CHAPTER 1
Grasping the issues
1.1 Regional Australia has been the focus of greatly increased attention
in recent years: a recognition of the relative decline of rural and regional
economies and communities. The then Industry Commission undertook a study
of regional industry in 1993. [1] Two reports published in 1994 have become widely
quoted: one by McKinsey and Company, commissioned by the former Department
of Housing and Regional Development, and another by the (Kelty-Fox) Regional
Development Taskforce. [2] There is an increasing volume of academic research
and writing on the condition of regions which the Committee has gratefully
called upon to inform its views and recommendations.
1.2 In the first term of the Coalition government, elected in 1996, official
interest in regional matters appeared to wane as relevant agencies were
disbanded, resulting in the loss of 220 public service positions and some
$150 million in program funding. The government did, however, retain the
regional structure of Area Consultative Committees (currently 58 of them)
and moved to change the focus of their activities. More recently, the
attention of government has returned to regional matters, as reflected
in the title of the newly expanded Department of Transport and Regional
Services.
1.3 The Committee notes the government's announcement of its regional
policy made on 11 May 1999, and contained in the statement Regional
Australia: Meeting the Challenges. While some members of the Committee
regret the limited scope of regional policy action which characterises
the statement, all members commend the government for acknowledging, through
its proposed Regional Australia Summit, and regional forums, the need
to involve regional interests in the direction of future policy. The Committee
sees this as an encouraging move toward redirecting policy making from
an exclusively Government process to a broader more consultative process.
1.4 A difficulty arises in estimating the effectiveness of a regional
development strategy aimed at fostering new growth concepts in regional
areas. The Committee believes that in general, governments have not fully
focused upon the necessary requirements to enduring prospects in regional
areas. The issue has not been a lack of acceptance of the need for regional
development policy but rather a lack of a consistent approach that transcends
the political cycle, and one that is coherent between all levels of government.
1.5 Governments also increasingly expect the private sector to assume
the risks in any development. Currently the status quo is that joint ventures
are to be encouraged provided that governments are not required to bear
excessive risks. This raises the question of the role of government in
regional development. It can be argued that the private sector is likely
to be more risk averse than governments as there is a requirement to achieve
an adequate return for their shareholders. Therefore in many cases it
may be necessary for governments to `kickstart' the process. The value
of this report, the Committee hopes, will be in addressing some of the
political realities and imperatives involved in regional policy making.
1.6 These are complex issues. There are some claims that financial assistance
remedies are more likely to distort the overall balance of economic growth
than to benefit depressed regions in the long term. Policies directed
at more focused and sustainable regional development planning are claimed
to be difficult to formulate and execute with the overlapping responsibilities
of three spheres of government. [3] The Committee
is aware, nonetheless, of a residual sympathy in Australia for the `bush
battlers', though this may be coming to an end as new generations of city
dwellers lose their contacts with rural Australia. It is also aware that
the viability of rural and regional industries has been subject to rigorous
and continuing evaluation by government agencies, banks, investors and
environmentalists.
1.7 Above all, the Committee is aware that while only a minority of people
live outside the metropolitan areas, the issues of `city versus the bush'
have a social and economic dimension that economic rationalism can find
no answer to. The Committee understands that global forces and economic
policy changes over the past fifteen years have provoked a degree of dissatisfaction
in some regions, and increased perceptions of relative deprivation and
government neglect. Regional employment remains, therefore, an issue of
continuing political importance. The Committee's view is that despite
currently fashionable opinions favouring a minimalist role for government
on issues of progress and development, governments can not declare a `policy-free
zone' in relation to regional affairs.
1.8 An inquiry into employment and unemployment necessarily involves
a close look at the evolution of regional economies. The mantra `jobs,
jobs, jobs' unfortunately conceals the reality that employment is a consequence
of investment in marketable goods and services. No matter how efficient
and committed employment agencies may be, they cannot create jobs. Nor
are job creation projects effective unless they connect beneficiaries,
eventually, with unsubsidised employment in viable industries. Employment
is an investment in human capital; but one dependent on market return.
It is a harsh economic fact that investment in the production of goods
and services either no longer requires a large component of human capital
or requires skills which a large number of people do not possess. Up-skilling
of the Australian workforce, particularly in regional areas, clearly presents
a major challenge which governments can not ignore.
1.9 As this report notes at several points, the forces of economic change,
particularly to trading and investment patterns and decisions may well
be matters largely beyond the control of governments. This does not absolve
governments from exercising their responsibilities to deal with the impact
of these forces on the Australian economy. Governments must engage in
some serious policy planning to ensure that the development of Australia's
competitive advantage includes programs for re-skilling the regions, developing
their infrastructure, growing sustainable industries and encouraging the
flow of investment to them.
1.10 McKinsey and Company (1994) found that the success of regional economic
development depends to a large extent on the commitment, quality and energy
of business and community leadership. [4] In
submissions and oral evidence received by the Committee, the importance
of approaching regional development from the bottom up was also stressed.
The Committee believes that the Commonwealth must play a key role in the
facilitation of regional development strategies which are based on the
initiatives generated in the local areas themselves and in the coordination
of the actions of state and local governments and their respective agencies.
Regional disparities in employment
1.11 In a dynamic world economy it is to be expected that not all regions
would maintain their position in the prosperity league. Globalisation
and structural economic change affect regions in different ways. Many
of Australia's regions are growing rapidly and are taking full advantage
of growing trade opportunities, thereby attracting national and international
investment across industries as diverse as tourism, dairy farming, mining
and viticulture. [5] Other regions are less
fortunate. Disparities in employment in regional Australia are starkly
evident in the following charts:
Source: Submission no. 166, Department of Employment, Education, Training
and Youth Affairs, vol. 8, p. 100
Source: DEWRSB, Australian Regional Labour Markets, No. 86
1.12 The worrying aspect of regional disparity in Australia is the experience
of inexorable decline in some centres of population. For many regions
there is unlikely to be any upward curve on the economic cycle to look
forward to. Location, resources and markets are the determinants of survival.
Thus, regional centres like Broken Hill, Port Pirie and Whyalla will almost
certainly continue to decline, not only because of global considerations
but because local sources of raw materials will soon be exhausted. Tasmania's
primary industries have been affected by changes to world trade patterns
in the past and more recently to global pressures on manufacturing and
process industries. Its remaining specialised and high valued trade commodities
are not produced by labour intensive industries. Outer metropolitan areas
of the major cities continue to show the unemployment effects of shifts
in investment toward industries and services where human capital needs
are determined by levels of skill rather than by weight of numbers.
1.13 Technological change is an important determinant in influencing
regional disparities. For instance the telecommunications revolution will
bring employment opportunities. [6] Regional
centres like Launceston and Ballarat welcome the advent of telephone call
centres as large–scale employers. Other regions believe they see
few of the advantages of the telecommunication revolution. The antagonism
of people in more remote areas of Australia to the sale of Telstra is
significant because of assumptions made that access to the most sophisticated
telecommunications system available is essential in maintaining global
competitiveness for remotely centred businesses.
1.14 In South Australia, a factor identified as a cause of regional disparity
in employment has been a regions' proximity to the metropolitan area.
The closer a region is to the city, the more advantages business in those
areas receive through lower transport and other transaction costs, including
availability of infrastructure and a potentially large labour market.
[7]
1.15 This experience in one state has more general application according
to the submission to this inquiry from the former Department of Employment,
Education, Training and Youth Affairs (DEETYA), which stated, among other
observations, that people in smaller populated regions often had to accept
jobs for which they were over-qualified; or remained unemployed for longer
periods. Industries in metropolitan areas were able to react faster to
cyclical changes in the economy, achieve faster rates of growth during
upswings, and did not experience skills shortages like non metropolitan
industries, as they were able to access a much larger labour market. [8]
1.16 Another factor influencing regional disparities in employment is
labour mobility. Displaced workers are most often unable to move to areas
where their skills may be in demand because of financial and family constraints.
Home ownership is a powerful disincentive to move when house prices are
depressed in towns and cities in decline. This is especially the case
with older workers, for whom `quality of life' is an associated reason
for lack of mobility where location is seen as ultimately the most important
consideration in a life which may extend twenty years beyond retirement.
It is the next generation, without ties, which moves out, affecting the
demographic profile of regional centres. As Professor Rolf Gerritsen told
the Committee:
What is happening in these towns is that young people – and that
is fairly common throughout rural Australia – with any talent finish
school and leave. Entrepreneurs with any talent move out. The entrepreneurs
who remain in these sorts of towns are risk averse; they are basically
running down their capital. There is substantial asset deflation in
these areas which operates independently of the Australian economy and
is another feature of this `terminal decline'. So we have a situation
where these communities are in very severe economic straits. They have
extremely high crime rates which are associated with poverty and unemployment.
[9]
1.17 Professor Gerritsen commented that there was a migration back to
these communities of people who did not succeed elsewhere. Reverse migration
was a characteristic of towns like Walgett and Bourke, particularly for
Aboriginal people.
1.18 Another factor entrenching economic stagnation in many regions is
a shortage of skills in a region. A number of witnesses referred to the
lack of general education and low retention rates in schools. While one
witness commented that high levels of ethnicity might explain why 12 000
residents of Hume had left school under the age of 14 [10] it does not explain why north-west Tasmania had
the lowest school retention rates in the country. [11]
Another witness stated that the retraining of people with previously low
levels of educational attainment presented problems because many people
in rural Australia have not had pleasant experiences with the formal education
sector.' [12] The Committee considers
these observations to be somewhat disturbing as it suggests that the education
system is not adequately addressing the needs of regional communities,
particularly those from non-english speaking backgrounds.
1.19 In addition to the problem of skill shortages is the growing problem
of generational unemployment. As a witness from the Maryborough City Council
revealed:
We are now in a situation where we have a third generation of unemployed
people within the community. They know no different. As long as they
can remember, their grandfathers have not worked and their parents have
not worked, and they seem to feel that that is the way the system goes.
[13]
International Experience
1.20 The revitalisation of regions whose industrial base has been significantly
eroded has been a challenge faced by countries even more severely affected
than Australia by global economic change. Industrial and mining areas
of France and Belgium have borne the brunt of this change, as have the
English Midlands, the north-east `rustbelt' areas of the United States
around cities like Pittsburg and Baltimore and the Maritime Provinces
in Atlantic Canada.
1.21 These countries have implemented many and varied regional policies
over time. Some of these policies have resulted in marked improvements
in the regions concerned such as in the case of Birmingham in the UK (discussed
further in Chapter 2) while others have been less successful.
1.22 The Committee takes the view that in regions which have suffered
considerable economic decline and where prospects for substantial revitalisation
appear limited the solution should include appropriate social and economic
assistance involving both government and community sectors. At various
places throughout this report the Committee has drawn on international
examples of regional policy some of which are innovative and others illustrative
of the difficulties faced by governments in attempting to combat regional
decline.
Classification of regions and their problems
1.23 The Committee notes the very useful classification of Australian
regions made by the National Institute of Economic and Industry Research
(NIEIR). [14] A listing of the regional structure
adopted by the NIEIR can be found in Appendix 1. The six broad categories
identified are:
- sub-global cities – this is Sydney CBD and some surrounding
areas (North Shore and Eastern Suburbs) which are connected to major
business centres abroad and whose workforce is heavily engaged in maintaining
financial services and information links with centres of global business.
The NIEIR also suggest that the Melbourne and Brisbane CBDs have the
potential to become sub-global cities. Economic performance in these
regions is influenced by the state of the world economy and their continued
prosperity will depend on their ability to be attractive players in
the global market place.
- service based metropolitan – these are suburban areas
dependent on service industries, the government workforce and domestic
consumer industries. The NIEIR places the Central Coast, Outer West,
Sydney South, Sydney Central, Sydney Northern Peninsula, Perth Metropolitan
and Perth CBD, Brisbane north and south, Canberra, and Adelaide CBD
in this category. Economic performance in these regions has been influenced
by transport improvements, retail decentralisation, and government locational
strategies.
- resource based regions – these are areas or centres which
are largely dependent on the exploitation of local minerals, energy
resources and timber resources. Examples include Broken Hill, Gladstone
and the Pilbarra region. Economic performance in resource based regions
will be affected by movements in world prices as well as the stock of
natural resources.
- industrial oriented regions – these being areas with a
higher than national average concentration of manufacturing activity.
They include metropolitan areas like Sunshine, Footscray and Broadmeadow
in Melbourne, Liverpool and Auburn in Sydney as well as fringe metropolitan
centres like Elizabeth, Geelong and Kwinana. A significant factor in
the performance of these regions over the past fifteen years has been
the progressive removal of tariff protection.
- rural based regions – these being areas of population
largely dependent on agriculture and pastoral industries, examples being
Gippsland, Riverina, Darling Downs and other wheat belt areas and coastal
regions in all States. While climatic conditions can paly a significant
role in the short-term performance of these regions, over the longer-term
the leading influence has been the decline in the real value of commodity
prices.
- lifestyle based regions – these are almost always coastal
regions with very favourable climates which have experienced population
increases because of tourism and as places of retirement. Places such
as the Gold Coast, Sunshine Coast, Far North Coast (NSW) and North Queensland
fall into this category. Tourism and often eco-tourism plays a primary
role in the economic performance of these localities.
1.24 Cycles of economic growth have been the experience of regions for
a century. These vary from region to region and occur for different reasons,
part of which can be attributed to the differential industry distribution
as identified above. Industries experience product life cycles and technological
change which have an impact on labour demand. [15]
The demand for skilled labour, in some industries, is usually more crucial
at the setting-up stage of production and less so once production is in
full swing. This explains why a perceived shortage of skilled labour is
often an impediment to investment in non-metropolitan regions.
1.25 Changes to the profile of Australia's manufacturing industry have
had its greatest impact on regional centres dependent on a narrow industrial
base. This can be seen in a fall in employment resulting from the rapid
decline of the clothing, textile and footwear industry in north west Melbourne
and in Launceston. It can also be seen in the Spencer Gulf towns of Port
Pirie and Whyalla and in Burnie. Larger and more fortunately situated
centres like Geelong and Newcastle have been less affected by the decline
in their major industries because of their success in maintaining and
developing a broader industrial base.
1.26 Rural based regional economies have waxed and waned over the past
seventy years, but the trend has followed a steady decline with the diminishing
value of agricultural industry products as a proportion of GDP, similar
to the trend in more recent years with regard to non-metropolitan manufactured
goods. The pastoral and agricultural industries which were the foundation
of Australia's prosperity for most of its post-settlement history, were
not labour intensive, but the small towns and townships which serviced
properties in rural districts have gone into sharp decline as improvements
to roads and motor vehicles have brought dispersed populations and townships
closer to larger regional centres. Much of the so-called `rural decline'
in small country towns may be attributed to progress and to increasingly
sophisticated demands of the rural population for services available only
in the larger regional centres. As was stated in a paper delivered to
the Small Enterprise Association of Australia and New Zealand:
Some commentators view the pattern of settlement in many parts of rural
Australia as simply archaic, in the sense that it reflects the `horse
and buggy' era and has not adjusted to the new economy. The trend toward
centralisation away from small settlements and into larger provincial
centres, they would say, represents a natural progression and reflection
of consumer demand. Whilst in one sense this might be true, it does
not deal with the very real economic and social issues bearing down
on small towns. If the issues are ignored, we risk weakening the economic
and social fabric of the State and its capacity to compete. [16]
1.27 The economic and employment conditions in lifestyle based regions
such as the coastal regions of northern NSW and southern QLD varies greatly.
Some areas have experienced property booms, not always to the advantage
of local people. Retirement incomes are lower than wages and salaries
on average, as are the incomes of the working populations in these regions.
On top of this are the very high numbers of unemployed people in these
regions, in particular unskilled young people for whom `lifestyle' is
either a more important consideration than employment, or some compensation
for lack of employment prospects.
The plight of regional Australia
1.28 The Committee has heard a great deal of oral evidence and assimilated
a large volume of information, which taken together, present fairly gloomy
prospects for those living in some regions in Australia. These stark realities
facing a community in decline may be sequenced as follows:
- erosion of the economic base as key industries wind down or where
company restructuring forces the closure of a branch plant;
- closure of support industries;
- loss of income puts pressure on local small businesses, some of which
may close;
- as employment prospects recede school leavers and mobile skilled workers
depart for the metropolitan region, further education and training or
to regions with a skills deficit;
- population decline sees withdrawal of some state and Commonwealth
government offices and services;
- school numbers drop and professionally qualified (and higher paid)
people leave;
- housing prices fall, reducing the options for some of those with portable
skills, who may stay and accept unemployment benefits; and,
- local rates receipts fall, with a likely drop in services as a result.
[17]
1.29 This sequence shows the influence of negative income multipliers,
with reduced levels of income and local small business closures. In towns
that have been highly dependent on a single industry sector, such as in
Whyalla, there is a significant risk that following a period of sustained
high unemployment, the local labour supply will become out of touch with
the mainstream labour market. Skills atrophy and the stock of human capital
loses its value. Regional labour market perceptions change the institutional
framework of the local labour market to the extent that it presents a
deterrent to new business investment. This effect is compounded when a
decline in housing prices or rents attracts workers with poor employment
opportunities. [18]
1.30 Evidence given to the Committee indicates that wage levels are not
a significant factor in determining employment outcomes, but skill levels
are. Thus, firms in search of skilled workers will select a location with
low unemployment and bid for workers in the already tight market. [19]
It should also be noted that Australia experiences a relatively low incidence
of geographical labour mobility. On the basis of evidence given to it,
the Committee has identified deficiencies in public transport as presenting
a serious disadvantage to people in some metropolitan regions. Even advocates
of a minimalist government policy role for regional development put infrastructure
creation in the category of tasks which governments do well and which
they have continuing responsibility for. Expenditure on urban transport
over recent decades has been restricted, in most cities, to improvements
to existing routes rather than to building in new corridors to meet settlement
expansion and population shifts.
1.31 Another feature of some metropolitan regions are the permanent pockets
of high unemployment, broadly characterised as low-skilled workers, often
migrants with poor English language skills, or those living in non-metropolitan
regions recently bereft of obsolete and redundant industries. This is
further evidence of the inherent inadequacy of the education system for
people from non-english speaking backgrounds. Such areas indicate
the extent of the training deficit which needs to be overcome.
1.32 The Committee notes the efforts that are being put into `school-to-work'
transition programs, particularly in South Australia and in Western Australia:
measures intended to fit school leavers into local jobs and to combat
the risk of `generational unemployment' of which the Committee heard much
evidence. Some evidence was heard of misconceptions about the changed
world of work, [20] negative attitudes to education,
and the need to address the challenge of local relevance and motivation.
There are also resource deficiencies. In the midst of the rationalisation
of services which is currently experienced across all sectors, that which
the country can least afford is a restriction of educational opportunity,
particularly in the area of vocational education. Chapter 5 of this report
details the Committee's findings and recommendations in regard to education
and training.
1.33 Despite the difficulties facing regional communities, the Committee
still found strong indications of optimism and stories of success in its
visits to rural regions; they are `battling' but they are still optimistic.
Communities were determined to survive on new, less certain and less lucrative
industries even though their populations were declining with their children
heading for the cities. The community spirit of a region, or of towns
and cities in the region, is an important element for future or continued
growth given the right form of government funding assistance.
1.34 At the public hearing in Elizabeth, the Committee heard from the
Deputy Mayor of the City of Playford, Mr Ronald Watts, that the region
believed in its economic future:
If you travel around the northern suburbs of Adelaide, and this is
not just Elizabeth; it is Salisbury as well, you will find a very positive
attitude from the people that live here. There is a bright economic
future, in our view. We do believe in our own ability to make things
change and to work. We are not sitting around waiting for someone to
come and give us a handout. We will obviously take your money because
we need it but we will make every effort to take our own attempts forward
and not sit back to wait for someone to do something about it. [21]
1.35 This attitude appeared to be paying dividends in some areas of South
Australia where economic restructuring has taken a significant toll on
traditional areas of employment. The Committee heard evidence from representatives
of the Riverland Development Corporation of successful industry diversification
leading to improved long-term prospects for regional growth. Between June
1992 and March 1997 the unemployment rate in the region declined from
15.7 per cent to 6.9 per cent. It was explained that this decline correlated
with a period of strong economic growth. It was also explained, however,
that industry restructuring and government assistance, particularly in
the area of infrastructure, played a significant role. Faced with a shift
in demand in the citrus industry, the Riverland region has expanded its
horticultural base with the wine industry seen as the critical new industry,
notwithstanding the significant value of growth in almond, vegetable and
olive production. [22]
1.36 A representative of the Eyre Regional Development Board in Whyalla
presented similar evidence to the Committee. In this region, it was explained
that while agriculture would continue to be a major source of economic
growth for the region, it would not generate significant employment growth.
Thus the region was working at developing its tourism, viticulture and
aquaculture industries. It was stressed that in fostering these new industries,
government had an important role to play in ensuring that appropriate
and adequate infrastructure was available. [23]
1.37 The task of the Committee has been to identify those problems in
the regions which may be addressed in a constructive way and those difficulties
and grievances which may be remedied by the actions of governments. The
Committee understands the economic basis for the decline in regional employment
opportunities. It appreciates the pressures on Australian enterprises
to rationalise workforces and maximise profits in order to become players
in the global market and to satisfy the demands of shareholders and the
stockmarket. It also appreciates that these developments are associated
with some heavy social costs, and does not accept the proposition that
in addressing these social costs governments must take their cue from
the operational culture of the private sector.
1.38 A more detailed discussion of regional diversification and the impacts
of government policy and structural change on regional growth is provided
in Appendix 2 of this report. This appendix provides a case study of the
Northern Rivers region of New South Wales, presenting the cumulative evidence
given to the Committee on regional development issues in this area.
City and `the bush': a hard-dying perception
1.39 There is no accepted definition of a `region' in the academic literature.
Most studies done on regionalism, including those commissioned by government
agencies make no distinction between metropolitan and non-metropolitan
regions. For instance, the Bureau of Industry Economics (BIE) argued in
its 1994 report, Regional Development: Patterns and Policy Implications,
[24] that regional policy ought to be developed
in a way which treated all regions, metro and non-metro, in the
same way so that disparities could be assessed. While the BIE found that
between 1976 and 1986, non-metropolitan regions in Tasmania, Victoria
and South Australia suffered the greatest relative declines in income,
Hobart, Melbourne and Adelaide also suffered relative declines. On this
basis, the submission from the south Metropolitan Perth Regional Development
Organisation also argued that it makes no theoretical or practical sense
to restrict regional policy to dealing only with non-metropolitan regions.
[25]
1.40 The Committee, following the current practice, has taken a broad
definition of the term `region'. This reflects the view that regions are
most appropriately defined according to measurable indicators of economic
and employment performance, and descriptions of economic synergies. Regions
include not only those areas of population outside the metropolitan cities,
but large districts within metropolitan areas beyond the central business
districts. The Committee, nonetheless, has some sympathy with the view
from rural regions that the emphasis on a broad view of regional Australia
would cast the more traditionally defined regions into the shadows [26]
and that social and cultural determinants should be seen as just as important
as economic determinants.
1.41 The tensions between metropolitan and non-metropolitan interests
are long-standing. They inspired the foundation of the Country (National)
Party in 1920 and fuelled the One Nation Party nearly eighty years after.
The two events are not unconnected. The traditional distinction between
`Sydney and the bush' which has featured prominently as a theme in Australian
arts and letters has changed, especially since the mid-1980s, to a distinction
between `the big end of town' and beyond. That is, a perception has developed
of a new and close alliance between governments and business, whose decisions
about the economic structure of the nation have resulted in declining
prosperity and a diminished level of services in the regions (including
outer metropolitan regions) as well as an increasing sense of neglect
and alienation. This sentiment has been well-described by Margaret Bowman
in the foreword to a series of studies on rural towns:
The communities described here may be geographically `beyond the city',
but they remain within its shadow, in the main under the control of
city-based social, political and economic forces which most residents
can neither control nor even understand. Country towns take their cues
from the city: what the trend setting suburb has today the rural centre
tomorrow will be working to acquire…But in other important respects,
non-metropolitan Australia is another nation…Life is harsher because
there are, at best, fewer social choices and often facilities and services
lack the quality and variety of the city. Vulnerability to external
forces breeds uncertainty, isolation begets fear of the city, and there
is the constant awareness that the city acts as a magnet to some of
the most talented and ambitious young people. [27]
1.42 Among these `external forces' are corporations and governments.
The corporations, especially in the retail industry, represent the face
of the city in the regions. With their economic strength they can destroy
local business, and also deprive rural centres of services that cannot
be provided locally. Governments have provided a protective counterforce
in the past, and regional communities have long been dependent on the
highly visible arms of government agencies, so that the extent of their
recent withdrawal has been traumatic. There is a perception that the decision
to reduce government services in regional areas has been at least partly
influenced by business models of administration which are not always appropriate
for the delivery of those services traditionally provided by governments.
1.43 The misgivings of some critics to a definition of regions which
excludes metropolitan areas may result from past experience in which regional
development policy was associated with efforts, with mixed success, to
decentralise economic activity away from metropolitan areas. [28]
It is also based on the idea that people who live and work in rural areas
form a cohesive group with particular needs and who are capable of exercising
political influence to achieve them. People living in the vast outer fringes
of metropolitan areas naturally see things differently. These regions
are the dominant centres of economic activity and contain about 80 per
cent of Australia's population.
1.44 The Committee notes that some scholars view the traditional distinction
between the city and the bush as a false dichotomy: that there is an overwhelming
commonality of interests between people who live in the metropolitan areas
and those who live beyond them. [29] Nonetheless,
the Committee considers that recent global trends, reflected in changing
government policies, are strengthening rather than diminishing the force
of rural mythology as may be evidenced by recent political developments.
1.45 However one may regard the `city and the bush' dichotomy, the evidence
presented to the Committee gives a clear picture of the importance of
metropolitan regions as areas of production and employment relative to
non-metropolitan regions. A view expressed in a submission from a rural-based
researcher, Professor Tony Sorensen, argued that government incentives
and training activities should not be restricted to rural and regional
areas.
I am inclined to the view that such activities should be national and
not regional since capital cities need similar conditions to rural and
regional areas to prosper. Dynamic and energetic capital cities will
create significant spill-over effects that benefit adjacent non-metropolitan
regions and diversify parts of regional Australia away from reliance
on traditional primary output. [30]
1.46 A social aspect to support for metropolitan regions was stated at
the Committee's hearing in Perth:
I believe that unemployment in metropolitan regions probably can have
a greater impact on the social cohesion of a metropolitan community
than in rural communities, because in rural communities, from my observation,
there is a greater support structure … that varies greatly …
from metropolitan communities, which in some cases comprise a lot of
strangers just grouped in a suburb and doing the best they can. [31]
1.47 The Committee was informed of the disparity between the northern
and southern metropolitan areas of Perth, exacerbated in part by the neglect
by successive governments of rail transport links in the south and by
high council rates. [32] The geographical focus
of regional development programs run by the government of Western Australia
is the rural areas. Metropolitan areas are not eligible for the range
of assistance programs for economic development which are intended to
ensure that communities in rural areas are not disadvantaged relative
to those in Perth. While the Committee sees some virtue in needs based
funding it also recognises the policy dilemma faced by governments which
receive sound advice that development funding can have proportionally
greater benefit in metropolitan regions through significant employment
gains. [33]
Social and physical infrastructure
1.48 The Committee was told that governments have failed to link effectively
the development of local infrastructure to training and work experience
opportunities for unemployed people. Many councils need support and encouragement
from both the state and Commonwealth governments to develop the frameworks,
concepts, plans (detailed designs in the case of infrastructure projects)
and budget allocations to tailor projects to have maximum community, training
and job placement outcomes. The Committee was informed by one council
that there seems to be a misguided notion on the part of governments of
all persuasions that just because they have an idea to get the unemployed
working that councils are going to be queuing to take advantage of it.
[34] The Committee is aware, however, of example
were local governments have enthusiastically taken up policies to help
generate employment in the local area.
1.49 Some metropolitan regions showed evidence of problems of an even
greater magnitude than non-metropolitan regions. The City of Maribyrnong
described its deteriorating infrastructure, on which it is now spending
twice the Melbourne metropolitan municipal average. The Maribyrnong Council
was critical of the failure to link infrastructure renewal with job training
opportunities. [35]
1.50 The Committee heard a more complex explanation in relation to employment
in the western suburbs of Sydney where Fairfield and Liverpool councils
have been energetic in the creation of new jobs, but with little improvement
so far in the unemployment rate. Professor Bob Fagan explained to the
Committee his research into the segmentation of the labour force, and
how people become trapped into particular types of jobs or unemployment.
People find local jobs hard to access because of deficiencies in local
transport, especially for shift-work, or because of language difficulties.
[36]
1.51 The factor keeping people out of the workforce, out of jobs that
exist in their own commuting zones, is their inability to access various
kinds of social infrastructure – educational institutions, childcare
and so on. [37] The creation of a stock of
local jobs is only half the answer. The other is the creation of services
which will allow people to take up these jobs. As Professor Fagan pointed
out, the social infrastructure deficiencies result from decisions made
outside the region.
They are determined at state government level, they are determined
by patterns of investment by state and federal government, and they
are determined by, if you like, a lack of regional sensitivity in policies
that are not regional policies but welfare policies, employment policies,
industry policies and so on. [38]
Government actions and responsibilities
1.52 A line in the Budget Papers for 1997-98 puts the government's policy
on regional matters at that time very concisely:
In 1997-98 the Commonwealth terminated regional development programs
to eliminate duplication of State and local government activities in
this area.
1.53 As noted, however, the Government has since given a higher priority
to regional development issues, strengthening its regional services portfolio,
expanding the role of the Area Consultative Committees and, as will be
outlined in Chapter 6, implementing some other regional development initiatives.
At its basis, however, Coalition regional policy is seen as an adjunct
to broader economic policy. The government claims that `getting the fundamentals
right' is the first and necessary step to the regeneration of regional
economies and employment. The Committee has no argument with `getting
the fundamentals right.' It does question the assumption that regions
will share in the benefits of national economic revival when so far all
the evidence points to the reverse. It takes the view that government
policy must become more proactive in the interests of regional Australia.
1.54 The Committee does not lack an understanding of the difficulties
and dilemmas that face the current government because they have faced
all previous governments. It also recognises that regional policy is not
an area where partisan boasts of long-term successes can be made by either
side of politics. As the Committee has noted already, the influence of
governments on many of the key factors impacting on regional areas is
limited. So much energy and resources with regard to regional issues is
tied up with the fight for markets, the application of flood or drought
relief and the scores of palliative measures that are required to keep
regional populations from falling behind their metropolitan kinfolk in
the equity stakes.
1.55 The Committee sees no end to the need for palliative measures in
parts of regional Australia. While the Committee accepts that some industries
will go out of existence and towns may go with them, there is in some
cases a justifiable cost involved in reviving the fortunes and the livelihoods
of localities and regions where economic and social benefits may be identified.
1.56 Economic and social planning should not be seen as incompatible
with either deregulation or micro-economic reform. There is neither national
economic benefit nor social benefit in having depressed regions remain
in existence in the midst of overall prosperity. Some attempt at planning
should be made to ensure that the redistribution of wealth and resources
gives a better than even chance that prosperity will be extended beyond
the fortunate few regions that currently experience growth.
1.57 The Committee believes that there is now the need for the Commonwealth
to continue its recent moves in creating a more proactive role for itself
in regional policy making. The core of this policy should be the establishment
of a more formal structure of consultation and decision making across
states, and embracing both state and local governments in the process.
The Committee argues that proper consideration of `bottom-up' proposals
and solutions, and facilitation of local business initiatives, would benefit
from a coordinating structure which embraced all three spheres of government.
At first glance this proposal presents a paradox: centralised `top-down'
structures may appear to be least suitable for encouraging local enterprise.
The first response to this is that the Commonwealth already has structures
in place for this purpose in the Area Consultative Committees. The second
is that the notion of a formally constituted federal coordinating body
would build primarily upon existing state structures rather than impose
a Commonwealth model, incorporating the Area Consultative Committees in
some overarching structure. The Committee is firm in its view that the
complaints of regional and local agencies and businesses about uncoordinated
assistance and initiatives from both Commonwealth and state governments
should be addressed in a practical way. It looks to the government's proposed
Regional Australian Summit to advance this process.
Footnotes
[1] McKinsey and Co. Lead Local Complete
Global: Unlocking the Growth Potential of Australia's Regions, Office
of regional Development, Department of Housing and Regional Development,
1994
[2] Report of the Taskforce on Regional Development,
Developing Australia: A Regional Perspective, Canberra, 1994
[3] Peter McLoughlin and James Cannon in R.
Hughes and P D Wilde, (eds) Industrial Transformation in Australia
and Canada, pp. 267-68
[4] McKinsey and Company, Lead Local Compete
Global: Unlocking the Growth Potential of Australia's Regions, Report
for the Department of Transport and Regional Development, Canberra, 1994,
p.25
[5] Submission No. 183, Department of Transport
and Regional Development, vol. 8, p. 91
[6] Submission No. 110, South Metropolitan Perth
Regional Development Organisation, vol. 5, p. 17
[7] Submission No. 202, South Australian Government,
vol. 9, p. 230
[8] Submission No. 166, Department of Employment,
Education, Training and Youth Affairs, vol. 7, p. 99
[9] Professor Rolf Gerritsen, Hansard,
Canberra, 18 December 1998, p.1510
[10] Mr David Hall, Hansard, Ballarat,
17 June 1998, p. 630
[11] Mr Dick Adams MP, Hansard, Launceston,
16 June 1998, p. 506
[12] Dr Ian Falk, Hansard, Launceston,
16 June 1998, p. 496
[13] Cr Alan Brown, Hansard, Rockhampton,
4 August 1998, pp. 1182-3
[14] Graham Larcombe and Mark Cole, `Australian
Regional Employment and Growth Trends, Prospects and strategies' in National
Economic Review, No.90, March 1998, pp.19-20
[15] Submission No. 110, South Metropolitan
Perth Regional Development Organisation, vol. 5, pp. 24-5
[16] Peter Tesdorpf, Competitive Communities…?
The Impact of Competitive Tendering and National Competition Policy on
Small Towns, Small Business, Economic and Regional Development –
the Victorian Experience, Paper delivered to the Small Enterprise
Association of Australia and New Zealand Annual Conference, 21-23 September
1997, p.10
[17] McKinsey & Company, Lead Local
Compete Global: Unlocking the Growth Potential of Australia's Regions,
Report for the Department of Industry, Transport and Regional Development,
Canberra 1994
[18] Submission No. 110, South Metropolitan
Perth Regional Development Organisation, vol. 5, p. 21
[19] ibid., p. 51
[20] Submission No. 51, Enterprise in the Community,
vol. 2, p. 163
[21] Mr Ronald Watts, Hansard, Elizabeth,
28 April 1998, p. 105
[22] Mr Kenneth Smith and Mr Trent Madder,
Hansard, Elizabeth, 28 April 1998, pp. 81-6
[23] Mr Ian Nightingale, Hansard, Whyalla,
29 April 1998, pp. 137-8
[24] Bureau of Industry Economics, Regional
Development: Patterns and Policy Implications, Research Report 56,
Australian Government Publishing Service, Canberra 1994.
[25] Submission No. 110, South Metropolitan
Perth Regional Development Organisation, vol. 5, p. 13
[26] Submission No. 36, Orange City Council,
vol. 2, pp. 2-3
[27] Margaret Bowman (ed.), Beyond the City:
Case Studies in Community Structure and Development, Longman Cheshire
Melbourne 1981, p. xxvi
[28] Submission No. 110, South Metropolitan
Perth Regional Development Organisation, vol. 5, p. 9
[29] D. J. Walmsley, `The Policy Environment'
in Tony Sorensen and Roger Epps (eds.), Prospects and Policies for
Rural Australia, Longman Cheshire, Melbourne 1993, p. 55
[30] Submission No. 72, Associate Professor
Tony Sorensen, vol. 3, p. 290
[31] Mr Henry Zelones, Hansard, Perth,
18 August 1998, p. 1407
[32] ibid., p. 1415
[33] Submission No. 110, South Metropolitan
Perth Regional Development Organisation, vol.5, p. 11
[34] Submission No. 118, Maribrynong City Council,
vol. 5, p. 194
[35] ibid., pp. 193-4
[36] Professor Robert Fagan, Hansard,
Parramatta, 23 July 1998, p. 1038
[37] ibid., p. 1039
[38] Professor Robert Fagan, Hansard,
Parramatta, 23 July 1998, p. 1039