Why growing the regions makes sense – for the big capitals
Willow Aliento | 26 October 2017
There has been a lot of recent focus on the role of the regions in alleviating the pressure of congestion on cities, seen on roads, public transport and arguably the housing market with skyrocketing prices in the big cities.
In Victoria the state government and the opposition have entered a major stoush about who is more concerned about developing the regions, while a federal government inquiry is underway into the Australian government’s role in the development of cities. Meanwhile there has been a shift in how the goal of developing the regions should be framed.
According to chair of Regional Capitals Australia Shane Van Styn, as Australia’s productivity continues to be challenged by growing congestion costs and jobs losses through a transitioning economy, getting regional cities right should be at top of the government’s agenda.
“Regional cities have so many competitive advantages – affordable housing, access to quality health and education, a relaxed lifestyle, strong jobs offering in the service sectors, and importantly, land to grow,” he says
Promoting the competitive advantages of regional cities should be a “no brainer” given the congestion that is a feature of life for those living and working in Sydney and Melbourne.
Government departments looking to make the business case for decentralising are not including traffic congestion as a cost, he says.
“They don’t value the time spent in traffic, which leads to decreased productive time [for workers].”
The economics of decentralisation projects should factor in potential congestion charges – then the move stacks up, he says.
Shifting workers out of the crowded cities also increases the trading economy of regional towns and cities and creates new economies.
Housing prices are also a plus, with housing in the regions more affordable.
“These are the sorts of discussions that need to be had.”
There is also the argument about the population in the regions.
Van Styn says with regional capitals home to 300,000 active businesses, delivering 16 per cent of the nation’s economic value, the government could well focus more on investment.
Resilient lot in the regions
Van Styn, who is also mayor of Geraldton in Western Australia, says regional economies are more resilient than many people might imagine, with economies often more adaptable and more diverse than larger cities.
He points to his own local government area of Geraldton where no industry sector is responsible for more than 16 per cent of its economy as a whole. Retail, education and services are all substantial contributors, he says.
Van Styn points out that the Productivity Commission’s Transitioning Regional Economies initial report found that Port Hedland – where the lion’s share of economic activity is reliant on iron ore – is one of the most adaptive economies.
Along with many other regions the commission found it was economically more adaptable than Sydney, Melbourne and Adelaide.
There are also some interesting facts emerging on coal mining regions such as in Victoria.
The Latrobe Valley is a good example of how facts get lost in the spin.
For instance, you would think from all the sparring over job losses due to the closure of the coal-fired Hazelwood power station in Victoria’s Latrobe Valley that coal is a major employer for the region.
The latest Australian Bureau of Statistics data on the Latrobe Local Government Area shows that the sectors with the largest share of employment are hospitals, supermarkets and grocery stores, dairy cattle farming, primary education and aged care residential services.
In fact the Hazelwood plant and mine accounted for just 500 jobs – with ABS data showing that the jobs in the LGA as a whole were 118,712 persons in employment, the power station and mine provided work for just 0.44 per cent of the workforce.
According to 2016 Census data the unemployment rate for the area was 6.9 per cent – exactly the same as the national rate.
And there is a higher percentage of people employed as managers or technicians and trades workers than both the state and national proportions.
Median incomes across individuals, households and families are on average lower than the state and national averages, but so are median rents and mortgage repayments.
Regional areas need connectivity
The major need identified by the report is for regional cities and towns to be connected, Van Styn says.
That means not just roads, but also rail and broadband internet, such as the NBN.
“Rail opened up the inner cities of the USA. Connectivity did that.”
Sustainable population growth could work in the regions
Regional Capitals Australia believes the federal government also fails to appreciate the role of regional centres in sustainable population growth.
Its National Cities Performance Framework earlier this year failed to include any Victorian regional cities except Ballarat, Bendigo and Geelong because a populations lo greater than 85,000 was the basis set in the draft framework for inclusion, Van Styn notes.
In NSW, only Newcastle, Wollongong and Western Sydney made the grade – along with Albury-Wodonga, which is both a Victorian and a NSW city.
The RCA also classes Victoria’s Greater Shepparton, Horsham, Latrobe, Warrnambool and Wangaratta as regional capitals.
“While it is great to see so many of our member cities included in the report, they also happen to be the largest – Australia has more than 16 regional cities,” Van Styn says.
“Prioritising the development of cities based only on the number of people who live in them is out of step with the growing understanding that cities of all sizes are valuable.”
Measuring the performance of all regional cities would assist the government across portfolios especially in the regional development portfolio, he says.
The immediate benefit of this would be highlighting which regional cities are the best fit for public and corporate sector decentralisation.
Renewables part of the solution
Van Styn also points to the opportunities in energy with renewables part of the solution in many communities that are at the end of the line of the mains grid. Solar and wind are the answer, he says.
Smaller local shires can also pilot technologies, as they can get the whole of the community involved as a test-bed.
Are congestion charges the answer?
Van Styn says the Grattan Institute’s report earlier this year, Stuck in Traffic – Road Congestion in Melbourne and Sydney, advances the argument for focusing on regional cities and was “essentially confirming the obvious”.
He questioned the institute’s conclusion that a congestion charge was the answer.
The lack of infrastructure
Lack of infrastructure on outer suburbs was another factor making the capital cities attractive.
“The National Growth Areas Alliance, which advocates for those in these suburbs, highlights that the current social and economic backlog of infrastructure needed in their communities is $50 billion, or $12,000 per resident,” Van Styn says.
It also found that a further investment of $23 billion – almost $4000 a resident – would be needed annually until 2031 to keep up with ongoing population growth.
“All of this begs two simple questions: as a nation have we reached a tipping point for our big cities? If we are to aiming to protect our envied way of life, is now the time for a new plan?”
Van Styn says the answer is obvious, as regional cities have room to grow and existing infrastructure that can be scaled up with minimum investment.
The Regional Australia Institute has estimated that the backlog of infrastructure investment in regional cities is about $15 billion.
“If you stick 100,000 Australians [from Sydney and Melbourne] in regional cities, there is $50 billion over 30 years in reduced congestion costs.”
They’re bickering in Victoria
In Victoria the issue of the regions and decentralisation has become a topic for sparring between the Andrews Labor government and the Liberal-National opposition, with claims neither care about regional Victoria.
The current bunfight started when the Victorian opposition reshuffled its shadow ministry, axing the regional development portfolio and instead creating a shadow minister for decentralisation.
The opposition also created a population taskforce partly to look into how regional areas can contribute to managing the state’s future population growth.
Newly appointed shadow minister for decentralisation, Nationals leader Peter Walsh, said the party wanted Victoria to be “a state of cities, not a city state”.
Details of how this might be achieved are still scarce, however there have been motherhood statements on investing in public transport, roads, schools and hospitals.
There have also been the predictable claims that Labor has been responsible for a decline in the economic fortunes of regional communities.
“The Andrews Labor government has no plan to manage our population growth and regional Victoria is missing out as a direct result of Labor’s incompetence,” Mr Walsh said.
“Under Labor, country roads have been left to crumble, and skyrocketing energy costs and other cost of living pressures are making it harder to do business and causing job losses across regional Victoria.”
Labor quickly returned fire.
Premier Daniel Andrews recently said the chair of the new Liberal Nationals Victorian Population Policy Taskforce, Peter O’Brien, had been “caught out telling porkies” following a media release in which O’Brien claimed the state’s regional centres were “stagnating” under Labor.
Geelong, Ballarat, Bendigo and Wodonga had all featured in the nation’s top 10 cities for population growth, Andrews said, adding that there had been a total of 62,500 jobs created in regional Victoria since his government took office, almost two-thirds of them full time.
“Only an opposition that considers regional Victoria to be the state’s ‘toenails’ and has axed the regional development portfolio could describe our thriving regional centres as stagnating,” agriculture and regional development minister Jaala Pulford was reported as saying.
Victorian government says there’s plenty of action in the regions
In fact the Victorian state government claims a number of initiatives aimed at stimulating regional communities. They include raising the First Home Owners’ Grant to $20,000 for buyers building a new home in a regional area, scrapping stamp duty on regional home purchases under $600,000, and cutting payroll tax by 25 per cent for regional businesses.
The New Energy Jobs Fund has also supported regional enterprises, as has the GovHub program, which will see some state government jobs relocated to new precincts in the Latrobe Valley and Ballarat.
The government allocated almost $48 million in the 2017-18 budget to redevelop Ballarat’s Civic Hall for the Ballarat GovHub in partnership with the Ballarat City Council.
Government offices will be combined with community services and local businesses at the precinct, which is expected to commence construction in 2018.
By 2020 it is expected up to 1000 people will work there, including 600 government employees relocated from Melbourne.
The $15 million Latrobe Valley GovHub in Morwell is expected to provide a workplace for 150 relocated public servants by mid-2020.
The $500 million Regional Jobs and Infrastructure Fund has also been paying off, according to the government.
Since launching in June 2015, it has attracted more than $1.2 billion in investment, generated $123 million in exports, and created and retained over 4600 jobs in regional Victoria.
Initiatives have included $19 million for the 44km Grampians Peak Trail, major upgrades for the Geelong Performing Arts Centre and Ballarat Station Precinct, and the development of a health training centre and dental prosthetics laboratory in the Latrobe Valley.