The Adelaide City Council’s message to certain innovative South Australian small businesses couldn’t be clearer – go away and don’t come back.

Despite our community’s anguish over worsening business conditions and increasing unemployment, the council appears to be attempting to re-regulate parts of the city economy that were only recently freed up.

I’m not sure what economic hypothesis it’s following in all this – let’s call it “Bugger-off Theory”.

A few years ago a zephyr of fresh air wafted through Adelaide’s culturally stale streets – and it was driven by deregulation.

The council, under former Lord Mayor Stephen Yarwood, wanted to bring life to the city’s dead corners. Among other measures, it fostered a mobile food vendor program, which was very successful, spawning a cottage industry and a rolling food festival, and springboarding several bright young things into permanent food businesses with their own “bricks and mortar” premises.

The council also decided to fix one of the weeping sores of the city: the dreadful paddock of Victoria Square. It spent millions turning it into an events space – a place where people would go, rather than a sparsely grassed wasteland in the middle of a traffic island.

The revamped square is now home to a rolling series of events, including the Royal Croquet Club. This is a large multi-venue arts project which in two years has finally attracted enthusiastic Fringe crowds to the centre of the CBD.

The State Government, too, got into the act with a relatively simple piece of deregulation – it introduced a small-venue licence, which freed typically young business people from the expensive curse of legal challenges by big hoteliers which has previously plagued hopeful licensees.

This simple change to licensing laws has seen an explosion of new venues in the city.

This week, the Government also introduced legislation to Parliament to free up restrictive licensing rules that have strangled live music.

Everyone’s a winner, right?

Wrong.

The council – while it can’t do anything about small bars – seems grimly determined to return much of the city to dull conventionality.

After creating a new Victoria Square exactly for this sort of event, it threatened and huffed and puffed about the Croquet Club until the boys in charge agreed to try to find a new venue away from the heart of the city.

The council’s latest plan – once it finally gets through its tortuous bureaucratic processes – is to run the food trucks out of many parts of the city.

New rules, which the council agreed this week should go out to consultation, will require mobile food vendors to set up at least 50 metres from the nearest “fixed” food business. There are also exclusion zones around the city. Effectively, this means all the city squares will be off limits for mobile vendors, with the exception of a small part of Victoria Square (ironically).

The food trucks will mostly be consigned to the fringes – the places where the people aren’t – and they will have to pay more for the privilege.

To describe this as a retrograde step would be an insult to past councils. For example, the beloved pie carts that used to serve floaters at the GPO and Railway Station would probably have been banned under this sort of regulatory regime.

In another example of the council’s blind spot when it comes to irony, Rundle Mall has plenty of mobile food vendors. The only distinction is that these are called “concessions”. In effect, they’re just the same as other mobile food vendors, and they compete directly with bricks and mortar businesses.

They are allowed in the Mall because the shopping strip’s management recognises that they are important in attracting people to the shopping precinct and making the area more lively, which is good for all businesses.

Rundle Mall encourages “pop up” vendors, including food vans and other businesses, such as this florist.

Some level of regulation is required, of course. But the scope and nature of regulation should be based on facts, and with an eye to encouraging competition – not destroying it. A council study earlier this year showed that the total take of mobile food trucks represented 0.15 per cent of all market trade in the city – hardly an apocalypse for other businesses.

It is axiomatic that if we are to grow our economy, businesses will need to proliferate. Competition between like businesses will become sharper but, overall, as employment grows, so will the size of the economic pie. Cutting off innovative business growth in the city to protect established businesses is an economic dead end.

Instead of destroying the burgeoning businesses it once fostered, the council should free up regulatory restrictions on bricks and mortar businesses to level the playing field. You don’t have to talk to many businesses in the city to find horror stories about regulatory battles with the council about alfresco tables and chairs or advertising hoardings, to name a few examples.

It’s a theme described well by SA economist Richard Blandy in this article on the need for more business start-ups in Adelaide. 

The food truck and pop-up phenomenon, he argues, is one of the few business-creation success stories in SA.

“… established cafes and restaurants have objected to this increase in competition, and cited regulations that they had to meet that the ‘pop-ups’ did not, showing the influence of regulations in stifling competition,” he writes. “Often, as the Productivity Commission has noted, regulations are supported by established businesses as a means of restricting competition.”

The excellent recent book published by the Grattan Institute, City Limits: Why Australia’s cities are broken and how we can fix them, explains how city economies benefit from the clustering of like businesses, even when they are in competition with each other.

New ideas, argue authors Jane-Frances Kelly and Paul Donegan, are fostered in cities where innovative businesses cluster together and learn from each other.

“Without using new ideas to improve what they do, businesses eventually fall prey to competitors who step in and do it better and more cheaply,” the book says.

And doesn’t that sound familiar for the forgotten people in this debate: city customers.

It’s hard to avoid the conclusion that, despite the council’s rhetoric, Adelaide isn’t open for business – it’s open for certain kinds of businesses, preferably those with people eligible to vote in council elections.

It’s all very poignant when we reflect that, for a brief crazy moment, the council treated the city like a civic space that belonged to all South Australians. It welcomed people with ideas – some good, some bad, some smart, some eccentric – to contribute to its unloved corners.

And people with ideas responded.

The food truck explosion that was part of this tentative renaissance which will now be remembered with nostalgia: they were cool; they served inexpensive and delicious food; they pulled people onto the streets, to talk and enjoy the sunshine while waiting to pick up their order, and then, heaven forbid, even to use one of our vast, usually empty squares, as a picnic ground.

It gave Adelaide positive PR and a point of difference – not that many of our elected councillors appear to care much about tourism, given their attitudes to the Fringe and new, tourism-focused businesses and developments.

So what will happen now?

It seems certain that the food trucks will mostly disappear from the city streets.

And those threatened bricks and mortar businesses – whoever they really are – will continue to plough on, blissfully unaware of the reasons why a handful of novice cooks in home renovated vans fitted with second-hand cooktops could capture customers’ attention with the flip of a single, sizzling patty.

David Washington is editor of InDaily.

Regular Friday columnist Tom Richardson is on leave and, in a stroke of bad luck, guest commentator Matthew Abraham is ill.