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Recently, a bill that would see Elon Musk and his ilk able to work above the state laws of South Australia was vociferously shot down. I think we should do it, as history has shown it to work.
When the opportunity to defend the seemingly indefensible with respect to my home state arises, I just can’t resist.
The South Australian State Government recently introduced a bill to Parliament called the Research, Development and Innovation Bill of 2017. The bill was the idea of State Premier, Jay Weatherill, the purpose of which was to send a message to companies (particularly in the tech field) “that South Australia is a place that’s prepared to try new technologies and do new things in new ways.”
Whilst the purpose as described by Weatherill appears sound, the bill met fierce opposition immediately; so much so that it was withdrawn within days. The opposition was borne out by the fact that the bill would effectively grant exemptions to almost all state laws for businesses that fell under it.
The Greens and the Law Society were unhappy, arguing that the bill was “too broad”, with Greens Legislative Council member, Tammy Franks, quickly presenting a petition with 10,000 signatures to the upper house, prompting the bill’s withdrawal.
At first glance, the opposition is extremely understandable. The idea of providing exemptions to state law for particular corporations does appear to go against the fundamental values of our legal system. In reality, such advantages of course already exist in a number of areas. However, to have them so blatantly given is bound to leave a bad taste.
I’ve longed for politicians willing to put their careers on the line to put an idea out there. The best years of South Australia were built on the backs of politicians doing just that, and it’s been a long time between drinks.
I’ll admit, such a controversial suggestion immediately caught my attention. It’s no secret that our economy has myriad problems and workable solutions seem to be few and far between. I’ve often said during passionate political debates with friends and family that courageous and unconventional thinking is exactly what the state needs to remedy this. I’ve longed for politicians that are willing to put their own careers on the line to put an idea out there that might be considered outside of the square. The best years of South Australia were built on the backs of politicians doing just that, and it’s been a long time between drinks.
Let’s strip back the hyperbole a little. While it is true that the bill does open the door for corporations to be exempt from the majority of state laws, it’s not without caveats. In the first instance, such an exemption would be granted on a case by case basis and is subject to approval from the Governor (following assessment of any application and recommendation by a minister).
The second very important thing to consider here is that exemptions to federal laws can obviously not exist and any and all corporations would still be bound by them.
The third thing to keep in mind is that we aren’t talking about any old business nor are we talking about any old business activity. The Act specifically makes provisions for Research and Development.
The final is that there are a number of considerations that must be made by the Governor before providing such an exemption, including:
- Whether the activity or project being undertaken is in the public interest
- Whether any identified risks can be eliminated or minimised
- Whether there is a risk of loss, harm or other detriment to the community if the project or activity does or does not occur; and
- Such a provision can’t be made if the project or activity gives rise to any adverse effects to public health of the environment.
- It also cannot under any circumstances breach the Aboriginal Heritage Act of 1988.
Despite the checks and balances included, it still places significant power in the hand of one individual, which I’d argue that most of us aren’t usually in favour of. The Governor position in South Australia is akin to the Governor General position federally and shares the same constitutional and ceremonial function. As the representative of the Crown, the position is impartial – in theory.
The primary issue is that the result would be effectively giving someone the power to circumvent both the legal and political system – which it’s hard to be in favour of.
Or is it?
It’s hard to argue that we don’t have a serious problem with our political system. We have two parties that are far more interested in either improving their position or destroying the position of their opposition than acting in the public interest. A politician from either major party could formulate the greatest idea in the history of this country and it would invariably be argued against by the other side simply because they didn’t come up with it. It’s no wonder that things have felt like a standstill, or a backslide, for at least a decade. Then we have minority parties and players who should be there to add missing voices but more often than not are just looking for the opportunity to be the kingmaker to further their own political aspirations.
To date, no-one has been able to suggest a way to fix this problem, short of a revolution. Under our current party system, those with fresh ideas and the courage to implement them will either be flushed out and removed or moulded into the party line well before they are anywhere near a position of influence – then once in that position, they will have to serve the relevant factional masters and ensure they fight their opposition at every turn before possibly sparing a thought for the citizens they are supposed to be working for.
If that wasn’t bad enough, then the issue of job security comes into play. The second they are elected, the job to stay elected begins. The easiest way to stay elected is to not screw up and to tell people what they want to hear.
Innovation and progress don’t live in that space, they are killed by it.
Under our current party system, anyone with fresh ideas and the courage to implement them will either be flushed out or moulded into the party line well before they are anywhere near a position of influence.
So maybe the first step to solving the problems with our political system is to circumvent it. When our pollies are ready to come back to the table and do their jobs we can hear them out. I’m not suggesting a free for all, nor am I suggesting that the wording in the Research, Development and Innovation Bill offers sufficient protections from abuse. What I am suggesting, however, is that the idea is sound and perhaps needs some polishing.
The tech industry has the potential to provide a significant portion of our GDP, employment and outside investment. Not only is it an industry with effectively unlimited growth potential but the flow on from it has positive and far reaching effects across an entire society. In addition to investment funds and jobs, a robust tech industry provides innovation and research that helps the areas of the economy that we spend our money on. It can make our health sector more effective and more efficient. It can make our education system more effective and efficient. It can make us internationally competitive with everyone. Assuming we can manage Internet connections that provide speeds from this century, of course.
Making South Australia as attractive as possible for investment from this industry is unequivocally the smartest move that our state government can make. We’ve wasted enough time complaining about the (inevitable) demise of our manufacturing industry, it’s about time we actually did something to replace it.
Take the US state of Delaware as an example. Delaware is the second-smallest of the 50 states and the sixth-least populated. You could be forgiven for not having heard of it.
Delaware in many ways has a similar history to South Australia. For much of it’s modern history it has relied on traditional manufacturing, resource and agricultural industries. So much so that one company (DuPont) has actually been responsible for a large portion of the employment base in the state for around 200 years.
Beyond DuPont, a strong agricultural base featured throughout the twentieth century, as did the oil industry. The US was hit by a couple of recessions in the early ’80s, yet this little state (filled with the types of industries that are the first to be hit in a recession, and with one company employing a large portion of its population) was one of two states to improve its financial position and by 1988 enjoyed the lowest unemployment in the country.
The second-smallest state now has the ninth-largest number of millionaires. The presence of these corporations has also created a significant legal, finance and government employment base.
Part of this was due to a long standing legal system in Delaware that was very business friendly, including a specific chancery court for settling corporate disputes and 200 years of case law to back it up.
In addition, there were some very bold moves from the former Delaware Governor, Pierre “Pete” S DuPont IV in the ’70s and ’80s that loosened regulations for the financial industry (specifically the growing credit card industry), and a few other choice provisions that made Delaware so attractive for corporations that it would be fiscally irresponsible not to set up headquarters there.
When DuPont took over the governorship, Delaware had some of the highest tax rates and unemployment rates in the country. In under a decade, DuPont managed to half the tax rates and wipe 6% off the unemployment rate – all while keeping the state books in balance the entire time he was in the chair.
DuPont’s legacy saw Delaware become the home base for more than 50% of all US publicly traded companies including 63% of the Fortune 500 list. The second-smallest state in the country also now has the ninth-largest number of millionaires in the US. Around a third of the state’s revenue now comes from fees and franchise taxes associated with companies incorporating in Delaware. The presence of these corporations there has also created a significant legal, finance and government employment base.
What is being proposed in South Australia and what occurred in Delaware aren’t the same thing of course, but without the changes made by DuPont in Delaware, it’s very likely that it would have found itself in a far worse position that South Australia now does economically. A bold and controversial move changed the path of that state for the better by doing something markedly different from what everyone else was doing at the time.
An overused cliché it might be, but the definition of insanity often attributed to Einstein says that insanity is doing the same thing over and over again and expecting a different result. If South Australia wishes to break the cycle of insanity, then it’s about time someone risked ridicule or opposition by proposing something that others might consider insane. So I applaud the Weatherill Government for doing just that. They don’t have it quite right yet, but with more work and consultation, it could be pushed through. It will require the courage to ignore much of the inevitable opposition and a firm belief in its efficacy. It will take mettle seldom seen from our political class these days where such belief is more important than the risk of political suicide. That’s how you leave a legacy instead of a bowl of tepid water.