Research report

Transitioning regional economies - initial report

21 Apr 2017
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Description

The purpose of this study is to examine the regional geography of Australia's economic transition, since the mining investment boom, to identify those regions and localities that face significant challenges in successfully transitioning to a more sustainable economic base and the factors which will influence their capacity to adapt to changes in economic circumstances.

Key points:

  • The mining boom has caused transitional pressures, but it has also made Australians substantially better off in 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.
  • About 80 per cent of regions have had positive employment growth over the past five years.
  • Even though overall employment growth has been positive, all regions have had highly variable growth in employment over time, with most also experiencing decreases at times.
  • Adjustment from the mining boom may not be the largest source of dissatisfaction outside of capital cities. Over the past five years, employment and population falls are evident in some agricultural and a small number of mining regions.
  • In agriculture, employment decline is driven by efficiencies and technological innovation, leading to growth in production using less labour. At the same time, there has been a pattern of consolidation from smaller towns to larger regional centres, affecting the social fabric of these communities and engendering a feeling of being left behind as Australia prospers more generally.
  • Caution is required if making policy decisions based on the rankings of regions using the estimated metric of relative adaptive capacity in this initial report. There is unavoidable uncertainty about its estimated value for each region, and actual adaption to any specific disruption would be affected by factors beyond the metric.
  • The factors shaping adaptive capacity include: people-related factors (educational achievement, employment rates, skill levels, personal incomes and community cohesion); the degree of remoteness and accessibility to infrastructure and services; natural endowments (such as agricultural land) and industry diversity.
  • Most mining regions appear to be resilient and have relatively high adaptive capacity.
  • Regions with a greater dependency on manufacturing have relatively low adaptive capacity.
  • Remote and very remote regions (including Indigenous communities) also tend to have relatively low adaptive capacity.
  • There is no ‘one size fits all’ approach that will promote successful adaptation in all regions, although there are ‘no-regrets’ policies that should be pursued as soon as practicable.
  • Strategies for successful adaptation and development are those that focus on supporting people in regional communities to adjust to changing economic circumstances. Strategies work best when they are: - identified and led by the local community, in partnership with all levels of government - aligned with the region’s relative strengths - supported by targeted investment in developing the capability of the people in the local community to deal with transition, adaptation, and securing an economic future - designed with clear objectives and measurable performance indicators and subject to rigorous evaluation.
  • Although government expenditure on projects can create short-term employment, it often does little to support transition and long-term sustainable growth in regions.
  • The initial findings in this report could change when data from the 2016 Census of Population and Housing become available in October and further research is undertaken

You are invited to examine this initial report and comment on it by written submission to the Productivity Commission by Monday 31 July 2017. Further information on how to provide a submission is included on the study website at www.pc.gov.au/inquiries/ current/transitioning-regions/make-submission. The final report will be prepared after further submissions have been received and further consultations have been undertaken, and will be published in December 2017.

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PUBLICATION DETAILS

Resource Type: 
APO URI: http://apo.org.au/node/75912
Peer Reviewed: 
No