Adrian Tembel: 0:00

Let's focus on evidence and facts. So So I always start from the point of view of what is the state of our economy? What's the true state and, and what I look at. And I've got my, you know, economist head on, and my policy hat on, you have to look at the long term facts. And you have to look objectively at how we compare in particular to other states of Australia. And when you do that, for our state, it's it grim. It's not I'm not here to be negative about the public sector. But you start to build a picture of an economy over the last 2530 years older, less educated, more inward looking, bigger government. So they were very useful jobs and industries at the time, but that's all vanished. What have we replaced those industries with? We've been trying to replace them now, the last 25 years, your future jobs. But that data I just presented to you before that the real growth has been in administration and healthcare inward looking jobs, is a sign that we're not diversifying our economy successfully. Hence, we'll get to this later in the podcast, you know, are our policies working? And what about the next time so so we have to manage that debt level, so that we can respond to opportunities but risks in the future, and I believe are a little bit of a delicate stage. And I think we need bipartisan discussion on what is our sustainable debt level two, ensure that we're not or that we are appropriately protecting future generations.

Daniel Franco: 1:39

Hey, there, my name is Daniel Franco. And this is the creating synergy podcast, your business and leadership podcast where we speak to high profile leaders and thinkers about their careers, and dig deep by asking the questions we all want the answers to uncovering their stories, strategies, leadership lessons, and their secrets to success. Today on the show, we had Adrian Tembel, CEO of Thomson Gear and chair of the South Australian Productivity Commission. So Adrian is challenging the economic policy consensus in South Australia. And I believe in this debate. So I really wanted to give him the opportunity to set out his thinking, why he thinks we have an economic problem, and why he thinks our policies aren't working, and what he thinks is the best way forward. So if you're interested in our state, the state of South Australia's future, then this is a must listen. So without further ado, here is my conversation with Adrian Tembel. Welcome back to the creating synergy podcast today we have a returning guest, Mr. Adrian Tembel. Welcome back to the show.

Adrian Tembel: 2:47

Thank you for having me.

Daniel Franco: 2:48

So CEO of Thompson Gear, but today we're going to be talking to you about your role as the chair of the South Australian Productivity Commission. So very, very excited. We've been thinking about this podcast for a long time.

Adrian Tembel: 3:05

it's been we've It's an ambitious podcast.

Daniel Franco: 3:06

It is, it is explained that, but being a returning guest, I do want to how did you find the process last time? Did you

Adrian Tembel: 3:14

know look, I enjoyed it. And I was very surprised by the level of feedback I received on it. You're right? Remember, we joked about there being maybe two listeners, a wife, and it was actually four, really as much more successful than I expected. I really enjoyed it. And I found it really useful.

Daniel Franco: 3:33

Excellent. Now we had I mean, you're, you're probably one of the most downloaded podcasts that we've had so very successful, we received a ton of feedback. So if you haven't listened to that one, that one's about Adrian and his story and how he came to be the great human that he is. But one, I do want to point out that after that podcast, there was there was a nice little write up for you in the advertiser wasn't there?

Adrian Tembel: 4:00

There was I think, I think they used your podcast as a bit of the basis of that story. They did so it was it was very efficient. So the local media formal and informal media working together.

Daniel Franco: 4:12

They did our... Do you? Do you remember the title of the of what the article was?

Adrian Tembel: 4:19

I do? A bit of making making fun of me. Because I never asked why they used that title. So the title was Tembel of Boom. Yes, it was. But but you know,

Daniel Franco: 4:33

I know I'm thinking surely your new nicknames Indiana like

Adrian Tembel: 4:40

it was making fun of the fact that I can be a little negative sometimes

Daniel Franco: 4:44

are really so yeah. Shouldn't be

Adrian Tembel: 4:49

making fun of me a little and trying to say that I'm more constructive than

Daniel Franco: 4:53

well done. Yes. No, I think that I would have said timbul of boom and I I know you being really passionate about South Australia and the opportunity that we do have. So I took it as the way it was written. But I did have a laugh. And I was. I mean, you did have Harrison Ford about Yeah.

Adrian Tembel: 5:13

I don't think that was. Actually, I'm glad you started that. And because it goes to the heart of what we talked about today. Which is we can boom as a state. But we have to do some hard work to get there. Sometimes that means hard conversations and talking about things that we don't like talking about. So due to Boom, maybe,, yeah, maybe that's the next line, we have to work.

Daniel Franco: 5:41

Yeah, well, we'll touch on some of those points, going going through it. And just a shout out to the advertiser, it was a great article, but just mentioned the podcast next time, because I think you're quoted a few times in there, and they didn't, they didn't give us a plug, I pay my $22 subscription fee every single month. So give us a plug next time. Now, but all jokes aside, you know, you are running one of the biggest legal firms here in the biggest legal firm here in South Australia. And one of the I think around about the top 10 in, in Australia, but we're going to talk to you about your role as SA Productivity Commission chair, can you please start off with just explaining your role as the as the productivity chair, if you could not

Adrian Tembel: 6:28

have very pleased to, and the former Premier, Stephen Marshall had a real ambition to inject, I believe. Real Economic discipline, and good economic policy across SA government. And so one of his election promises, was proud of winning in 2018, was to create a Productivity Commission in the form of the federal body, which I think over the years has been around for decades, used to be viewed a little skeptically, particularly by the progressive or left side of politics as maybe being a little right wing or too rational and a bit too hard. But over the years, I think that federal body has won a great deal of respect for being a source of evidence based, independent thinking that can inform the community and particularly the political class. So Stephen wanted to create that here in SA our own little mini version of it, I think was great policy, I was believed in it, that he got me involved. I was delighted. And I became the Chair, Chairperson Chairman, just not not long before the last state election. So of course, it was Stephens, baby, or the liberal party's baby. But to the great credit, I believe, of the new government. The Mellon ask is government they've embraced it. Peter also believes in it. And he's looking forward to hopefully the body continuing and hopefully getting better at providing good sources of independent evidence based thinking that can assist us being a great state.

Daniel Franco: 8:07

So where does this evidence come from?

Adrian Tembel: 8:09

Well, that's, that's interesting, isn't it? Because there's so much data out there. There's so many facts, but a lot of it is hidden away. And it takes people like, you know, the South Australian Productivity Commission, the team and myself, to find it, understand it, and try and translate it into what it means and what it means to policy in the future in the state. So it sounds dull. And you know, Daniel, one of the challenges you and I have today is to turn what could be a little bit of a dull topic into something other state economy. Yeah. into something that is interesting and useful. And that's our objective. Yeah. And I hope we achieve it.

Daniel Franco: 8:50

Well, I and we will point out this is a South Australian focused. And yeah, and really, I think what we want to go through today is some of your viewpoints as the as your as the chair, but you've been a bit controversial with some of your thoughts. Is that correct in saying In saying that,

Adrian Tembel: 9:11

I think that's fair. I think, look, I can tend to come across sometimes as being a little not negative, like I said in the opening remarks, but a little bit focused on the bad rather than the good. A bit like a, you know, an opposition leader or a contrarian, I don't I don't think that's me. But it can come across that way. And I, and I've operated my business career that way. I was quite a critic of earlier management in my law firm. I believed that I was right. It could have been viewed as a little divisive at the time, but over time, I think the thinking was validated. And so that gives me confidence as I get older, to back my instincts and my judgments and say things that might not make me popular, but I hope over time are useful and might even lead to those views being respected one day, so that's why I'm here. I don't expect anyone to say, Gee, he's a nice guy. And I want to follow him to the end of the earth. Yeah. But hopefully there's something meaningfully what I say. And it's of use to some people.

Daniel Franco: 10:15

You're a half glass full critic, though, right? Because you sat from the point of view of, I want this. I love South Australia, and I want it to grow.

Adrian Tembel: 10:24

I'm one of these. And marketing consultants hate me. In professional services, I've worked with plenty of them in my business career.

Daniel Franco: 10:33

Why is that?

Adrian Tembel: 10:34

Because generally speaking, the marketing consultants would come to us and say, we can market you to greatness. And I would say, I think we can be great. But we've got a lot of hard work to do, to build our capability and to be the best we can, before we start advertising how great we are. So let's put all that on hold. And let's look at ourselves to be faster, fitter, better, educated, more competitive. And then when we have achieved all of those things, we can communicate facts about how great we are. And there'll be real, and people will believe it, and we'll be then successful. So so I'm, I'm a little bit from that school of, I'm an optimist. I believe we can be great, I think most things are possible. But you've got to do the hard work to get there. Which means sometimes early on in the cycle, it's not as much fun as we'd like.

Daniel Franco: 11:31

No, it's not. But I do like the approach, I mean, put the horse before the cart, right? That's essentially what you're doing. Which is

Adrian Tembel: 11:40

why if you don't mind me jumping in, and I think this applies to your business, my business, your family, my family, you know, a sporting club, a state a country, you, you really have to accept that if you're going to get better. Who would say that there's an easy way to get there. Most of us would say, let's use a sporting club example in particular. If you're down if you didn't make finals and AFL finals, you know, the week after next. So it's topical. If you didn't make finals this year, that any of the fans of that club that Adelaide and Port Adelaide, does anyone believe that there's an easy way back, or to the fans believe that you've got to make some changes, maybe train a little bit differently, work really hard over the summer, and then you might make finals next year. So I don't think anyone in the community ever believes that. There's an easy way to greatness. But sometimes I'd be interested in your views. Sometimes our political leaders feel obliged to say, we can make things better. But wait, there's an easy way to get there, you know that they almost feel something I almost feel sometimes that they feel that they don't want to put the pressure on the electorate or make them feel that there's going to have to be some compromise or some pain along the way. And that's that's unfortunate, because then maybe they're not telling the full story of the pathway to

Daniel Franco: 13:05

I think, is it? Is it just a poor form of greatness, communication? I mean, anyone in a senior role like that would clearly understand Nothing's easy, right? There's there's a lot of moving parts within within that.

Adrian Tembel: 13:17

I just think it's politics is such a it's such a tough business. Yeah. And it's hard to be viewed. You know, it's hard to get elected when you're a pessimist or when you're saying we all have to tighten our belts. I mean, that's not a, that's not a great pathway to winning votes accept that. But still, sometimes I think that if we can just communicate a little better around the challenges we face, then we're better able to solve them, and really get to a sustainable place of success.

Daniel Franco: 13:48

Right? We're not here to solve the world of politics. No, no, no, no, no. But is that your role? Is that your role as productivity is to point out those facts?

Adrian Tembel: 13:57

Well, certainly my role is to stay out of politics. And I do yeah, and I'm like you. I'm an Australian citizen. So I vote, I'm obliged to. But when it comes to my role as the chairman of the Productivity Commission, it's free of politics. I've got zero interest in it. It's all about SA and the best information possible that could assist those those who really are the leaders, like a current Premier, or you know, opposition leader.

Daniel Franco: 14:21

Brilliant. Just a quick note, this episode is brought to you by Synergy. IQ leaders in enabling change. Synergy IQ are the ones you call when the change or challenge seems so complex, and you don't know where to start, but more importantly, where the ones you call when you want to make a change that will actually last if you want to check them out. It's at Synergy. iq.com. Today you are I will let's get into what we were really keen to discuss and you and I have been having this conversation for quite some time about getting this podcast together. You came to me and said Dan, I wouldn't mind challenging the state's economic policies and putting it out there for for people to listen too, and I'd love to do it through your platform. So thank you for reaching out, I don't normally do the policy stuff, it's not my strong game. So I am really going to come at this from a from a person who is curious, that is going to be my position, I'm going to learn what your thought process is. And we are going to share it. And as we said, it may be controversial, it may be different to what some others believe if there's anyone out there who's keen to come in and and counteract or kind of challenge this back, then I'd be like, I'd love to have you on the show as well. So feel free to reach out. But we're here to challenge the economic policies that the state has in place and has been in for the past 30 years. Can you tell us what those government policies are first, please?

Adrian Tembel: 15:43

Yeah. And do you mind before I do that, just to set the scene? Cuz I'm very keen to do that. And I've done that, and a few speeches that you've heard? Yeah, my thesis of essentially years, that we, we have to just leave anecdotes at the, you know, at the door, that is our, you know, we've just won a particular company to Adelaide. So a great little Yeah, that's an anecdote, that's just a single standalone event, it doesn't mean that the economy is stronger. Yep, leave that at the door. And let's try to leave opinion at the door as well. And let's focus on evidence and facts. So So I always start from the point of view of what is the state of our economy? What's the true state and, and what I look at, and I've got my, you know, economists head on, and my policy hat on, you have to look at the long term facts. And you have to look objectively at how we compare in particular to other states of Australia. And when you do that, for our state, it's it grim. And I go back 30 years, as you say, I use the state bank won't call it disaster, but set back in the early 90s, as a starting point for modern essay. And what I say is, things haven't really worked that well set. So what do you mean by that? So So firstly, we build the picture up, as we're an aging population, we have structurally become older, over that period. And so that's viewed as a challenge for healthcare system point of view. That's point one. And relative to other states, we we are older. So that gives us that's a bit more of a burden on future generation. The second point is we're less educated. So so the percentage of our workforce the 25 to 44 year old, you know, the engine room of an economy, South Australians are structurally less educated than in other states, for example, in all the other states, except for Queensland, the biggest portion of workers in that 25 to 44 cohort have got university degrees in our state, that's a smallest portion of our workforce. So it just gives you a taste of the fact that we're older than the other states.

Daniel Franco: 18:00

What does that what does that mean, though? Like, I get it from a innovation point of view, we obviously don't have the big company to attracting those talent. Is it? Is there an exodus of of those? Well,

Adrian Tembel: 18:13

there might be Yeah, it might well be that because we haven't had the jobs that people have left. But on education, just just because that's a really good point, because that's been put to me. So when I've said before, that we've got a less educated workforce, people say, Well, you know, we've lost people. So is that our fault? I think it actually is, but let's just pause it. But there's another important factor as well, which is that less of our school leavers go into higher education or jobs. So it's a statistic around 65% of our school leavers go into higher education and jobs. The national average is more 73 or 74%. So something's going on in our education, our pre university education system, which means that we're generating less people that go on to build higher levels of skills, which means less people going on to higher levels of income, and value creation, which is what we all aspire to. If you look at the last few years, the narratives gone from employment because we've got very low unemployment, you know, that we need jobs, too. We want well paid jobs, and lack of wages, growth has become a real issue, and no one likes lack of wages, growth, particularly South Australians. So that's an issue we have to solve. So sorry, I've segwayed there, but just going back to you edge it. There's an issue with the level of education in our state, and that's a key marker of future economic success. So So that's, that's a second weakness. The third the third weakness that I really keep an eye on is the types of jobs that we have been creating in SA over the last 25 to 30 years. And essentially, there's been I wouldn't call it an explosion but significant growth in jobs in administration, government, aged care, health care. So basically jobs which are inward looking, yeah, we're administering or we're caring for ourselves. There's no export element to there. There's very limited growth opportunities. And generally those jobs are not as well paid as working for a high value exporter, you know, a drug company or a tech company that's taking on the world and making big profit margins. So So there's been a real growth in those jobs,

Daniel Franco: 20:34

where you can see the clear link between the education and the job,

Adrian Tembel: 20:38

it makes sense, doesn't it? Yeah. And you're right, we'll build a picture up. That makes sense. And then there's another just makes total sense, doesn't it? That the jobs of that nature are growing? We've already got we're getting older, that makes sense, we're triggering more need for those types of jobs. But they're not high paid jobs. They don't really they're not the career paths, not necessarily as interesting as joining in the ground level, a large export, that has the world at its feet,

Daniel Franco: 21:05

or young startup, you know,

Adrian Tembel: 21:06

the education that those jobs are growing. And

Daniel Franco: 21:06

Well I, so I can talk to that fleet. vilify, if I the jobs of course, that have contracted over that period were manufacturing jobs. So these were jobs, which were industrial and could lead to value add, and maybe export, they've contracted. And meanwhile, Daniel, with all of that the percentage of public sector, or the public sector wage bill, over the last 20 years has risen from 8%. of gross state product to 9%. might not seem like a lot, but our gross state products, about 115 billion. So we we've started to as a percentage of the state, there's another billion dollars that has gone into public sector wages. Now I'm not here to be negative about the public sector. But you start to build a picture of an economy. Yeah. Over the last 25 30 years. It's older, less educated, more inward looking. Yeah. Bigger government. will, and I come from my background, from a nationality and heritage point of view is Italian point of view. So parents have come in from overseas, well, my mom, my dad was born here. But he was he was a young Italian family as well, when they only just arrived when he was born. So growing up in a world of security is what was really important to them. Right? If you think of from a value set point of view, I remember and I have previously worked for government before this podcast and me starting my own business. And I remember when I got the role within government, the words that came out of my parents mouth or parents mouth, or even just their attitude was, right now you're safe. You're safe. You're you're okay, you will do okay. And then I remember when I left, there were people in my community and family community that would say, why would she leave the comfort of a government role? You know, so there is very much a,

Adrian Tembel: 23:05

that's a very good story. I think that's a really important story, I the same thing my mother wanted me to work at, it's the electricity trust, because she thought that was secure, she still repeated to this day. Now. That's, it's an interesting example of the psychology of our state, isn't it, that two of us sitting here randomly both had the experiences of the government being a good source of security, government's important, but it doesn't really grow the state in the way we want it to, you know, we want higher wages, you know, come to wages in a moment how they compare. So to do that we have to grow and true growth, sustainable growth that creates wealth, of course, in the private sector. So it's interesting to me, there's another, I think there's another really important element to that in parallel with that phenomenon that you you just described, there was also the protected manufacturing industries that you grew up a little bit with, but I did as well. white goods, textiles, motor vehicles, yeah. And that, and they were, they were quite well paid jobs as well. They were protected by the federal government. So they had a semi semi government nature to them. And they were great stepping stones for whole families to go from, you know, working class migrant, get their kids educated. So they were very useful jobs and industries at the time, but that's all vanished. What have we replaced those industries with? We've been trying to replace them now for the last 25 years with future jobs. But that data I just presented to you before that the real growth has been in administration and healthcare inward looking jobs is a sign that we're not diversifying our economy successfully. Hence, we'll get to this later in the podcast. You know, our our policies working because there hasn't been a state government since 1991 92 of both political persuasions that hasn't said Our objective is to diversify the economy and pursue higher value jobs through innovation. in technology, that's that's a 30 year old story. Yeah. But Daniel, what are challenges? Has it worked? And that's the big debate that I'm having with you, and hopefully others in the future

Daniel Franco: 25:10

or to play devil's advocate. And I don't know, if you've got these numbers in front of you, if you look at that growth percentage from 8% to 9%, in the public sector from a wage bill, is there. Do you have the statistics from private industry? Is there a growth in that area too? Or is it just?

Adrian Tembel: 25:26

Well, what? That statistic really what it what it shows, it doesn't say that the wages Bill has gone up. Okay. It says that it's, it's gone up as a percentage of the economy. Okay. So if you think about the economy, it's 100%. Yeah. And you know, 8% of it is a public sector wage bill. And that's become 9%. So, you might say, 1%. Adrian, really, is it really material, but I think, coupled with the other data, it shows a trend of government becoming more central to the economy. And that my argument is that that is not consistent with wanting a high wage, high growth economy.

Daniel Franco: 26:05

Yeah. And is that what we want?

Adrian Tembel: 26:08

Well, I'd be very surprised. A good question. Because exactly going back to your point, well, your mum, and my mum wants a job security. So are people happy? If they earn less, but they have more secure and simple and comfortable lives? That might that might be the case, that might be the case. And that's for the political class to work out every four years at election time. That's not a matter for me. But what I say is, most people will say, and if you look at the last federal election, in particular, it was we can deliver, we need to fix low wages, we need to create wages, growth. So I say, Well, if you want wages growth, then you need to get the right policies to do it. Because the last 25 years of policies here, at least at state level, I don't think have delivered in that respect. And just if I if I can just go to that point. Yeah. It's very, very relevant to wages. Yeah. productivity in Australia, over the last, you know, if we measure over the last 25 years, is viewed as having not progressed well, particularly the last five years. But our productivity growth is often blamed for our low wages growth in Australia, can you explain productivity, productivity is you put in a unit of time, and you put in a unit of capital, and you get an output, you know, you create this coffee cup. And then next year, if we put the same units in, but we create one and a half coffee cups for the same units, that means our productivity has risen by, you know, 50%. Makes sense. Now, with the same amount of inputs were creating more. So guess what, that's going to be more profit. And the theory is that more of that profit trickles back into wages. Now the unions and the right wingers will debate that. But let's just leave that aside. Our reality is, the economy will be stronger, if we're more productive if we're doing more today, than we used to do yesterday with the same level of input. So in Australia, the level of that growth Yeah, the amount of more coffee cups we're producing, has been very flat and is criticized. But in SA, but it's but there has been growth. Yeah, modest growth. But there's been Australia, in Australia, in SAE over the same period, it's actually gone backwards. So over the last 25 years, and you see my graph here, yeah, you can see the red goes down, the yellow goes up. What that means is that over the last 25 years, just using this example, we used to make one coffee cup an hour with, you know, a worker and a machine. And now we make about three quarters of a coffee cup. an hour. That's so it's hard. Well, I think it is because it's hard to justify higher wages and a better standard of living and better schools and better hospitals and more police. If we're not doing more, in fact, we're doing a little bit less

Daniel Franco: 28:50

well, you take out the Mitsubishis. And the Holden's from that that graph is that why is that? Is that those industries? Or

Adrian Tembel: 28:57

it could be Yeah, it could be, but whether it is or not. That's done. And that's, you know, Mitsubishi left here a long time ago, Holden more more more recently. There's a long term trend here around the growth of the jobs I described before. But there's not this parallel growth in these export jobs, which create whichever side of competitiveness and create high value jobs that want exports. If we can go to that, if you don't mind. That's another key metric. At the beginning of the decade, century, my apologies 2000, South Australia produced 8.2% of the country's exports, which which is pretty good. But now we're down to 3.2%. And in fact, the last the last goods, export data, the export of goods, not services, but goods, we're down to 2.7%. So so if you analyze that, that's starting to get that starting to look very, very small. We're about 6% of the national economy, but we're now less Some 3% of national goods exports. Now, that could be a sign of lack of competitiveness. Because exporting into the global market, you have to be super competitive because you competing with the whole world, yeah, people will only buy your services or goods or commodities, if you do it really, really well. And our state has gone backwards. Now, we have grown marginally our exports over that period, but the other states are racing ahead. Partly, it's gas, partly it's iron ore, but you can't keep using that as an excuse, as our Queensland and WA are booming. Hence, you know, we're just drifting back, we're still okay, the reality is we're not keeping up. And that means that our kids will have less money spent on them in schools, our parents less money in hospitals, because our economy is getting smaller, and poor. So I think these issues are important. Just one final point before I pause, is that our wages our wages are lower than other Australian wages, both in the public sector and in the private sector. And that trend is in the wrong direction. I've actually softened steadily over that last 25 years. So we're just earning less than other Australians. And again, I don't like the fact that we're getting poorer than the rest of the country.

Daniel Franco: 31:19

That's a problem. On the exports, pace. Right. And we'll probably jump into later on what the what what your thoughts are and what the state should concentrate on. But from a defense point of view, if we are known as the defense state, Does, does that affect the export? I mean, that doesn't the defense work doesn't go towards exports, does

Adrian Tembel: 31:43

it? Well, it will, it could, it could spawn an export industry and the dream of the recent federal government's and you remember Christopher Pyne, and very prominent South Australian, was quite central to the attempt by the federal government to reindustrialize, Australia. And that project continues. And we hope it's successful. That the HOPE has always been that we will produce, for example, a new generation of submarines. And that could be that that's not just the development of a sovereign industry and capability, but also be the springboard for innovation and therefore, exports of defense products. And I think there might be some beginnings of that. But it's very, very early days. So I agree with you. The defense sector is an opportunity for our state. Yeah. But I'll just say one thing, there's always a boat with me, and but you don't want to put your eggs in one. But no, because as we've learned with defense, if you look at the cancellation of the Navarro contract, I think it was last year wasn't yet wiped out. It just shows you how volatile things can be if you rely on one sector, and that's one sector that is also captive to geopolitical risks. So very suddenly, the whole pipeline of work can be canceled as it was. And there's still uncertainty as to what will happen next, with orcas. Will we make our own nuclear subs? Will they be built elsewhere? And so on? Yeah, I don't know the answer. You don't know. No one knows the answer. But again, essays got it. And we should push hard. But we can't rely on it to solve all our problems.

Daniel Franco: 33:20

We need to do something else, because we want to ask the question. And going back to the exports, I think that my point is, is exports, a measure of growth? It has to be is it the only measure?

Adrian Tembel: 33:31

Well, it's not the only measure. But if you're a small economy like us, and all you do is do business between yourselves, yeah, we know the principles of free trade mean that if everyone else is involved in trade, and we're not, we will grow at a slower rate, obviously. So So by definition, we will get poorer than the other States or other countries that are trading with the world and focusing on comparative advantage, the most efficient use of resources than if we are an inward looking economy. So if we made all our own fridges and cars, we'd be so poor, because they would be so expensive. We'd all have all the industries here, but because they've got small scale, the price would be huge. You and I would have no money to actually buy a car, you know, like the old Soviet Union.

Daniel Franco: 34:22

Excuse the ignorance in his question, who is the biggest exporter in Australia, which they?

Adrian Tembel: 34:27

I don't know that off the top of my head by absolute numbers, but who in Queensland are leading the way by a long, long way? I'd say who is the biggest exporter on gross numbers because of iron ore. But of course, gas from Queensland is enormous as well. So So remember, we're a commodity exporter. When you take out agriculture, minerals and other natural resources, we don't do much more, but the other states are way ahead of us.

Daniel Franco: 34:55

Thank you. So in regards to the current policies, Right. So you've you've set up this hysterical picture, you've painted a, the Tembel of Doom. And, and so and you're saying what I'm hearing come out in, in your language is this has been the same way for the past 30 years, which means there's consensus in these government policies,

Adrian Tembel: 35:21

I believe. So. The, the, as I've said, you know, we're older, we're less productive. It's getting bigger. wages aren't growing.

Daniel Franco: 35:29

So why isn't new government coming in? And well,

Adrian Tembel: 35:33

this is where, again, we don't want to go into politics. That's not our job here today. But addressing our growth problem, I think, is a key priority. Over the last 30 years, we have grown at 2.1% per year, the country at 2.9%. Every year, the country goes further ahead of us. So I say we've got it simple, a growth problem. And then exactly what you're leading into is, well, what is the solution? Have we been doing the same thing for the last 25 years, and I believe we have the consensus in this state, for at least that period, is that government, the state government, probably the the biggest player in our economy, 100,000 employees spends $20 billion plus per year in an economy of 115. So it's probably indirect terms, it's close to 20% of our economy. So it's huge. And it makes laws and it can create leadership because people want to watch them on television. Yeah. So that, that state government can have a huge impact on the future of this state, we shouldn't always look to government to solve it, it can have a huge impact. And the consensus has been that government will not just facilitate and step back, but it will drive and create jobs. And then it will have a very interventionist industry policy that involves whether it's the development of precincts, or government grants, or trade missions or marketing, the state are giving business services, you know, training people how to be businesses, all of that coupled with, particularly for the last 15 years continuous infrastructure spend. So stimulating the building industry, and then helping businesses win customers, and to raise capital, and to create businesses and to create industries, our state governments have been very central in creating industry plans. So they're right in the middle of the action, they're saying, we're going to help you create industries and create plans, hold your hand, hold your hand, we're gonna, I'm gonna give you money. And on our Productivity Commission, it's probably directly maybe three 350 $400 million a year, year, after year after year, we're gonna spend that, and we're gonna help in partnership with business, we're going to help create this economy. And I say that if that's worked, then you're going to have to find some good evidence to show that it has because all of the macro data I've got more than I didn't describe before, shows that it's not working. Because over the long term, we continue to underperform the other states. So are those industry policies and that infrastructure stimulus? Are they working? And I say, I don't think they have. But if they have produced the evidence, so we don't spend another 25 years doing the same things that may not work over that period.

Daniel Franco: 38:34

So let's paint a picture. Right? And if we continue on this merry path. What does South Australia look like in 25 years? If we don't change? I think

Adrian Tembel: 38:46

you can. Yeah, I think you can extrapolate what's happened in the last 25 Over the next 25? Maybe we'll have some good luck, and something will drop out of the air. Yeah. You know, maybe they'll build, you know, 50 submarines, I was born unlikely, we don't want to maybe there will be a hydrogen boom. And the whole world will come here and invest, you know, 10s of billions of dollars, maybe unlikely. The reality is that if we keep doing the same things, like with most things in life, you will get the same outcomes. And so that's my big challenge. And now, I really want the bureaucracy or the academics to challenge me on this and say, no, these these policies have worked. They have been money well spent, and to produce independent, credible evidence to verify that so we can all be comfortable, and you and I can go off and do other things.

Daniel Franco: 39:45

I have a couple of lines. I am producing evidence, though, then they need to produce evidence that it will continue working and for the next 25 years though, right? Sure. And that, for me is the biggest issue. I'm a proud South Australian law have want to live in a state that is continuously growing and invested in its own growth. But am I the only am I sitting in a minority? Yeah, I mean,

Adrian Tembel: 40:09

the, the growth problem. And there's also we've also got just to finish the picture. Yeah, and let's just dive into that. I think we also have a fiscal problem, I think our level of state debt, which is basically gone from 15 years ago, from around one and a half billion, so basically no debt, within the next three years, it's gonna have grown to about $34 billion. And in three or four years, we're going to be we're forecast to be paying interest of $1.2 billion a year, just interest, just interest, I think about what we could do. If we didn't have to pay interest, we could pay $1.2 billion. Now, that's not suggesting that all of that debt was spent on unconstructive activities. But you'd have to ask yourself this in 2000. And you've lived through that period in 2007, essentially, you know, we were debt free. In the next two or three years, we'll get to 34. That's the forecast in the Budget papers. What do we have $34 billion of value that we've invested, that makes us an incredibly more dynamic, productive and high growth economy, you have to ask yourself that, yes, we got a new hospital. We've got some more, some new roads,

Daniel Franco: 41:21

34,000,000,034 billions,

Adrian Tembel: 41:23

a lot isn't salon. And and we're still in, you know, spending mode. So I think we've got a fiscal problem. And we've got a growth problem. And they are the two issues. I don't want to go beyond that, because we'll make this podcast too broad. They're the two issues that I think we have to face up to.

Daniel Franco: 41:41

So a growth problem and a

Adrian Tembel: 41:43

and a fiscal problem fiscal, you know, I think we got a debt issue. Because debt, you know, up until recently, when inflation suddenly occurred, there was all this talk, that debt doesn't matter, because interest rates are low, and all you have to worry about is servicing debt. And interest rates are gonna stay low for you know, not forever, but for many, many, many years. And all of a sudden, over Christmas, that will change. And suddenly debt does matter. Debt always matters, inflation is always a risk. And it was always high risk that we would grow our debt heavily. Because external shocks happen, things go wrong, countries invade each other. There are oil shocks, you know, COVID occurs, there'll be cyber risks, there'll be a stock market collapse. And if you're not in control of your debt level, then you won't have the money to spend with the next crisis. And so if we're at 34, and interest rates continue to rise, what happens if there's conflict in Taiwan? And we have a heavy recession in Australia? Do we have the capacity to borrow another five or 6 billion and to go and stimulate our economy to protect our families? Maybe, but we're starting to get on the edge. And what about the next time so so we have to manage that debt level so that we can respond to opportunities but risks in the future? And I believe are a little bit of a delicate stage. And I think we need bipartisan discussion on what is our sustainable debt level to ensure that we're not or that we are appropriately predicting future generations.

Daniel Franco: 43:21

There's so much in that. My question, though, coming back to paint a picture, like you said, we could use the data and have a look at it, and it doesn't look so great. But what if we are going to visualize the state of South Australia? And I'm gonna use an extreme example, is it broken windows? When you walk down the street? What does it look like? From a from the point of view of of being in this state? Why will we attract talent? And will we what happens? So I

Adrian Tembel: 43:51

think, what a really important point to make is that at the outset here, is that the narrative particularly at our state, over that whole period, has been to create jobs, to get unemployment down. You know, we've had relatively higher unemployment, we still have the highest unemployment in the country, but it's a 4%. country's in threes now. So we have at the moment, historically, very low levels of unemployment, which is great, because everyone's got a job if they want one. Yeah. But be that means there's a lot more scope for reform, when everyone's got a job. So if we were at 10% unemployment, it's going to be very hard for me to say, let's reform the public sector to create fiscal repair, that then allows us to have the economic platform for future growth. But I think it's very sensible and balanced to say when we have such low levels of unemployment and in fact, employers, private sector employers in Adelaide are saying, we need more workers and we can't find them. You said that to me before this podcast. So so the ability to say let's look at our spending, and let's reform it in a way that makes it sustainable. So we don't have to borrow money every year, I think is more possible now than ever before. So the image you have, you know, smashed glass, you know, the garbage is collected? Yeah, because we've got austerity. And we're just squeezing so tightly that we're all living in a really, really difficult situation. I'm not sure that that's the right image at the moment. Okay. But But still, I accept that reform takes courage. And there's, you know, there's sometimes pain.

Daniel Franco: 45:32

So why, why is this a big problem for South Australia?

Adrian Tembel: 45:38

Because I think like I said before, if for two reasons to kick on Cisco, let's just focus on fiscal can we, with those climbing debt levels with the risk of higher interest rates? Afford, can we afford another COVID? In two years time? So we'd have to let's say, we, let's say we spent round numbers, stimulating the economy, we say, we borrowed, let's just say five $6 billion? Yeah. Could we go to 40? Maybe, but what if interest rates went up by the end to 5%, quite foreseeable. That would mean that we'd be spending almost $2 billion of interest a year. Can we afford another? We're at 1.2 in three years time? So could we afford to spend another billion dollars a year on interest? With all the pressure on healthcare and schools in six or seven years time? If there was another COVID, all as a huge cyber attack? Or there was a war in Taiwan? Could we afford that? That's my question to you. Now you say, maybe, but it started to feel a bit wobbly, wouldn't you? Yeah, credit rating would be reduced, interest charges would go up. And then you'll that's before we even talk about the repayment of that debt. So that's, that's the defensive side of this. Yeah, the offensive side is this hydrogen could be a great new industry, for our state, it could be I've just done some work on it. It's, it's got lots of challenges, but it's got lots of opportunities, and the state should do its absolute best to grab the opportunity. My view, though, is that to win some of that foreign investment to maybe or interstate investment, to build hydrogen export industry, it might well be that it will help a great deal of our state government can co fund some of the infrastructure, ports, cheap energy, water, Queensland and WA, who have got the lion's share of active hydrogen projects. Today, it's a race to try to win this will throw a great deal of money at it and they have the infrastructure, we arguably won't have the capacity to say, yes, our debt position so strong, it's very manageable. If we need to write a check for 2 billion and invest in the future, we can do it. That won't be the case, if our fiscal position continues to weaken, because remember, there's high levels of state debt in some of the other states, particularly Queensland, but they've got a growth history, they've got the Olympics, they've got gas, they've got tourism, they're bigger, that they have a huge level of internal individuals wanting to move there, you know, from Melbourne phenomena have said, I've got growth, we don't have a growth record. So our abilities to sustain higher levels of debt is nowhere near what the biggest states. So so that's why I say fiscal is an issue from a defensive point of view, but an offensive point of view. And I would love to see some bipartisan decision on what our sustainable debt levels actually are. So we then have realistic expectations of what our governments can do. And that, for example, is north north south, you know that, that if we go ahead with that, it's a lot of money, we need to make sure we do a very sensible assessment and decision or whether we can afford it.

Daniel Franco: 49:02

So why are all the other states so much more? Right? She talked about Queensland, Queensland, we've got we've got a weather, you know, weather

Adrian Tembel: 49:10

next tracks. I got that wonderful climate,

Daniel Franco: 49:13

you know, finals Kennicott can argue that all right, so let's let's take that out. But let's take Queensland out of this comment, then. Why is South Australia always lagging behind other states?

Adrian Tembel: 49:26

I think I'm so glad you asked. Because previous political leaders have said and I'm not being critical of them. They've said, look, it's always been the way we don't you know, we're a desert. You know, we don't as you say, we don't have that tropical climate, or maybe some of the natural beauty were remote. We don't have the water. And so Federation, because the federal system helps us Federation, you know, the countries that the states the federated, we should be supported. Because we're often criticized by the big, more powerful states as well. Always putting our hands out for support. And the feedback is, you know, stand on your own two feet. And previous leaders of this state have said, fair enough, we should be given extra support, because we're not as fortunate, just as you said, you know, we don't have all that gas and all that iron ore as others. Now, I always say, I think we've got plenty of value here. And we've got plenty of natural beauty, we just have to see it for what it is. But equally, I always just use two words Singapore, and Israel. And these are two of the most dynamic, extraordinary economies in the world. One's tiny on a swamp. And the other is in the middle of a desert where it's much drier and hotter than here. I can tell you in the summer, it's not much fun. Being there. And surrounded by enemy combatants. Yeah. So so you can do anything. The future of our economy is its people. I'm sorry, I don't I just want to say this, that I just want. And I know there's so many people that feel the same way that we don't want to be apologetic for being South Australian. We want to be proud. And so we need to have a mentality we will we will compete and not always say our but you know, it's unfair for us. And we need a bit of extra welfare from Canberra.

Daniel Franco: 51:16

These rounds, and you're poor that I mean, different position, their backs are up against the wall, they've got no. So South Australia seems to like you said hold its handout, more so than off more than others. But, but why is that acceptable? I mean, I live here, I love this state. I'm a proud South Australian. But I get frustrated hearing that these policies haven't worked. I get frustrated hearing those statistics thing, the things are going backwards. I get told being an entrepreneur and starting my own business in this state saying, if you can do business in South Australia, you can do it anywhere. Why is why is this always come up? Why can can't we be a front runner and a leader in this country or in the world?

Adrian Tembel: 52:01

that describes Australia, I think SA is a little like that as well, on a much smaller scale, of course, because Federation helps us the way GST money is distributed, we get more than the share that we should otherwise be entitled to because of the way it's calculated. Now we've got more as a percentage of our population, members of parliament in Canberra. Yeah, we've got the defense industry here. And then we're just part of Australia, this amazing country, with all these commodity exports, that makes us rich record terms of trade at the moment, so So look, Daniel, I don't know the answer to that we've all got our opinions. But as a matter of fact, is that just that we've been so fortunate that we're in this extraordinary country, and so we've been able to live still very, very well. And not have to necessarily challenge ourselves in the in the in the way that you just said that a Singaporean Israel what?

Daniel Franco: 53:05

What, in your opinion, needs to be done to turn this?

Adrian Tembel: 53:11

Well. We just don't think so. Can we just I raised two issues to be succinct fiscal, and growth. Yep. And we just put fiscal to bed. All I would hope for at the moment, is that the issue is on the table. I think there's been real silence in South Australia for some time now about debt affordability amongst a political class. And I just would hope that both sides of politics would focus in on this issue even more. And look, I might get criticized for saying that the treasurer might say, Adrian I have. And the Shadow Treasurer, I might say, Adrian, I haven't maybe I haven't seen it. Maybe it hasn't had the media attention. I think in fairness that Stephen Mulligan, who's a very competent person is honing in on the issues. But I would just love to see maybe a little bit more bipartisanship on this to say, what is that natural level of debt that we can afford? And do we need to engage in fiscal repair so that can we leave that aside, we can on growth, that's the more exciting stuff because the fiscal is to get the get the platform right now. We want to build on that platform, this fiscal building the platform, I, you know, I've said it before, and I'll say it again, till I'm blue in the face, education and research will be our salvation, lifting the quality and output of our schools, reforming I believe our university system, and I've said it before, I'll say it again, I'm a huge supporter of the current government's commission into South Australian University and contemplating a merger, just so at least we're looking at them as a source of growth and they're an engine room of activity and work out what is the best way for those three universities to act as the end You remember the state? So that's that that's a key and the state's doing that. So I think that's, that's terrific. But on top of that,

Daniel Franco: 55:05

so sorry, just on that, are you saying that there is going to be a merger or they're looking into it,

Adrian Tembel: 55:09

they looked at the policy is we want to examine a merger? Yeah, we have an expert commission, looking at the pros and cons. But really what that policy is, is we want to look closely at the universities and make sure that they are operating in the best possible way for the South Australian economy. And I think that's an activist policy position. And I think it's excellent, I think, I think it's entirely and

Daniel Franco: 55:31

here's the point of that, because right now, we've got three universities competing for the same talent, and effectively not being in the top 100.

Adrian Tembel: 55:39

Top 100. So every every state, every mainland state, I don't think Tasmania has has a top 100 University except for SA so WA, Queensland, New South Wales, Victoria, and UN cameras. Well, more than that, they've all got a pretty strong number two, we don't so when you go to the university headlines first, maybe around the 130 mark, depending on which index but after that it falls away a long way to the university wrestling Flint out in the four hundreds, Mark? Yeah, well, the other states have, most of them have, you know, there's a qu T, or there's a University of New South Wales, where there's a Monash, so there's a lack of depth as well, now we're smaller, but but I just come back to this, universities have got such potential to be a source of, or a form of Rinascente of our economy that I don't think we can just ignore them, we have to tackle them. And I think it's terrific that the government is actually tackling the issue and looking closely at it. On top of all of that, I argue strongly that we need a much more powerful and well funded Applied Research set sector. So to put some color on this, you've heard of the Fraunhofer Institute or institutes in Germany, it's, it's probably one of the key drivers of why it's an industrial powerhouse. The Fraunhofer Institute has, I think, 74 different sub Institutes, you know, 1000s, I think 30,000 In total scientists and engineers, it generates 750 On average patents a year, we need our own mini version of that in SA in the right sectors. And I'm not going to say which sectors it should be that's beyond me, I haven't done the work. But we need to look closely at how we link the high schools, to the universities and then into industry, and have an applied research engine room. And I argue over and over again, and I'll keep repeating it that our public sector spend of you know, well over $20 billion. If only we could more efficiently spend some of that money on creating a greater applied research ecosystem in this state through the creation of an equivalent of a frown Hoffa. If only we could do that, because if we could, we'd retain our best and brightest. And this would be just an attraction of industry that will create long term industrial strength. So So look, it's a bit simplistic, we could go into a lot more detail. And we'll do that on podcast three. But my fundamental message is that education and research should be the highest the highest priority for our state government. And there's a pathway there, but it requires reform and a reallocation of current spending.

Daniel Franco: 58:21

So if we focus all of our attention, or a lot of our attention on the research, and universities, obviously, there's a clean, clear link, right? You have a top performing top 100 university, you attract some amazing talent to the state, you then keep those people because the research is here. Right? Obviously, it's very simple. But is how long does that take? Like? How long are they? And what what, when will we see the benefits of that?

Adrian Tembel: 58:55

It's a fair point. And this is where it gets difficult politically. Because the key point I make is yes, we do have a very bright future where we can be an industrial powerhouse. But there's no short term solution. This will take a long time, not hundreds of years, but a decade or two. And secondly, there's no easy way because to do it, you have to change what you're doing today. And that means none of us like change. So it is ambitious. It does take a long time, it can't be the only economic activity because you got to deal with the short term issue as well. But if you want a blueprint of how to actually make sure that the next 30 years is effective, and that the government can say at the end of actually this time it did work. I believe this is the framework to pursue, rather than the existing framework of corporate welfare holding your hand as you said, which won't create a robust competitive industry. You

Daniel Franco: 59:59

said there it, it just stuck out to me. Because it's something you know, I work in a business that manages change for large organizations, and you said there no one likes change. The alternative of going down this path doesn't seem like the right option, though. So so we have to. So one thing that I always say is, there's that comment that people don't like change. But if I was to put a million dollars in front of you, right, now, I'm quite certain you would like to change. So we need to just position it in a way it is. Because it's a long term thing people can only see it's far too

Adrian Tembel: 1:00:36

far ahead. You know, change, therefore, the perception of pain in the short term, you know, some some dreary years where it's just hard work, but we will clear you've got electoral cycle in the middle of it. You know, that's a hard road, isn't it

Daniel Franco: 1:00:50

but a clear vision of where we want to be with, I'm sure there's researchers and studies that can say, Look, if we start now, we will see these trends in 20 years time,

Adrian Tembel: 1:01:01

I believe you can, from where I sit, but quite fairly, if you're a political leader, with not just short term pressure, but pressure by the hour to solve problems. You will say to Adrian Tembel, when you're walking, if you're the premier, or the or the opposition leader, when you've got time, Adrian, yeah, you're you might be right. And let me think about it, but you'll go back quite fairly to your day to day pressures. And you'll lose sight of what I'm talking about. So I will never criticize any political notes, because I've got such pressure on them. But that's why you and I are here to try and create the momentum to make it easier for them to contemplate these types of bold policies.

Daniel Franco: 1:01:47

Well, I think you're right. I mean, I'm not electing a government into position or into power, because I'm worried about what's happening in the next four years. I'm electing because I believe that they're going to benefit this state.

Adrian Tembel: 1:02:03

Well, you might, but you know, we might be lucky, where we have the luxury of thinking long term, most South Australians don't have that luxury, you know, it's a day to day we ask them. I'm not the expert. But my perception is that many of our South Australian friends and colleagues don't have the luxury of thinking for a 12 years ahead. They've got short term pressures. So our poor political class has to balance that. Yeah. With irritating people like us that preach long term. But

Daniel Franco: 1:02:40

wouldn't that be solved with some clear communication and evidence based research?

Adrian Tembel: 1:02:45

I believe so. And I believe, you know, we might not do it perfectly. But if if, if the themes that I'm talking about, let's just say they're right, they need to be debated, and country voices, there'll be plenty of them. And I'm not saying I've got a monopoly on good policy. But I'd like to think that this is an important contribution to make. You know, once there's a little momentum there, little shifts in a public sector thinking, and then our political class, and then our media and then a university, you know, the economic faculties. Yes, we can get there. And obviously, we believe we can otherwise you and I wouldn't be spending a Friday morning. Yes, sunny and beautiful in this room. Yeah. But we should never say it's easy. And we should never be disrespectful, all of the leadership out there now because they do it. It's hard work for them.

Daniel Franco: 1:03:35

I agree. I just think and knowing I know this to be true with clear vision, and clear communication, transparent communication. Right now we we've got majority, you saying majority of South Australia, looking who don't think long term, because they don't do that in their own lives. But if we were to show them the opportunities that South Australia could be, right and show them to paths, Hey, everyone, we're going down this path, or if we change a few things, we go down this path, which future would you like to live in? Wouldn't the results just speak for themselves? It

Adrian Tembel: 1:04:14

makes logical sense of it makes logical sense. And you and I agree it but quite fairly. Someone with political expertise would say, you know, that's a challenge. And we've only got so many hours in the day. So So look, I'm not defending the political class. You're not criticizing them, either. No, we're having an educated discussion, I believe about the state that we love. And and What's brilliant about I think this discussion, I just hope some people listen to it, is that it's a bit of a following, but it's not I wasn't being disrespectful to you laughing at myself. It's these types of debates that we desperately want. And the answer is always going to be somewhere in the middle, isn't it? Yeah. Because as I said, You're not Well, I'm not a monopoly on great knowledge. But there's probably something in there. There's probably something in current policies that I'm maybe undervaluing, but somewhere in the middle might be the answer. And that will get us to a better place. So we need to continuously challenge and debate these issues in a respectful way.

Daniel Franco: 1:05:18

Yeah. So you brought up earlier, one of the policies or precincts in and infrastructure, can we can we touch on that? Because we've got some amazing things like what 14 But I know that you have,

Adrian Tembel: 1:05:31

I'm very, I'm very, if we were Switzerland, yeah. And we had deep pockets, I'd say, you know, we shouldn't have just built Tonsley, we should have built another two down there, we shouldn't have just a lot 14, we should have a lot 15 and 16. And 17. You know, but we're not, we've got fiscal challenges. And I want to I want to put this put it this way. Again, not 14, Tonsley Mawson lakes, there's been other precincts set up in this state before. And there's many of them set up around the world and other states, they are well intentioned. Their government saying we want to do something to modernize this economy, let's create a hub. And it's tangible. And you can see it, and the people can relate to it. And so it's been done over and over again. But there are so many studies now that show that they almost never work. And just think about this anecdotally. What is Tonsley? Tonsley is an old car factory where the government has acquired and it's subdivided the land up and it's attracted tenants, Flinders University move people there are created new buildings there that they would have done elsewhere, they would have done it just a question of where they were tasted the same thing. What has it added to the private sectors ability to build buildings for tenants? Then you say, or a lot 14 to say, you know, we've got a CBD, there's vacancy in the CBD? Did we need to create new commercial space? That's my question. I'd say no. The second question is yes. But it creates some unique proximity between these tenants. That means they do special things. And I must say, I do laugh at that. Because in a digital world, a globally connected world that is digital, increasingly work from home. Are you seriously telling me that we need governments to create buildings where tenants meet each other in the hallway? Are you seriously suggesting that a central business district or people on a Facebook page can't do that themselves, or if government wants to stimulate collaboration, there's a much cheaper way of doing it isn't there, you could just hire a room for the day and invite everyone in for drinks and let them get to know each other. And they'll exchange their, you know, I'm not a social media person. But they're, I don't know that tick tock or Instagram references. And off they go. Do we need to spend hundreds and hundreds of millions of dollars and take a whole lot of the government's focus to create new buildings when the private sector has created plenty and it's called a CBD?

Daniel Franco: 1:08:10

Yes, it I, I understand your point. But we know that you do not learn something in a one day workshop, you do not create trust in your relationships in a one day workshop, you do not spit ball and come up come up with ideas in a in a one day gathering or a couple of workshops here and there it is being in a community. It's a Petri dish for innovation. That's what they're trying to do, is it not? It is.

Adrian Tembel: 1:08:39

And in theory, it sounds great. But then when you think about the money spent in creating a little mini CBD, when you've already already got one, you have to say to yourself, Wasn't there an easier and cheaper way to bring people together? When as I said, high tech is global? Yeah. I mean, the reality is that if you talk to most high tech companies in Adelaide, Australia or the world, they'll really be focusing on just what's around them. They'll have collaborations all around the world with the best people. So so that's the case already. But digital is only enhancing that. And so I say, why would you spend your money reproducing physical form that's brittle, and that already exists?

Daniel Franco: 1:09:25

So then assign that and if you're super rich, great. No, we're not that aside, though, hasn't been successful? I don't

Adrian Tembel: 1:09:32

know. And this is the point. Do we know the cost of these precincts? And that's a rhetorical question. Yeah. I don't know. I think people find it very difficult to know the true cost of Tonsley. You know, what is the return on investment? And then therefore, if you don't know the cost, how can you begin to understand the benefits? And also what would have happened if you did something different, easy to say, Oh, we created X numbers of jobs. But that money that you spent could have created so many more jobs? Perhaps If you use more productively or efficiently so, so I'm not the first person to challenge precincts, there's literally recently been a book written on it with case studies that's very skeptical by an ex CSIRO expert in the field. So I'm not original in my thinking. But what I hope is that we properly do a cost benefit. So we get the policy settings right in the future. And I'm never I'll never criticize those that have driven this in the past. You know, previous premiers have been advocates for Tansley and lot 14. And it's well intentioned, and they believed in what they were doing. And I'm sure great things have been a cheat, but I questioned whether it was the best use of money.

Daniel Franco: 1:10:41

Like, I want to play devil's advocate here for one sec. There's some remarkable things happening down there. You know, FinTech, there's the tech, the FinTech industry, there's the Defense and Space, there's, there's some amazing stuff. And it from the outside, it's, it looks like it's buzzing. And when you actually walk in, I have a lot of meetings in there down there. And it's a really exciting space to be in and you speak to the people who are there, and they love it. And they say, Well, we have the potential to change the world here just being in this environment. Are you suggesting that there is no benefit from that?

Adrian Tembel: 1:11:19

Of course there's a benefit. But could have that been achieved far more cheaply? Okay, when you've got buildings through the whole city, were walking a block isn't that difficult? Certainly, in a digital world, it's not

Daniel Franco: 1:11:34

no I mean, UK.

Adrian Tembel: 1:11:38

Business, I keep saying CBD, yeah. It's an old invention. You know, the town square is an old invention, the private sector, does it really well, we have commercial agents that find new tenancies really, really quickly, all of that exists, do you need to reproduce a mini version of that, on the other side of the road from the CBD, or in the you know, in the southern suburbs? Is that money well spent in a fiscally constrained world, in a world where it becomes something constructive at the moment where that money could be spent on something more productive? And you say what? Well, let me let me let me tell you what startups want. Most importantly, they want new customers. So I would say to you, maybe it's it, you will attract more startups to South Australia, if the state government is more innovative, innovative in its procurement, and allocates more money to buy innovative tape. That might be more appealing.

Daniel Franco: 1:12:34

I was thinking that point one.

Adrian Tembel: 1:12:37

The second point is you will attract startups to South Australia, if they come here to work with great people. So if there's a great research institute, that is generating some of the best animation technology in the world, you'll get animation companies coming here. And they won't need a precinct to attract them, they will say, I'm moving to Portland, or I'm moving to Hollywood, because they've got the best film industry there, or the best tech industry. And I want to be around the Silicon Valley, we'll talk about that. They want to say to your dad, I'm moving to Silicon Valley, because this is amazing building, he'll say I want to be around these people. So I say you'll attract the people to add late if you're doing great work, and you don't need to spend hundreds of millions on precincts to do it. That's what I'm saying. And just one idea, you'll be more likely to attract them if they can work with a research group that's world class, the best PhDs in the world. So spend some of that if you save money on Tonsley, or lat 14 spend money on creating that frown offer not to so we're just saying and second, maybe they can win a government contract. And they say we're moving to Adelaide, because we've picked up our first big customer contract, and we're going to go near our customer. And remember that anyone listening, these Fraunhofer institutes can be called, you know, the Mellon outskirts Institute one day, or they can be called, you know, named after the opposition leader. So this is what this is what they'll write books about. Yeah, I don't think it'd be the precincts that write books about you

Daniel Franco: 1:14:08

know, how to change the way we do think. So. And if you're a CNN last question on this precinct of if, if a unicorn business comes out, like a Canberra and Atlassian given, they're the biggest businesses to sort of, um, you know, not so much bhp, but like Atlassian, this tech type scenario, tech type business comes out, and there's a it's a unicorn business, will that be of benefit to South Australia?

Adrian Tembel: 1:14:37

Can I I'm so glad you asked that thing. I want you to think about this scenario. It's not theoretical. Can you imagine what this city would be like? If we were the headquarters of one of the world's if not the world's biggest and most powerful media companies. Just think about that for a moment. Can you Imagine what a headline would be like, if it was the headquarters for News Corp. and Fox. Think about Rupert Murdoch never forget this. He started here was going back probably 60 year, I think he was in his early 20s. And it could be up to 60 or 70 years now. And he started in Adelaide. And up until about 20 years ago, we will still technically the head office, town of News Corp. So you and what he did, just so you know, he started, you know, inherited the afternoon newspaper here, called the news. And then he took over the advertiser, and he built it into a national. He then moved to Sydney, as he built a national arm. And then he moved to London as he dominated the UK, they moved to New York, he dominated the world effectively. Imagine if he had stayed here? Do you know what the News Corp head office is like? Or what the fox said? I mean, we're talking 1000s of some of the most smartest, well paid 60s people in the world. Now, you don't so I answer your question that way. Imagine if he had stayed here and done it from Adelaide. Now, because the two more things, he probably couldn't have.

Daniel Franco: 1:16:10

Population,

Adrian Tembel: 1:16:10

what not population, I

Daniel Franco: 1:17:52

I love it. Now, you might

Adrian Tembel: 1:17:53

say I do doesn't mean we just sit back and wait for the next Rupert Murdoch, you need to have 500 people are potentially like him. And then one might come through the system. That's like becoming an Olympic. Yeah.

Daniel Franco: 1:18:05

And then and then having government policy to entice them to

Adrian Tembel: 1:18:10

make them loved. Yeah. But we're not going to create Hollywood here. No, we're not going to create the next media empire. But we can create industrial powerhouses in technology, whether it's, you know, the things that we're pursuing at lot 14 great credit, you know, whether it's AI, or cyber, but my argument is to get there, you're gonna need to build the research, education hubs and spend your money more on that, than on buildings.

Daniel Franco: 1:18:35

So just to clarify what we've been talking about, we have a fiscal problem. Yeah, we have a growth problem. Yep. And your idea and thought processes that research and education are the two critical things we need to think about working on to fix them

Adrian Tembel: 1:18:51

on the growth problem. And then on the fiscal problem. We need bipartisan discussion on debt levels, and then we need reform. Okay. And I believe we need reform of our spending priorities, which includes government.

Daniel Franco: 1:19:04

So we know that it's very clear right now. Like, let's take the research and education piece aside, it's very clear right now that South Australia hasn't quite made up its mind what it wants to be when we grow up, right. We're trying to we've got a bit of everything going on. Yeah, yeah. Look,

Adrian Tembel: 1:19:22

I can't answer that. Because I've never done the work. And I don't have the expertise to say whether it's sensible for us to focus on a small number of industrial areas, I suspect it is. It makes sense to me that you can't be a hero in everything. And you need to focus on strengths. That's all very logical accept all of that. I think our current government will say, and it might be valid, that defense, hydrogens slash renewables, at least two of our priorities, and I think that's probably a sensible thing to do. But to get there, if we are in there As areas, I think two is a little bit thin. And secondly, it will need, I think, a high level of investment in what I was saying before the research and expertise around those areas that will allow them to be successful and not just hope that we will magically win additional, additional investment in those areas. So I think my answer to you is, we need to work more on what our strengths are, and make some choices. But I don't know exactly whether that's two or three or four or five, I'm not sure.

Daniel Franco: 1:20:34

But are those choices in exports? Is that like an industrial sense? Or can it be in tech? Or what was it all? Is it all just one ecosystem? What does that look like?

Adrian Tembel: 1:20:45

Well, the areas of innovation, the areas of you know, we always talk about biotech,

Daniel Franco: 1:20:52

which we have a great company here in biome Bank, which is doing a wonderful thing

Adrian Tembel: 1:20:57

we've got a great history of medical research. Human Health is as areas as the world gets bigger and richer and older. Healthcare Solutions are in demand. Obviously, defense technologies are in demand as well, because we are entering into an unstable geopolitical period. Clean energy is obviously in demand, dealing with cyber risk, and the evolution of computing technology into quantum and AI is obviously going likely to be in demand as well. Nothing original there, but exactly how we position ourselves and how we would establish our greater level of pride research activity, you know, my melon, ask us institutes at the Fraunhofer Institute. Yeah, exactly what they focus on how they're designed, a lot of work needs to be done. But I'm, I'm stimulating the idea.

Daniel Franco: 1:21:44

Yeah. Are you the only one beating this drum?

Adrian Tembel: 1:21:47

I'm sure I'm not. I'm sure there's plenty of people that at least privately would be, and some may be more actively. But I hope more and more people will or if they disagree and have alternative solutions or issues, I hope there's this draws them out as well.

Daniel Franco: 1:22:06

Given the statistics that you've read out today, is it too late to turn the ship around? It's

Adrian Tembel: 1:22:09

never too late in Australia, because we're protected by Federation. So as as we contract, we're still subsidized by Canberra. And so as a result, we still have GST allocations. We've still got a few more politicians in Canberra than our population suggests, though, we do contract. But it happens slowly, because we're underwritten. And of course, we still got the mining royalties from Olympic Dam, we've still got agriculture generating tax revenues. We've got some hedge, but do you want slow decline? Do you want it to just steadily continue the way it has? Just slowly get poor and slowly get poor?

Daniel Franco: 1:22:50

No, no, absolutely. So

Adrian Tembel: 1:22:52

there won't be a disaster. We're not going to go bankrupt. It's not going to world's not going to end. But I think we'll continue to decline unless we change. And change means accepting long term solutions and the need for us to roll our sleeves up.

Daniel Franco: 1:23:09

So in essence, we've got a quite a good foundation to build us we have

Adrian Tembel: 1:23:13

where South Australian? Yeah, we're blessed. Yeah, we've got all this land.

Daniel Franco: 1:23:17

Yeah. You

Adrian Tembel: 1:23:18

know, I think we get $300 million of mining royalties every year. Yeah, before we get out of bed, all the agricultural activity, all that beautiful land. Federation, you know, I've repeated it, but we're lucky.

Daniel Franco: 1:23:30

So for those listening right now, who don't sit in a leadership position within the state, or don't, you know, a civilians who are sitting in the back bench, not really having any influence on the decisions that are made, what can we do? Like there will be people sitting right now saying what I don't want to? Yeah, I don't want those trends to continue. What can I do? What can we do? I hope

Adrian Tembel: 1:23:56

that people more and more will engage on these issues. Ask what the costs are, of our economic policies, ask for evidence of what they're doing and ask, you know, the questions of whether this is the best use of our precious funds, precious taxpayer dollars, to drive our economy forward and ask also, Are there alternative options and views that we can weigh up and vote on

Daniel Franco: 1:24:25

election? So when you're talking to those people right now saying ask those questions. Who are you? Who are you pointing your finger at? Whoa, is it industry leaders, business leaders, everybody? I mean, we all but you're not going to get that from the frontline because they don't think about economic policies.

Adrian Tembel: 1:24:40

I accept that. But you have to start somewhere. And my job it's in my terms of reference, as the Chairman of the Productivity Commission is my job in part is to communicate what I believe or the commission believes are the economic issues of the day. So you try and maybe no one will ever listen to a word I say more than likely, but you're trying I, and you get your word out. He keeps saying what you believe is right. What happens

Daniel Franco: 1:25:04

if people don't when people are

Adrian Tembel: 1:25:05

getting door knock by local MPs? Yeah, I hope some people do.

Daniel Franco: 1:25:11

If what you're saying today, and I know you're going to continue pushing this agenda, but what happens if they don't listen? In your world? What what happens to you?

Adrian Tembel: 1:25:25

So what do you mean by

Daniel Franco: 1:25:26

what you know, if you're not going to have the influence that you can

Adrian Tembel: 1:25:30

not at some point, you'll say, Look, I'm not having an impact. And I need to either change myself, and do it better, or accept that I'm never going to have any impact and maybe encourage someone else who will take over. But you know, I'm young enough and energetic enough to keep pushing these views and debating the issues and to see whether there might be something useful. And this is what I say. So

Daniel Franco: 1:25:57

there will be industry leaders and CEOs and positions people have in positions of power listening to this podcast, what's your message to them in order to support or I mean, they might not only to support but in order to support the growth of South Australia,

Adrian Tembel: 1:26:13

well, many people will disagree with me and they'll say, Adrian, you're a knocker. And you're being a little bit divisive. And you're negatively impacting on confidence, okay. And so therefore, you should talk about the good things that are going on. And I say, I will talk about the good things. But I'm not going to get caught up in anecdotes, and one off examples and opinions, present facts, and shut me down with long term evidence that shows that we're not in decline, shut me down with long term evidence that shows that our policies are working, and then I'll become a member of the cheer squad. But my job isn't just to be nice. My job isn't to try and be popular to be popular go into politics. I'm not, I'm not that's not my job. I've got to be honest and real. And you know, do you appease a dictator? And just say, Yes, dictator, you're great. No, you got a challenge. And so I'm not by the way, I'm not comparing us. I'll just use that as an example of appeasement. Sometimes you've just got to stand up and be real, and accept that you're not going to be popular. I hope to be in time maybe respected. But let's wait and see.

Daniel Franco: 1:27:24

So in rounding off this chat, it's been an amazing and insightful chat. So thank you, I want to give you some air on what your thought processes are moving forward. And if there is anything that you feel like you haven't covered off, I would love to I don't

Adrian Tembel: 1:27:42

think, no, look, I'm so grateful for the opportunity to speak. And to have this on the record. And for it to be scrutinized and challenged. I have a huge optimism that the South Australian political class has the capacity to have imagination, and to look closely at the facts and over time, make choices that I think are the right choices. I'm not I'm not saying that they've done it incorrectly, to date. But I do think we have to continue to evolve and change. And I hope that there are a few people listening in, and this might have some impact in the way they implement their public lives.

Daniel Franco: 1:28:26

Brilliant. So as we walk out the room today, what are you going to continue doing to support this and to keep beating this drum?

Adrian Tembel: 1:28:34

Oh, look, you know, I spend most of my week running a very important business that I'm very passionate about. And I allocate spare time for this role that I make. And I'm just going to keep taking every random opportunity to do more analysis, more thinking, more debating, and more communication. And I wish I had the whole week to do it. But I don't, I'll just keep trying to use my time as productively as possible. And hopefully just be slightly useful to South Australia.

Daniel Franco: 1:29:04

Brilliant. Thank you for everything that you're doing. And thank you for raising I know one thing that you have said time and time again is that you you may be the unpopular person coming out of this but we need to we need to challenge is through these sort of things that can create great change. So appreciate the work that you and the team are doing it the Productivity Commission.

Adrian Tembel: 1:29:24

Pleasure, and thank you for having me on.

Daniel Franco: 1:29:26

Thanks, everyone. We will wrap it up now and we'll catch you next time. Thanks for listening to the podcast though. You can check out the show notes if there was anything of interest to you and find out more about us at Synergy iq.com.au I am going to ask though, if you did like the podcast, it would absolutely mean the world to me if you could subscribe, rate and review. And if you didn't like it, that's alright too. There's no need to do anything. Take care guys. All the best