Australia comprises cities and regions with diverse economic potentials and social needs. An almost inevitable consequence of this diversity is a spatial dimension to many of the economic and social issues facing Australians today. Coming to terms with these urban and regional inequalities is a key element in public policy even if such considerations have not always been to the fore of the policy agenda.

This recognition of urban and regional issues has been a great challenge for all levels of government. The Federal Government is more used to applying economic policy instruments to the national economy as a whole. The influence of economic rationalism has also not been conducive to selective interventionism in public policy. The State governments meanwhile complain of a lack of resources for remedial policies, while remaining locked into a process of 'beggar-thy-neighbour' competition. Local government, closest to the needs of the people, is too fragmented and under-resourced to provide any general solutions.

The major challenges for public policy include: what can ameliorate or resolve complex urban and regional problems and inequality? Can urban and regional policy make a difference?