to invest

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Speaker 2: in your equipment and to expand and grow. So that

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Speaker 2: is a real big black mark on the South Australian

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Speaker 2: economy and I think businesses are feeling that pain.

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Speaker 1: Why is it so much more so here than Victoria?

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Speaker 1: For instance? Five percent that's not a little bit, that's.

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Speaker 2: A lot, it's almost double. A couple of key reasons.

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Speaker 2: The first was the destruction of the base load power

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Speaker 2: supply with the Port Augusta coal station that was a

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Speaker 2: bad move. It was shortsighted. And what it has meant

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Speaker 2: is it doesn't mean that South Australia no longer uses coal.

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Speaker 2: It just means that that coal is brought in from

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Speaker 2: Victoria via the interconnector. And what that means is that

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Speaker 2: if that interconnector should go down, or if Victoria says, look,

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Speaker 2: we're not sending our power supplies across the border, then

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Speaker 2: South Australia's lights will go out. Now, yes, it is true,

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Speaker 2: and I will give full credit to Premier Alamascus in

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Speaker 2: his discussion about the potential nuclear power future for South Australia.

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Speaker 2: That's something that is contested but important and should be debated.

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Speaker 2: But the main plan that the state government has so

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Speaker 2: far is a hydrogen facility, a potential hydrogen power plant

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Speaker 2: at Wayala. But even the government has said, well that's

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Speaker 2: only going to bring prices down by ten percent, so

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Speaker 2: we need a lot more than that in order to

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Speaker 2: make sure that this Australia has this sovereign capability to

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Speaker 2: make sure the lights don't go out.

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Speaker 1: The answer is baseload, isn't it. We're moving away from coal,

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Speaker 1: as you're rightly saying, certainly here in Essay, we have

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Speaker 1: and it really leaves just gas. And gas is expensive

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Speaker 1: to turn on and off because generators need to be

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Speaker 1: sought after and in other words, high demand, high price,

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Speaker 1: and so they will switch on. So gas ends up

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Speaker 1: costing a fortune and spiking the power prices. So we

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Speaker 1: really need something that's on all the time. And the

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Speaker 1: only thing that you think of to underpin renewables is nuclear.

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Speaker 2: Well, that's right, or coal, and I think that should

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Speaker 2: be part of the debate. I mean, it really is

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Speaker 2: the case that the sort of ultra super critical coal

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Speaker 2: stations that they have in countries like Japan and elsewhere,

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Speaker 2: we do need to look at that. And I know

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Speaker 2: there's people in the community that will bulk at the

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Speaker 2: idea of setting up a new coal station in South Australia,

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Speaker 2: but there's nothing else. I mean, nuclear can be a

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Speaker 2: part of the future, but under the best case scenario

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Speaker 2: that's ten plus years away, and federally they're talking about

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Speaker 2: a potential small scale option which could be very good

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Speaker 2: but will not necessarily power the entire state. You're spot

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Speaker 2: on in your observations abouts gas is critical, but as

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Speaker 2: a baseload source is not as stable or reliable as coal,

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Speaker 2: So you know, we saw earlier this week, for example,

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Speaker 2: in South Australia wind and solar generation felter zero. So

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Speaker 2: you know it does go to that point when the

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Speaker 2: wind's not blowing, the sun's not shining, you're not getting

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Speaker 2: energy out of that system. Yes, you can have batteries.

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Speaker 2: Of course, you can have batteries, but they are very

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Speaker 2: very expensive. So we do need to have that conversation. Well,

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Speaker 2: do we need to rebuild a coal facility to make

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Speaker 2: sure that baseload power supply is in the system, Daniel.

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Speaker 1: Let's move on from that to one other point here

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Speaker 1: in South Australia that often comes up when you talk

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Speaker 1: to business people, and that's payroll tax. How do we

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Speaker 1: set how do we compare in that market?

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Speaker 2: Well, South Australia performs relatively well in that context compared

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Speaker 2: to other states. That is in part because other states

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Speaker 2: have very bad payroll tax systems, but nonetheless South Australia

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Speaker 2: ranks relatively well. When we're talking about the small, medium,

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Speaker 2: a large enterprise, the threshold in South Australia before you

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Speaker 2: start paying is very high. It's one point five million,

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Speaker 2: so that basically carves out a lot of small businesses

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Speaker 2: from that regime, and so that's the key thing that's

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Speaker 2: really driving South Australia's strong performance in that it's actually

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Speaker 2: got the highest threshold. And really the higher threshold the better, because,

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Speaker 2: like I say, you really want to be carving out

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Speaker 2: as many particular smaller businesses. I mean, big businesses can

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Speaker 2: handle some of these costs much better, but anyone in

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Speaker 2: a small business will tell you that payroll tax is

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Speaker 2: an absolute killer. I've never understood the point of payroll

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Speaker 2: tax because it's effectively a tax on jobs. The more

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Speaker 2: people you employ or the more wages you're paying, the

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Speaker 2: higher at tax. So I think the more you can

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Speaker 2: carve out, the better.

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Speaker 1: And I read a report from I reckon It was

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Speaker 1: Business Essay that put this out earlier in the week,

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Speaker 1: and they said that threshold is stopping small businesses from

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Speaker 1: growing because they don't want to pay the tax. They

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Speaker 1: grow to a certain point and then stay there.

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Speaker 2: Yeah, it's a really interesting point and I think that's right.

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Speaker 2: You do see a clustering of businesses around the threshold,

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Speaker 2: which does suggest that observation is correct. At the end

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Speaker 2: of the day, I think the best solution is to

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Speaker 2: remove the payroll tax and focus more on land tax.

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Speaker 2: Land tax is a less inefficient tax than payroll tax. Ultimately,

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Speaker 2: the state government needs to raise revenue from somewhere, so

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Speaker 2: I don't think we'll be getting rid of payroll tax

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Speaker 2: in the near future. So you're not going to have

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Speaker 2: a perfect regime. But look, my perspective, certainly from a

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Speaker 2: small business rationaleist, is to get that threshold high. Yes

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Speaker 2: there's inefficiencies, but it's better than the other states.

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Speaker 1: All right, Daniel, really appreciate your time. Thank you, my pleasure.

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Speaker 1: Thank you, Daniel Well. Deputy exec Director, Institute of Public Affairs.

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Speaker 1: Listening to that has been the Treasurer of South Australia,

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Speaker 1: Stephen Mulligan treasure a good mining.

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Speaker 3: Oh good morning.

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Speaker 1: That's well reasonably glowing assessment. And that's on the back

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Speaker 1: of COMSECT reports that have put us at number one.

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Speaker 1: Institute of Public Affairs just slightly below that but still

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Speaker 1: you have to say that's if not an A minus,

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Speaker 1: certainly a B plus. You'd take that. I imagine.

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Speaker 3: Yeah, this is really good news for the state's economy.

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Speaker 3: I mean it's it. Never before have we been ranked

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Speaker 3: by the concept Start of the State's reporters number one

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Speaker 3: in the nation, and we've had that for the last

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Speaker 3: three quarters in a row. We've also had the amz

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Speaker 3: Stata Meter rate US and Western Australia as the two

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Speaker 3: best performing economies in the nation. And now we've got

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Speaker 3: today's report from the IA saying that again South Australia

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Speaker 3: along with Western Australia are the top ranked jurisdictions to

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Speaker 3: do business in. And we've also had the Business Council

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Speaker 3: of Australia, you know, the national body representing all chambers

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Speaker 3: of commerce around the country, rank US as having the

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Speaker 3: best red tape bird in the country as well. So

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Speaker 3: you know, South Australia is really performing well at the

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Speaker 3: moment and we've put an enormous amount of effort into

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Speaker 3: making sure that we are a good place to do

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Speaker 3: business and that we will continue to be a good

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Speaker 3: place to do business. We committed at the last selection

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Speaker 3: not to increase taxes. We saw what happened in the

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Speaker 3: previous term of government with the huge hike in land tax.

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Speaker 3: And while I give credit to the previous government for

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Speaker 3: increasing the payroll tax threshold, you know that comes on

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Speaker 3: the back of what it had been a decade of

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Speaker 3: persistent work of getting our payroll tax regime to the

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Speaker 3: best in the nation, and on the IPA's report today,

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Speaker 3: you know we do have the best payroll tax regime

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Speaker 3: in the nation. We've got the highest tax free threshold

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Speaker 3: and at higher payroll levels we've also got the lowest rate.

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Speaker 3: So you know, the message that the Premier and I

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Speaker 3: and the Minister for Investment and Trade Joe Sockarch and

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Speaker 3: I are telling businesses around the nation and telling investors

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Speaker 3: looking at investing in Australia is that if you want

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Speaker 3: to do business in Australia and you want to do

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Speaker 3: it cost effectively and easily, then you have to be

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Speaker 3: doing it in South Australia.

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Speaker 1: That threshold is it holding businesses back? And you would

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Speaker 1: have seen the report businesses cluster around there and don't

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Speaker 1: want to put on more people because then they'll be

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Speaker 1: paying payroll tax. Is that a consent?

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Speaker 3: Well, look, the total number of businesses in South Australia fluctuates,

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Speaker 3: but it's between one hundred and forty five and one

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Speaker 3: hundred and sixty thousand businesses that we've got across the

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Speaker 3: entire state, and less than ten thousand of them pay

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Speaker 3: payroll tax. So the vast majority of businesses, and in

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Speaker 3: particular small businesses are not liable for payroll tax because

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Speaker 3: they fall below that tax free threshold. But yes, I

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Speaker 3: do accept the argument that some business owners will take

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Speaker 3: into account what it will mean for them if they

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Speaker 3: continue to increase their workforce. But right now, Matthew, our

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Speaker 3: unemployment rate is lower than the national average. We're outperforming

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Speaker 3: the nation in terms of how strong our labor market is,

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Speaker 3: so we can see that there is a really strong

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Speaker 3: demand by employers still to take on workers across the economy.

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Speaker 3: And you know, I think we've got our payroll tax

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Speaker 3: settings right. Of course, business will always make the case

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Speaker 3: to pay less tax. They've been doing that for more

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Speaker 3: than one hundred and fifty years here in South Australia,

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Speaker 3: and I wouldn't expect any different, And you know that

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Speaker 3: always needs scrutiny and pressure to make sure that we've

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Speaker 3: got the right tax setting. But you know, the Premier

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Speaker 3: and I have said that if we've got the capacity

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Speaker 3: to cut taxes in the future, we'll look at it

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Speaker 3: and we'll do it in a way which generates the

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Speaker 3: best change of behavior in the economy. And what the

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Speaker 3: way we've done that today is abolishing stamp duty for

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Speaker 3: first home buyers when they build a new home or

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Speaker 3: when they buy a new home again to incentivize that

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Speaker 3: change of behavior by first home buyers to make the

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Speaker 3: decision to get into the housing market, and to help

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Speaker 3: overall by adding to supply. So we're open minded about

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Speaker 3: tax changes, but we want to make sure it's going

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Speaker 3: to lead to a positive behavioral change that's going to

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Speaker 3: benefit our state generally.

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Speaker 1: All Right, the credit rating for South Australia at the moment,

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Speaker 1: we want to get that back to triple A as

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Speaker 1: soon as possible. Will we get there given levels of

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Speaker 1: debt to increase to what was it forty four billion

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Speaker 1: in four years time.

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Speaker 3: I'm sorry, Matthew, my line is breaking up. Can you

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Speaker 3: hear me properly?

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Speaker 1: Yeah? I can. Maybe we need to call you back.

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Speaker 1: You're You're as clear as day and I know I

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Speaker 1: am here as well. Oh he's gone, he's dropped out.

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Speaker 1: So his line was breaking up wherever he was. We'll

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Speaker 1: try and get him back because we've got to talk

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Speaker 1: about baseload power as well. One of the things the

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Speaker 1: Institute of Public Affairs says we really need to improve,

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Speaker 1: and we've got him. Stephen Mulligan, you're back. Yeah, obviously

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Speaker 1: your line went you were great here, but you obviously

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Speaker 1: couldn't hear me.

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Speaker 3: Yeah, sorry about that's all right.

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Speaker 1: I was asking you about the triple A rating. Are

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Speaker 1: we going to get that back given our increasing levels

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Speaker 1: of debt, because that would help in repayment of that debt,

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Speaker 1: wouldn't it.

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Speaker 3: Well, I think it's going to be difficult for South

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Speaker 3: Australia and the other states and territories to get back

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Speaker 3: to where we were with triple A credit ratings before

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Speaker 3: the global financial crisis. And you know, really we've seen

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Speaker 3: two big shocks to the Australian economy and to states

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Speaker 3: and territories around the country over the last fifteen years.

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Speaker 3: First of all was that global financial crisis starting in

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Speaker 3: two thousand and eight, where state and territory governments had

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Speaker 3: to take on a lot of extra debt because they

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Speaker 3: were running budget deficits, spending more money and getting less

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Speaker 3: tax receipts during those difficult times. And then we've had

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Speaker 3: the same experience again with COVID. So what we've seen

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Speaker 3: over that fifteen year period is two big economic shocks

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Speaker 3: which have led to states and territories carrying more debt,

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Speaker 3: and now, of course, from that starting point, our government

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Speaker 3: has got an agenda to really significantly expand the infrastructure

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Speaker 3: in our community that we feel that we need. You know,

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Speaker 3: we're building a new women's and children's hospital, and we're

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Speaker 3: completing the last stage of the North South Corridor, building

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Speaker 3: tunnels under that last stretch of South Road. And that's

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Speaker 3: a similar approach to what we're seeing around the country

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Speaker 3: where states and territories are really having to catch up

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Speaker 3: with their infrastructure spending. So I think the expectation of

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Speaker 3: state and territory treasurers is that, you know, we're not

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Speaker 3: going to get back to triple A in the short

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Speaker 3: term because we've got a lot of budget catch up

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Speaker 3: to do. Other states are trying to get their budgets

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Speaker 3: back into surplus after COVID. We've achieved that here during

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Speaker 3: this government, and we've got a lot of infrastructure to build.

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Speaker 3: There's only one state that's got a triple A credit rating,

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Speaker 3: of course, and that's Western Australia, and that's because they've

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Speaker 3: got the dual benefits of having a booming mining sector

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Speaker 3: with huge royalty revenues pouring into their coffers. But of

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Speaker 3: course they've got that massively preferential GST deal where there's

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Speaker 3: a huge in fact, more than five billion dollars a

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Speaker 3: year of extra GST goes to them every single year,

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Speaker 3: so their budget's very healthy. But for the rest of

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Speaker 3: us near mortals, we're trying to make sure that we

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Speaker 3: can get our budgets back into shit while meeting that

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Speaker 3: pressure of better support of a community through better services

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Speaker 3: and more infrastructures.

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Speaker 1: And that's an absolutely ludicrous situation of state versus federal

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Speaker 1: relations right there. But anyway, that's another story for another day.

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Speaker 1: The other issue in the IPA report was baseload power

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Speaker 1: and that's the elephant in the room and to me

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Speaker 1: it just seems like given the Premier's position on nuclear,

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Speaker 1: it seems to me it's just a no brainer, just

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Speaker 1: an absolute opportunity for the government to say, look, we

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Speaker 1: are going to look seriously at this, on the back

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Speaker 1: of the Scarce Royal Commission as well into nuclear, we

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Speaker 1: are going to take this by the horns and do

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Speaker 1: something about this to secure cheap energy prices for South

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Speaker 1: Australian's moving forward.

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Speaker 3: Yeah, well, we're very open minded about the prospect of

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Speaker 3: nuclear and I think that's really important for our state

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Speaker 3: because whether people realize it or not, we are involved

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Speaker 3: in the nuclear industry. We've been exporting uranium out of

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Speaker 3: South Australia for forty years now and I think once

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Speaker 3: a week there'll be a shipment of uranium driven down

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Speaker 3: Victoria Road on the La Fiva Peninsula to Outer Harbor

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Speaker 3: for exports. So we are in the cycle and we're

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Speaker 3: going to expand that as we start construction of nuclear

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Speaker 3: powered submarines in the coming years, and I think that's

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Speaker 3: good and exciting for our economy. But what we've said

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Speaker 3: is we're open to nuclear for power generation if it

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Speaker 3: stacks up economically, and what we saw from Kevin Scarse's

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Speaker 3: World commissioned report back in twenty fifteen and twenty sixteen

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Speaker 3: is that it didn't stack up then and it wasn't

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Speaker 3: worth pursuing. And only in the last couple of months

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Speaker 3: we've had another look at this by the CSIRO, an

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Speaker 3: independent research agency funded by the Commonwealth Government to look

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Speaker 3: at what stacks up best for power generation. And again

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Speaker 3: nuclear's expensive, and the reason it's so expensive is because

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Speaker 3: of its construction and installation cost very cheap to run

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Speaker 3: once it's going, But there's a huge cost up front,

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Speaker 3: and so I agree in part with what the IPA

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Speaker 3: is saying that I got to get the mix of

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Speaker 3: baseload right with renewables in your economy, and South Australia

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Speaker 3: should have a pretty good advantage here. And while we

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Speaker 3: don't have nuclear, and while we don't have coal, and

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Speaker 3: I would strongly argue it doesn't make sense for us

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Speaker 3: to have coal. You know, we don't have the coal

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Speaker 3: mines of Queensland or New South Wales streak sample.

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Speaker 1: Not even smart plants.

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Speaker 3: Well, I mean, if you're going to have to truck

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Speaker 3: coal in from other jurisdictions, you've got all of that

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Speaker 3: added transport costs. But what we do have is gas.

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Speaker 3: You know, we've got Santos, We've got the Moonber gas fields,

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Speaker 3: We've got a long history and gas. And getting the

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Speaker 3: mixed right between baseload gas vied power generation and then

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Speaker 3: taking advantage of very very low cost renewable energy when

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Speaker 3: the sun is shining and when the wind is blowing

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Speaker 3: is a recipe for low power prices. But what we've

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Speaker 3: seen in the last three or four years in particular

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Speaker 3: is building additional interconnection into state has meant that the

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Speaker 3: owners of those gas vide power plants. Origin and AGL

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Speaker 3: have said, well, this is going to really threaten the

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Speaker 3: viability of our gas vide power plants in South Australia

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Speaker 3: and we're going to have to start switching off capacity.

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Speaker 3: And so the comment that the IPA makes in their

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Speaker 3: report is South Australia should not be held hostage by

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Speaker 3: the energy networks that we now rely on in Victorian

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Speaker 3: New South Wales and we agree with that. And while

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Speaker 3: most of the focus about our hydrogen jobs plan has

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Speaker 3: been about producing hydrogen, another important part of it was

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Speaker 3: installing a gas fide power generator as well, which can

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Speaker 3: either run on one hundred percent natural gas or one

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Speaker 3: hundred percent hydrogen or everything in between. And that'll give

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Speaker 3: us a bit more capacity to generate baseload gas vide

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Speaker 3: power when we need it in the middle of the

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Speaker 3: night or when the when the wind's not blowing. And

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Speaker 3: that's you know, that re emphasizes how important based low

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Speaker 3: capacity is for the state's economy but also to bring

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Speaker 3: down power price all right.

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Speaker 1: So inclosing, then if Peter Dutton is elected in the future,

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Speaker 1: whether it's this election one after, who knows, if he

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Speaker 1: still has a nuclear policy and he's elected, will you

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Speaker 1: be in the way of him building at Port Augusta

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Speaker 1: or will you allow him to do it?

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Speaker 3: Well, you know, I think the community is going to

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Speaker 3: want to run the ruler over his nuclear plants to

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Speaker 3: make sure that they stack up financially, because if we're

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Speaker 3: seeing huge amounts of taxpayers money funding power generation which

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Speaker 3: is not economically efficient and it's more expensive than using

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Speaker 3: gas or using renewables or using other sources of energy production,

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Speaker 3: I mean that is that's what economists rail against, is

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Speaker 3: inefficient use of scarce taxpayers fund.

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Speaker 1: But if he's elected, he's got that mandate, so people

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Speaker 1: have presumably done that. So will you support him or

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Speaker 1: will you be in the way? Will you stop it?

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Speaker 3: Well, well, so I guess just let me walk you

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Speaker 3: through our consideration versus the economic Well, no, it is

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Speaker 3: because you've got to consider it from an economic and

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Speaker 3: an energy bill perspective. So that's test one. Test two

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Speaker 3: is what does it mean for the local community and

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Speaker 3: is there is there community consent for it up there

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Speaker 3: in Portugusta. And there are mixed views about that. Some

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Speaker 3: people think it's great, some people think it's it's dreadful

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Speaker 3: and a waste of money. But the other part of

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Speaker 3: it is how does it integrate into our energy networks,

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Speaker 3: make them more resilient and bring down their power price. Now,

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Speaker 3: Peter dunn't Peter Dunton has announced seven sites around the country.

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Speaker 3: He hasn't said what the power plant's going to be.

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Speaker 3: He hasn't said how much it's going to cost, and

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Speaker 3: he hasn't said who's going to fund it, and he

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Speaker 3: hasn't said what the impact on power bills will be. So,

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Speaker 3: you know, it's an idea and for some people it's

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Speaker 3: a nice idea, but there's no detail about it, Matthew.

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Speaker 3: So I'm not in a position as the state's treasurer

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Speaker 3: to say I'm going to come out and back these

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Speaker 3: plans or on going to block them, because they're not

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Speaker 3: really planned yet. They're just ideas. But it sounds like

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Speaker 3: you're far from a thought bubble.

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Speaker 1: You're walking, you're talking the talk on New clear but

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Speaker 1: when it comes time to do the walk, you don't

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Speaker 1: want to do that.

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Speaker 3: Well, let me tell you how we're walking the walk

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Speaker 3: on nuclear We've got an out and easy labor government

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Speaker 3: that has committed to building nuclear powered submarines and expanding

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Speaker 3: our nuclear industry in South Australia and they funded it

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Speaker 3: in the federal budget. Now that, of course we can

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Speaker 3: get behind because it's not an idea. It is a

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Speaker 3: rock solid budget funded commitment of a federal government. So

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Speaker 3: you know, when we get to that point, when we've

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Speaker 3: got something in front of us with detail that's committed

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Speaker 3: and funded, that's the point in time that we'll be

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Speaker 3: in a position to give it proper consideration, not when

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Speaker 3: we've got a press release from an opposition leader federally

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Speaker 3: that hasn't got any detail, costings or commitments behind it.

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Speaker 1: All right, appreciate your time this morning, Stephen Mulligan, Thank you.

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Speaker 1: Thanks Matthew Treasurer of South Australia on the independent public

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Speaker 1: report that has come out, the Instant Rather of Public

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Speaker 1: Affairs that has come out saying South Australia basically doing

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Speaker 1: it right economically leading the nation along with Wa. Our

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Speaker 1: biggest stumbling block power prices and as you heard the

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Speaker 1: state government the treasurer, yeah, we're all for nuclear if

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Speaker 1: it stacks up. But hang on Peter Dunton's plan. Now

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Speaker 1: there's a lot to come