Australia's regions: Gap between rich and poor grows
2006 National Economics State of the Regions report
See also: 2006 Regional Co-operation and Development Forum
November 27, 2006
Australia's wealthy and well-connected regions have continued to build their advantage over less-affluent and less-connected regions widening the gap between rich and poor regions, according to the 2006 ALGA National Economics State of the Regions report.
The survey of Australia's 64 regions is commissioned annually by the Australian Local Government Association (ALGA) from National Economics. This is the 9th survey undertaken by National Economics.
The 2006 survey is set against a backdrop of accelerating of population growth in the 'resource zones' and a ten-year land boom that saw land values triple between 1996 and 2005 creating a housing affordability crisis for renters and first home buyers.
Despite improvements in broadband usage, the lack of connectivity in parts of regional Australia translates to an inability to attract new industry and well trained productive workers. Lower land costs make these regions attractive to low-income earners, fixed-income retired or semi-retired households.
Regions with higher concentrations of low and fixed income earners tend to be less attractive to young people and skilled workers which further reduces the skills base and accelerates the loss of skills and critical mass for improved connectivity.
The key to reversing this vicious cycle is to reverse the flow of skills and improve connectivity - both transport and communication - between relatively disadvantaged regions and successful regions as well as international markets. The report says Australia's local government areas could resemble California's Silicon Valley, given a boost to regional innovation, and mentions the Bendigo Community Telco as an example.
The report paints a picture of regions and local communities fighting back by innovating and generating investment. It shows that:
- Improved employment conditions in rural regions are encouraging greater levels of working age migration to some rural regions
- The baby bounce continues in core metro and lifestyle regions
- Local communities can take action to improve the speed and coverage of their internet services
- High productivity regions are ageing relatively slowly
- The capacity to innovate depends on knowledge networks at the regional level
- Australia's major centres are forming innovation clusters that attract high tech start ups
- The land boom in Australia increased the self-perceived wealth of households across the nation
The report praises the Australian Government's major broadband initiative - Broadband Connect and Clever Networks - which will have flow-on benefits and shows that much of the current investment in upgrading broadband services focused on upgrading existing exchanges in successful regions to higher bandwidths that provide higher speeds.
The report found that Australia's most successful regions, when measured by the number of patents per 100,000 population and high tech start-ups, are still the major cities, particularly Sydney, and Melbourne.
It is evident that the major centres, with their internationally networked businesses, universities and research centres attract more firms, and the impact of this is that dense clusters of activity create a higher level of patent applications.
Municipalities that are (financially) smaller or (geographically) larger face additional disadvantage due to longer travel times and scale. The report finds that the quality of service each dollar can purchase can vary considerably between municipalities.
The resources necessary to give disadvantaged councils a better chance to play a more effective role in improving economic performance outcomes will in the main have to come from grants or other revenue enhancing measures.
Regarding council infrastructure, the report estimates that $2.3 billion in extra money is needed to bring resource-poor local government regions infrastructure up to the general standard. On the issue of road finance, the report advocates a move to road finance through user charges with council rates only paying for maintaining local access roads.
» 2006-07 State of the Regions report
- Contact
- Cr Paul Bell AM, ALGA President - 0418 791 596
- Amanda Lynch, Director, Public Affairs - 02 6122 9434 or 0419 123 862
About National Economics
National Economics is one of Australia's leading economic consultancy and research organisations. National Economics is a business of The National Institute of Economic and Industry Research (NIEIR). National Economics' clients include Australia's major corporations as well as Federal, State and Local Government Departments. It prepares commissioned reports, studies and forecasts in areas which include industry policy and strategy, regional economics and local government, energy policy and forecasting, international trade, employment and training, infrastructure and major events analysis. This strategic work by National Economics will often make a major contribution to policy formation in industry and government sectors in Australia and overseas. Further information is available from www.nieir.com.au
About the Australian Local Government Association
The Australian Local Government Association is the national voice of local government, representing 673 councils across the country. In structure, ALGA is a federation of state and territory local government associations. Key activities include representation of local government on national bodies and ministerial councils, providing submissions to government and parliamentary inquiries, raising the profile and concerns of local government at the national level and providing forums for local government to guide the development of national local government policies. Further information is available from www.alga.asn.au
