Transitioning regional economies - study report

15 Dec 2017

Over recent years, the mining investment boom provided substantial economic benefits to individuals, businesses and governments across Australia. As the investment phase has wound down, regional economies have generally transitioned well. A large amount of discretionary spending is directed towards regional areas, by all levels of government. Much of this expenditure generally does little to facilitate adjustment and long term development. There remains ample opportunity for governments to coordinate better and evaluate this expenditure to improve its effectiveness in supporting development, improving living standards, and generating better value for money.

Key points

- Overall, the Australian economy has shown considerable flexibility and resilience over the past 30 years, with a large majority of regions (77 per cent) experiencing positive employment growth over the past five years. Employment in mining remains more than double pre-boom levels.

- While the mining boom has caused transitional pressures, it has also made Australians substantially better off in the short term and over the long term. – A mobile workforce (including fly-in, fly-out) has spread the benefits of the boom across workers living in other regions, as well as reduced the cost of both the investment phase and the ongoing production phase. – Adjustment from the mining boom is generally not a source of significant disadvantage and does not justify special intervention from governments.

- Even though overall employment growth has been positive, all regions have variable growth in employment over time, with most experiencing falls at times. – Over the past five years, reductions in employment and population are more evident in some agricultural regions and a number of marginal mining regions. – Despite this, there is emerging evidence of rising incomes in agricultural regions.

- As requested, the Commission has constructed an index of relative adaptive capacity. This metric does not, by itself, provide a basis for policy making. There is unavoidable uncertainty about its estimated value for each region, and transitions in the real world also depend on the specific nature of the shock, the options available to people and the decisions they make.

- Using this metric, most major cities have relatively higher adaptive capacity, while some remote regions (including Indigenous communities) and many outer regional areas tend to have relatively lower adaptive capacity.

- Governments should avoid providing ad hoc financial assistance to regions because it is rarely effective. It does little to facilitate transition and long-term development. Governments should also better coordinate and evaluate their activities that affect Australia’s regions.

- Specific adjustment assistance to individual regions should be reserved for extreme events that are likely to result in high levels of permanent disadvantage in a community. Even then it should be targeted at assisting the most vulnerable families and individuals, in particular to help them secure employment.

- There is unnecessary overlap in the regional development roles of all three tiers of government, contributing to concerns about the effectiveness and value for money from the large outlays on regional development programs.

- Central responsibility for regional development resides with State and Territory governments, supported by local governments. They should: – remove unnecessary planning and zoning regulations that are obstacles to regional development – adopt more rigorous and transparent assessment and implementation of their regional development planning strategies to improve the effectiveness and value for money from the large expenditures on regional development. This requires strong and effective local leadership – direct discretionary funding to priorities identified in regional strategic plans.

Publication Details
978-1-74037-652-5 (PDF)
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Subject Areas
Geographic Coverage