Councils need boost for regional growth, report says
See also: 2006 Regional Co-operation and Development Forum
November 27, 2006
Australia's local government cannot rely on rate revenue to play its role as a facilitator of regional development, a new report says.
The 158-page State of the Regions 2006-07 Report, released today, was commissioned by the Australian Local Government Association from top research body, National Economics. The report is sponsored by the Jardine Lloyd Thompson insurance group.
The report says many councils in Australia face a development option of low productivity and rapid ageing of their populations.
Councils must have adequate resources to break out of this vicious cycle and to attract industry for productivity driven growth.
National Economics says councils' ability to raise rate revenue is constrained by household income and business productivity. The research group points out that high land values, relative to income, can cut councils' capacity to raise revenue because it can lead to higher numbers of high debt households with reduced household disposable incomes.
The report states it is clear that the resources needed to achieve greater regional equity are not available through rate revenue.
It estimates councils need an injection of $2.3 billion to bring lagging regions nearer the average standard for regional growth and the provision of infrastructure attractive to business and desirable population levels.
In the era of globalisation the local government role in economic development has become more complex. The goal is to keep the manufacturing sector that remains in the regions as a major driver of local economic growth. National Economics says the core development objective for local government areas is to maximise productivity; and for that it needs resources to supplement rate revenue.
The benefits of higher productivity are many, including increases real wages, allowing firms to employ more highly skilled workers and increased real profits enabling increased investment and boosted manufacturing capacity.
There is also the capacity to boost research and development and boost exports. Such support for councils would allow local government regions to boost growth in domestic demand and provide opportunities to replace imports with Australian products, thus strengthening Australia's skills pool.
» 2006-07 State of the Regions report
- Contact
- Amanda Lynch, Director, ALGA Public Affairs - 0419 123 862
- Michael Spencer, National Economics - 0419 123862
