According to a forecasting model presented by the Premier of the state of South Australia, Jay Weatherill, the closure of Holden manufacturing operations in the state will result in 1,500 jobs in 2016 and a further 4,600 jobs in 2017.
Growth in the jobs section isn’t expected to return to normal levels for a period of seven years, and “the strongest effect will be felt in 2017-18, beyond the forward estimates”.
The loss of jobs is also expected to negatively impact the state’s budget, reducing it by $303 million thanks to a drop in expected GST revenue over a period of four years. GST, or Goods and Services Tax, is collected from retail sales across Australia and then divided among the states. The closure of GM manufacturing in Australia is thought to deliver a direct A$14.2 billion tax hit starting in 2017 as property sales and consumer activity slump.
In other words, Holden’s closure will create a long-term problem for the state of South Australia. According to various media reports, the has not been able to adequately prepare for and is struggling to find an answer to the impending trouble.
The revelations come just a few months ahead of the 2014 South Australian state election, where the Labor party’s Weatherill will square off against Steven Marshall from the Liberal party. As such, it’s highly likely that there will be much politicking over the outcome of the report brought forth by Weatherill, who was blamed for reportedly withholding it by a couple of days. But at the core of it, South Australia seems to be on the verge of entering a decade-long period of a labor recession that’s amplified by fragile economy with a scarce amount of funds for various public services.