Water Journal : Water Journal April 2014
6My Point of View WHERE TO FROM HERE? WHY WE NEED AN INDUSTRY POLICY TO SECURE OUR FUTURE WELLBEING Göran Roos WATER APRIL 2014 Göran Roos chairs the Advanced Manufacturing Council in Adelaide, is a member of the Economic Development Board, the Council for Flinders University and CSIRO's Manufacturing Sector Advisory Council. Göran was appointed "Manufacturing for the Future" Thinker in Residence by the South Australian Premier for the year 2011 and a member of the Prime Minister's Manufacturing Leaders Group 2012--2013. He was selected for the Committee for Economic Development of Australia (CEDA) Top 10 Speeches 2013: A Collection of the Most In uential and Interesting Speeches from the CEDA Platform in 2013 for the Speech: 'The Future of Manufacturing in Australia: Innovation and Productivity'. Most of what we value in society costs money, whether this be health care, aged care, education, infrastructure, utilities such as water, gas and electricity, public transport, the legal system or emergency services. The ability for the public sector to fund these valued services rests on the country's or state's ability to raise enough funds, either directly -- for example through GST, fees and tax on pro ts; or indirectly, for example from tax on the salaries of individuals employed in value-adding activities -- from the value added that takes place within the country or state. To fund the increasing costs of providing such services, the underpinning value added also needs to constantly increase through a combination of two factors: 1) the volume of value-adding activities needs to increase through such things as population growth, growth in the number of companies and business, and company and business growth; and 2) the value added in each value-adding activity needs to increase. THE CHALLENGES OF A SMALL ECONOMY In South Australia we do not have suf cient population growth, business growth or entrepreneurial activity to succeed in increasing the available funds solely from growth in the number of value-adding activities. This leaves the opportunity of increasing the value added in each value-adding activity. Unfortunately, however, the smaller the economy the less likely it is that this will happen of its own accord; or in neoclassical terminology, the smaller the economy, the more market failure becomes a feature of the economy as a whole. South Australia is a small economy; hence there is a role for government to develop industry policy -- a frequently misunderstood and maligned term. Modern industrial policy is the intervention perpetrated by government with the aim of improving business environment or in uencing a shift in the economy towards a structure that can generate higher economic bene ts and, hence, contribute to social good. Interventions such as this will only take place if their absence would not generate the same or higher bene cial outcome.
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