Developing Australia's Regions: Theory and Practice

D E V E L O P I N G A U S T R A L I A’ S R E G I O N S : THEORY AND PRACTICE

DEVELOPING AUSTRALIA’S REGIONS THEORY AND PRACTICE

Andrew Beer, Alaric Maude and Bill Pritchard

UNSW PRESS

A UNSW Press book Published by University of New South Wales Press Ltd University of New South Wales UNSW Sydney NSW 2052 AUSTRALIA www.unswpress.com.au © A Beer, A Maude and W Pritchard 2003 First published 2003 This book is copyright. Apart from any fair dealing for the purpose of private study, research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without written permission. Inquiries should be addressed to the publisher. National Library of Australia Cataloguing-in-Publication entry: Beer, Andrew. Developing Australia's regions: theory and practice ISBN 0 86840 548 5. 1. Regional planning - Australia. 2. Regional economics Australia. 3. Regional disparities - Australia. 4. Australia - Economic conditions - Regional disparities. I.Maude, Alaric. II. Pritchard, Bill (William Noel). III. Title. 338.994 Cover Max Watters, Houses Along the Wybong Road, 1987 Printer BPA

CONTENTS

Contributors Preface Acknowledgements Acronyms and abbreviations

ix xi xiv xv

CHAPTER 1 An Australia of regions Uneven growth patterns Policy options The goals of this book

1 2 9 12

CHAPTER 2 Defining local and regional development Working for growth Bidding for jobs Lessons from other countries The place of society within economic development Conclusion

14 14 21 29 32 35

CHAPTER 3 What is a region and why does it matter? The significance of the region in regional development Types of regions Defining and delimiting regions Conclusion

38 39 41 51 55

CHAPTER 4 Australia’s diverging regions: Causes, outcomes and policy challenges What scale of region? Increasing polarisation, increasing differentiation

57 58 67

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

The roles of capital city and non-metropolitan regions across Australia Challenges for policy

73 81

CHAPTER 5 Local economic development in resource-based 84 economies The changing role of primary industry in the national 85 economy Primary industries and Australia’s regions 88 Measuring the economic flows of primary industries: 91 Input–Output analysis How do primary industries interact with regional economies? 94 Regional purchasing by farm businesses 96 Changing regional interactions: Mining 99 Moving forward: What can regions do? 103 CHAPTER 6 Sunrise industries: Engines of regional growth? 107 The ‘old’ manufacturing industries 108 Sunrise industries 114 Tourism 115 Producer services 122 Call centres and back offices 126 Advanced manufacturing 128 Regional business strategies 131 Business incubators 132 Business retention and expansion programs 134 Clusters 136 Conclusion 142 CHAPTER 7 The practice of local and regional economic development in Australia The role of economic development agencies The practice of local economic development in Australia ‘Chasing smokestacks’ Conclusion

144 145 159 169

CHAPTER 8 Indigenous people and Australia’s regions Visible and invisible: The regional policy challenge The Aboriginal economy Future issues and directions

171 171 182 188

143

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VII

CHAPTER 9 Infrastructure and services Economy, government and society Infrastructure The banks and financial services Telecommunications Housing as a determinant of regional growth Conclusion

192 193 198 202 204 208 216

CHAPTER 10 Green regions Sustainable development The environmental sustainability of Australian regional economies Will protecting the environment damage the economy? What can be done at the regional level? Who should be responsible for sustainable regional development? What are the barriers to achieving environmental sustainability at the regional level? Developing and implementing a regional sustainable development strategy Conclusion

218 218 221

CHAPTER 11 A local and regional development policy for Australia Scenario 1 Australia’s regions in an unfettered market Scenario 2 Systematic planning for local and regional development Scenario 3 An entrepreneurial model of economic development Governments, regions and communities Conclusion

246

Notes Index

225 232 234 237 243 245

248 253 257 260 262 265 303

CONTRIBUTORS

Andrew Beer is an Associate Professor in the School of Geography, Population and Environmental Management at Flinders University. Previous publications of note include Home Truths (with Blair Badcock) and Beyond the Capitals: Urban Growth in Regional Australia (with Alaric Maude and Andrew Bolam). His interests include the behaviour of regional development bodies, housing markets, local government and Federal and State policies. Andrew has spent two major periods overseas, the first as a Visiting Research Fellow in the Department of Geographical Sciences at Plymouth University in 1997, and the second in 2001 as a Leverhulme Fellow at the Magee Campus of the University of Ulster. Alaric Maude is an Associate Professor in the School of Geography, Population and Environmental Management at Flinders University, where he has been teaching topics on regional and urban development for twelve years. He has undertaken research into out-migration from lagging regional economies in Indonesia and Malaysia, the role of small towns in regional development in Malaysia, regional towns and cities in Australia, and regional development agencies in Australia. In 1998 Alaric was the Conference Secretary for the Annual Conference of the Australian and New Zealand Regional Science Association at Tanunda in South Australia, the first to be held in association with a regional development agency. Bill Pritchard is Senior Lecturer in Economic Geography at the University of Sydney. He was co-editor of Land of Discontent (UNSW Press, 2000) and has published widely in the areas of agricultural and food industry restructuring, rural economies and

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

Australia’s North. Bill received a Coral Sea Fellowship to undertake research on agri-food industries in North America, and more recently has travelled the globe undertaking research on the tomato industry. In previous lives Bill has been employed by the Evatt Foundation, worked for a Federal Member of Parliament and been employed in the NSW public service.

P R E FA C E

This book is an attempt by three university-based researchers and teachers to engage with a broad audience on issues relating to the development of Australia’s regions. This audience includes local government councillors, State government officials, economic development practitioners, academics, Indigenous communities, environmental groups, Federal government policy makers and undergraduate and postgraduate students. We believe this is an important task because the future of economic development in Australia, and the future of our communities, is very much tied to the nature, pace and direction of growth within its regions. To a very large degree debates about regional issues in Australia have focused upon the nation’s non-metropolitan parts. ‘Regional Australia’ has become a synonym for non-metropolitan Australia and ‘RaRA’ (Rural and Regional Australia) has dominated policy development and the attention of senior politicians. The prominence of non-metropolitan regions has been an inevitable consequence of the political landscape — and voting behaviour — of Australia over the last decade. Unfortunately, this focus has resulted in a skewed perception of Australia’s regions and regional issues. It has contributed to the view that regions only exist outside the capitals; that all of Australia’s non-metropolitan regions are in decline — usually terminal; that Australia’s non-metropolitan regions depend entirely upon agriculture and its supporting industries; that Indigenous communities are an impediment to regional development; that environmental decline is an inevitable consequence of economic development; that responsibility to address environmental issues rests with State or Federal governments, not local communities; and that greater levels

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

of public sector funding could restore ‘regional Australia’ to the Golden Years of the 1950s, 1960s or 1970s. Developing Australia’s Regions: Theory and Practice seeks to challenge these misconceptions. It sets out to show how the development of regions within capital cities is as important for the nation as the development of non-metropolitan regions. It attempts to present a balanced view of how Indigenous communities can, and do, contribute to regional economies. It examines our slow progress towards regional environmental sustainability and the benefits for regional economies of better environmental protection. It also highlights how successful Australia has been in certain industries and regions. Throughout Developing Australia’s Regions: Theory and Practice we examine the practical applications of theoretical perspectives on regional economic development. Theory isn’t seen as an endpoint; rather we draw upon it in order to examine current practice in regional economic development and to suggest new approaches. Individuals, organisations and communities can use the ideas presented here to map out strategies and actions that could improve the prospects of their region. This might include taking the first steps to set up a business cluster or reconsidering the potential role of Indigenous Australians within the regional economy and developing new models of collaboration between economic development agencies and Aboriginal or Torres Strait Islander communities. It might include a re-evaluation of the economic development strategies employed by a local government; conducting an environmental audit at the regional scale; rethinking a regional tourism strategy, or the development of an aggressive regional marketing strategy. We hope to contribute to the bank of ideas individuals and communities use when discussing regional issues and planning for their future. We draw on the experience of regions in Australia, as well as overseas, for strategies and policies that seem appropriate for Australia. Each of Australia’s regions is unique, but not so unique that they cannot learn from other places. Developing Australia’s Regions: Theory and Practice is primarily focused on economic development. However, ‘development’ is one of those terms that can be interpreted in several different ways, all of which are valid. Some people emphasise community development and focus on strengthening social interactions and the capacity of groups to identify and deal with challenges. Others focus on human development, the strategies and actions used to enhance the capacities of

PREFACE

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XIII

individuals. We have chosen to focus on economic development because we recognise that in a market-based society such as Australia the wellbeing of a region, and its capacity to attract infrastructure, services and investment, will depend upon the performance of its economy. Yet economic growth is not the only dimension to regional wellbeing: the quality of the environment, the strength of a region’s communities, the levels of tolerance and goodwill amongst residents, and the richness and diversity of social and cultural life are equally, if not more, important than economic performance. The strength of the local economy, however, has a substantial impact on many of these other dimensions of life. Actions that strengthen the regional economy help meet other aspirations. In turn, these qualities have a growing influence on economic opportunity in an increasingly knowledge-based economy. Finally, we hope that Developing Australia’s Regions: Theory and Practice will help inform the development of State, Territory, Federal and local government policy into the future. A greater appreciation of the range of policy instruments available to governments alongside greater awareness of the impacts of current policies will, in the longterm, contribute to a more productive policy environment. Australia’s regions, and those responsible for their development, have made considerable progress over the last two decades, but successful regional development is a process of constant learning. This book is a contribution to that process.

ACKNOWLEDGEMENTS

Many thanks to those who helped us complete this work. In particular we would like to thank John Elliot of the UNSW Press for his very considerable patience with this much-delayed work. We also express our gratitude to three staff members of the School of Geography, Population and Environmental Management at Flinders University. Once again, Mrs Cecile Cutler provided invaluable assistance through proofreading the manuscript. Mrs Louise O’Loughlin was her typical professional self in her assistance with the formatting of the final manuscript while Mr Steve Fildes was responsible for the cartography. Along the way various people commented upon parts of the manuscript. Special thanks to Professor Chris Paris of the University of Ulster for his usual incisive comments. Professor Graham Haughton of the Geography Department, University of Hull also provided comments, especially on Chapter 7. Thanks also to Dr Terry Clower of the University of North Texas; he provided useful and much-needed advice on local economic development issues in the USA. Each of us as individuals has been assisted with this project. Andrew Beer would like to express his sincere thanks to the Leverhulme Trust and the staff at the Magee Campus of the University of Ulster. His chapters were written while a Leverhulme Fellow in Derry. Bill Pritchard would like to thank his colleagues at the Division of Geography, University of Sydney, for their ongoing support. The preparation of some background material in Chapter 5 was assisted by an Australian Research Council Discovery Grant, ‘The spatial construction of food commodity chains in the Asia Pacific’.

A C R O N Y M S A N D A B B R E V I AT I O N S

ACC AFL ALGA ATM ATSIC BEC Centrelink

Area Consultative Committee Australian Football League Australian Local Government Association Automatic Teller Machine Aboriginal and Torres Strait Islander Commission Business Enterprise Centre The Federal government agency with responsibility for social security and other forms of income support. CBD Central Business District CCT Compulsory Competitive Tendering CLP Country Liberal Party E-commerce Retail trade and other business based on the Internet and allied technologies EDU Economic Development Unit EFTPOS Electronic Funds Transfer at Point of Sale EIS Environmental Impact Statement GDP Gross Domestic Product GP General Practitioner GRP Gross Regional Product GSP Gross State Product ILC Indigenous Land Corporation IO Input–Output ISP Internet Service Provider LGA Local Government Area Mabo The term used to refer to the decision by the High Court of Australia that colonisation by the British did not extinguish the common law

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

MSP NGO NHT NOIE NTN NTT OECD RDB RDC RDP SAHT SHA SLA TAFE SSD USO Wik

rights of Indigenous Australians with respect to Crown land. Main Street Program Non-Government Organisation National Heritage Trust National Office of the Information Economy Networking the Nation Native Title Tribunal Organisation for Economic Co-operation and Development Regional Development Board Regional Development Commission Regional Development Program South Australian Housing Trust State Housing Authority Statistical Local Area Technical and Further Education Statistical Subdivisions Universal Service Obligation (may also be referred to as a Community Service Obligation (CSO)) The term used to refer to the High Court of Australia’s decision in 1996 that the leases under which pastoral operations had been granted assumed ongoing residual rights for Indigenous people.

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AN AUSTRALIA OF REGIONS

Australia has become a land where regions matter. For much of the 20th century Australia’s regions exerted a limited impact on how individual Australians and their communities lived. The expansion of manufacturing industry, in combination with government intervention in the economy — through the provision of services, tariffs, and government spending decisions — resulted in a relatively even social and economic landscape.1 This was particularly true for the years of the ‘long boom’, that period from the end of World War II to the mid-1970s when Australia experienced sustained growth and low rates of official unemployment. For much of this period — and in earlier times — the nature of the economy and people’s quality of life was broadly similar across Australia’s capital cities. The capitals performed comparable functions and grew in response to nationally evident processes. Even in the countryside few areas were left behind as services provided by State or Federal governments supported struggling communities, and in some instances public sector price supports, agrarian socialism, ensured the survival of whole industries. Regions, of course, still existed in a physical sense. They were areas with a common landscape, industry or cultural tradition but they were a curiosity of geography, rather than a potent force shaping economic opportunities and wellbeing. Australia has been engaged in a program of radical economic, social and political reform over the last two decades and these changes have had far-reaching implications for the regions. Since the early 1980s Australian governments have chosen to open the economy to global markets and global competition. In the late 1960s Australia had a highly protected manufacturing sector. New Zealand

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

was the only country in the OECD with greater levels of protection for their manufacturers.2 But by the start of the 21st century effective rates of protection on manufactures averaged 5 per cent and applied to all but a handful of industries. The cold winds of competition forced the rationalisation of many industries and the extinction of some, often with acute regional impacts. These impacts were felt both in metropolitan regions and in the countryside. Many would argue, of course, that Australian governments had few, if any options. The ongoing processes of ‘economic globalisation’ have witnessed the ever more rapid expansion of world financial markets, the rise of new competitors for Australia’s traditional export markets, the emergence of increasingly sophisticated strategies amongst other developed economies designed to foster economic growth, and continuing European and American incursions into Australia’s agricultural markets. To ignore, or try to deny, these international developments would risk the emergence of a national economy that is uncompetitive globally. The lessening of tariff and other trade barriers has been one area of substantial government and economic change with significant knock-on effects for regions. Other changes have been as important. The floating of the Australian dollar affected the competitiveness of Australian exports, helping particularly those regions that produce for world markets. At the same time, deregulation of financial markets provided a fillip to the financial services industry, boosting the economic performance of regions such as Sydney. The privatisation of government services such as telecommunications and governmentowned banks has radically restructured the nature of service provision across huge swathes of Australia. In the past, governments were committed to providing rural Australians with the same quality of service found in Sydney, Melbourne or Perth but the new private models of service provision are based on notions of tightly defined ‘Community Service Obligations’ and implicitly accept lower standards outside the capitals.

U N E V E N G R O W T H PAT T E R N S The shift in political ethos from a position which accepted that governments had a role in directing the economy and redressing some of its failures, to one focused on markets alone, has affected every area of social and economic life. It has brought benefits for the Australian people through a more productive and efficient economy but there

AN AUSTRALIA OF REGIONS

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have been costs as well, particularly in the emergence of a more unequal society. Researchers have documented how regional income disparities have grown. One study in the mid-1990s found greater levels of differentiation between regions, with the best performing regions the inner north, central and southern parts of Sydney, the inner and outer north-east of Melbourne, outer western Brisbane, southern Tasmania and the Snowy region.3 Those that fared poorly were concentrated in the Top End and in rural and remote regions. These conclusions have been supported by the economists Rachel Lloyd, Ann Harding and Otto Hellwig of the National Centre for Social and Economic Modelling. They concluded that: There is a large and growing gap between the incomes of those Australians living in the capital cities and those living in the rest of Australia. The incomes of metropolitan residents increased at about double the rate of those living in major urban centres and regional and rural towns in the five years to 1996.4 Non-metropolitan regions are not always the losers in the shifting pattern of income differentials, but they are vulnerable. There is ample evidence that through the 1990s Sydney and Melbourne captured the lion’s share of capital investment in Australia, which in turn led to higher productivity, more jobs and higher wages.5 Importantly, change within the Australian economy has resulted in greater differences between regions in their capacity to grow, as well as in their incomes. This is a fundamental theme in the State of the Regions reports produced by the National Institute for Economic and Industrial Research (NIEIR). They have, for example, identified central and northern Sydney as ‘Global Sydney’, a highly productive region locked into, and trading with, global markets. It is a region packed full of well paid ‘symbolic analysts’6 and with an almost unlimited growth capacity. In their view ‘Global Sydney’ drives the entire Sydney economy, with the rest of the city providing services and goods to support this engine for growth.7 By contrast, other regions lack any evident economic capacity. Some parts of Australia have experienced population growth without the investment in productive activities needed to establish a prosperous future. Many cities and towns have therefore become vulnerable communities — with high rates of unemployment, low incomes and high levels of dependency on pensions, unemployment benefits and other forms of

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

government-provided income support.8 Other communities and regions have come to the same parlous position, but arrived there via the decline of their established industries, especially manufacturing. The growing gap between booming metropolitan regions and other parts of Australia cannot be denied but there is no simple division between well-performing regions in capital cities and struggling regions outside the capitals. Change within the economy has generated a complex pattern of regional winners and losers. Who would have predicted in the early 1980s that the purchase of the Cairns airport by a semi-autonomous State government body would see that city become a major international tourism destination? Who would have forecast in the early 1990s that by 2001 some parts of non-metropolitan South Australia would be struggling to deal with the problems of too much economic growth, while others face an apparently inevitable loss of population? In the early 1980s who would have foreseen that a collapse in the price of wool would threaten the future of inland regions such as the New England Tablelands or the Far West of NSW? Similarly, who would have forecast that Hobart’s shipbuilding industry would be reshaped and emerge as significant within international markets? The growth prospects and incomes of regions are a reflection of the industries they contain. But we can take this point further; it is not just the industry that matters, increasingly it is the mix within those industries and the willingness of individual enterprises to embrace change. Research on Australia’s regional cities has shown that some cities with economies based on agriculture, horticulture and forestry grew between 1991 and 1996 while others had sluggish or declining economies.9 Growth was concentrated in those places where the commodities produced were in demand on world markets — wine grapes, horticulture, forestry. By contrast cities that relied upon broad acre production of grains or wool suffered. Regions able to identify and secure niche markets have thrived while those reliant on mass production at the lowest possible cost have been confronted by more difficult times.10 Some regions appear able to find solutions to their problems, while others cannot. And it is not a simple reflection of differing opportunities because of differing environments. Some regions are able to generate or attract innovation and change for the better, while others lack that capacity. Change within the economy and change within political processes has meant that, for most Australians, where you live — your region —

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has become a much more important determinant of quality of life than it was thirty, twenty or even ten years ago. In the world of work it now shapes the number and types of jobs that are available, the salaries paid within an industry and the career structures available to employees. The weakening of the labour awards system and the shift to a system of enterprise bargaining has contributed to a widening differential in wages between metropolitan and non-metropolitan Australia. Services also reflect regional differences: the quantity and quality of education you are likely to receive, your access to information technology and telecommunications, the availability of conventional services, and your community’s health status will all be affected by the facilities available in your region. There are pronounced regional differences even within the virtual world of the Internet. Limited bandwidth and higher user charges can make the World Wide Web either too expensive or too frustrating for those living outside the capitals. As another example, housing costs vary by region, as do the type of services provided by State and local governments. Health is one area where regional differences have become more evident over the last two or three decades. There have always been substantial differences in health outcomes – mortality and morbidity rates, access to General Practitioner services et cetera — but the increasing cost of providing health services and attempts by both State and Federal governments to shift health expenditures from one to the other, have exacerbated the problem. Many small country towns struggle to attract and retain a local doctor, but even the poorer regions within metropolitan areas have fewer doctors. The closure of public facilities has often meant that access to specialist facilities — such as neo-natal support — is extremely limited in less well off regions. General Practitioner health services starkly illustrate the differences between regions in Australia. In the early 1990s there was one General Practitioner (GP) for every 1173 residents in South Australia. But this figure masked substantial area-by-area differences. There was one GP for every 350 or so residents in Adelaide’s wellheeled eastern suburbs, and an average of one GP per 873 residents across the metropolitan area.11 Non-metropolitan South Australia was less well served: there were 1600 residents per GP in Whyalla, 1300 residents per GP in Port Augusta, 2000 residents per GP in the Flinders Ranges and 2200 residents per GP in the remote mining town of Coober Pedy. In aggregate terms the Eyre Peninsula had

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

reasonable access to GPs, with a ratio of 1:1200. However, there were just 10 practitioners to cover the entire area of the Eyre Peninsula outside Port Lincoln (72 000 square kilometres). The situation appears to have worsened through the 1990s with some communities — of which the small farming settlement of Kimba is a prominent example — struggling to retain a GP. Poor access to a General Practitioner is more than just inconvenient: it contributes to poorer health within the population, the movement of people to other regions, lower vaccination rates amongst children, lower quality of life and the leakage of expenditure from the region.12 It is worth remembering also that the ‘technological fix’ of remotely accessing health services through video link-ups or the Internet can be a mirage. The residents of Far North South Australia reported problems in securing Medicare payments for consultations at which the doctor does not attend in person.13 The physical presence of a GP is therefore significant both for the quality of the service and its affordability. There is no more readily evident proof of the importance of regions in contemporary Australia than the emergence of Pauline Hanson’s One Nation Party. Pauline Hanson first came to prominence in 1996 when she took the Federal seat of Oxley — a former Labor Party safe seat previously held by one-time party leader Bill Hayden – and this initial success was followed by victories in the Queensland and New South Wales elections. Pauline Hanson and the One Nation Party were successful — admittedly to a limited degree — because they offered populist politics to a disenfranchised and disillusioned electorate wary of the radical free-market policies of the Liberal Party on the one hand, and unforgiving of the social and economic reforms thrust upon them by thirteen years of Federal Labor on the other. Voters in ‘stressed out’ communities14 and regions turned to the simple solutions — reduced immigration, reduced support for Indigenous Australians, reductions in government-provided benefits — offered by this new political force. Critically, while the National Party feared that it would lose its traditional voter base in the countryside, support for One Nation was always greatest in the regional cities and outer urban areas.15 It attracted those who previously voted Labor, as well as conservative voters. They came from the communities that had felt the sharp end of social and economic change. That is, One Nation attracted popular support in regions that had experienced the loss of hospitals or schools, faced the

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burden of high rates of unemployment, seen job security disappear and seen working conditions deteriorate as local enterprises competed with producers using cheaper overseas labour. The fact that substantial change has occurred within the Australian economy and its set of regions cannot be denied. What is open to question, however, is what it means for Australia’s future, and how governments should respond. Should we consider current trends toward greater inequality to be an aberration? Should we assume that the continuation of current policies will — in the long run — result in growth and prosperity for all? Should we accept greater regional inequality because in aggregate Australians may become more affluent? Alternatively, are we looking at the beginning of a long-term trend with a further concentration of wealth, opportunity and economic power in a few select locations, while other regions and other places in Australia settle for second best? Is substantial government intervention the answer, perhaps through the reintroduction of tariffs? Are there locality-specific policies we should embrace? Other nations and other parts of the world have far more substantial regional development policies than are ever contemplated in Australia. It has, for example, been estimated that regional development assistance from the European Union’s Structural Adjustment Fund raised Ireland’s Gross National Product (GNP) by between three and four percentage points through the late 1990s.16 Does Australia need to engage in regional development programs of similar magnitude? Figure 1.1 Public sector spending as a percentage of GDP, Australia, all OECD countries, OECD Europe and OECD America

SOURCE

OECD 2001.

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

The prospect of more substantial regional development policies in Australia appears slim. Australia has miserly governments when compared with other developed economies. In 1998 there were 29 nations in the OECD, and Australia was ranked 24th with respect to tax revenues as a percentage of GDP.17 Only the United States, Turkey, Japan, Korea and Mexico had smaller public sectors relative to the size of their economies. Indeed, Australian tax revenues have fallen further behind the OECD average over the last thirty years (Figure 1.1). It therefore appears unlikely that Australia will ever introduce local or regional development programs of the scale found in Europe. There is another, equally important, conclusion: local and regional development initiatives in Australia need to be effective and efficient. Resources for economic development are limited and it is therefore crucial that only the most effective techniques and tools are employed. Too often in the past resources have been misdirected or wastefully employed, with governments placing a greater priority on political, rather than economic, objectives. The low level of public sector funding for local and regional economic development must inevitably raise questions about how to secure private sector interest and funding for economic development initiatives. Questions of policy and the future of Australia’s regions lie at the heart of this book. There are three key themes in the chapters that follow. The first of these themes is that Australia’s regions now look upon a horizon of economic opportunities that is radically different from the situation ten or twenty years previously. This has a number of dimensions, including the recognition that there are new industries that offer prospects for growth. Ecotourism, for example, may offer some more remote regions the chance of achieving sustainable growth by broadening their industry base. The development of both onshore and offshore aquaculture may boost employment, bring a value-adding industry to the region, and boost investment in Research and Development (R&D). The example of aquaculture brings forward a related point: the importance of ‘smart’ industries and the need for regions to act to ensure their own economic wellbeing. The critical role of intellectual capital in ensuring the prosperity of regions and their businesses is highlighted by international success stories such as California’s Silicon Valley.18 But while there have been attempts to replicate this success in Australia, there have been failures as well as triumphs. The Australian Technology Precinct in Sydney appears to be thriving19 while the Multi Function Polis that was intended for Adelaide was a spectacular failure.

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POLICY OPTIONS How then, can economic development be encouraged in the 21st century? What techniques and approaches work, and what are their implications for regions? Will the models developed in Europe or the United States work in this country, or are there factors unique to Australia that militate against the successful application of overseas models? The latter is an important consideration, as Australia remains a very small part of an ever-expanding international economy. Australia also occupies a remote and unimportant corner of the globe. Historically our economic strengths have been with extractive industries — mining, pastoralism, broadacre farming — and they may not furnish Australia with an industrial or intellectual legacy appropriate for economic expansion through the 21st century. Laissez-faire attitudes to the role of government within society and the economy may also be inappropriate because while the Americans have always embraced the market, government defence expenditures bankrolled the fundamental research that made possible its high-technology success stories such as Silicon Valley and Route 128.20 The need for governments to adopt new and different roles is the second major theme within this text. Previously, regional equality was maintained by a host of government institutions and practices. The Commonwealth Grants Commission, for example, ensured equity of access to services between the States through the application of horizontal equalisation principles. This has meant that the smaller States — such as Tasmania and South Australia — received more Commonwealth Government funding than NSW or Victoria because it was accepted that their smaller populations made it more expensive to provide adequate services to all. The public sector itself was a major influence on regional economies. Beyond the capitals State and local governments have been the largest single employers and important guarantors of quality of life. However, the rationalisation of government activities from the 1980s onwards, and the privatisation of government businesses that gathered pace in the early 1990s with the release of the Hilmer Report,21 resulted in the loss of this levelling influence. The introduction of national competition policies adversely affected weaker regions, especially non-metropolitan regions.22 The Kennett Government’s insistence on the adoption of Compulsory Competitive Tendering for all State and local government services in Victoria, for example, resulted in the concentration of municipal services and employment in the larger regional centres and the loss of jobs from smaller towns.23

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

Two of Australia’s most respected urban researchers — Frank Stilwell and Pat Troy — have argued that Australia has a legacy of capable public sector institutions that could ensure the effective and efficient management of Australia’s cities and regions into the future.24 But governments and politicians have not been inclined to leave well enough alone. On the one hand, the new emphasis on market solutions has influenced the operations and functioning of existing organisations. The Commonwealth Grants Commission, for example, has stepped away from the principal of horizontal equalisation in local government funding,25 thereby explicitly accepting greater regional differentials in service provision. However, on the other hand, governments have sought new models for encouraging the development of regions, especially non-metropolitan regions. Centralised approaches to the planning and management of State economies have been abandoned. From the end of World War II until the mid-1970s most State governments across Australia established planning strategies and decentralisation policies that attempted to secure balanced state development.26 They have been replaced by opportunistic strategies designed to secure economic growth for the state, apparently at any cost, and without regard to regional impacts or distribution.27 Outside the capitals economic development initiatives are now organised at the local or regional level, with most States and Territories establishing regional economic development boards or commissions through the 1990s.28 While precise arrangements vary between States, there are common elements between them as a significant percentage of these bodies have boards of management drawn from local governments within the region, as well as local entrepreneurs. They attempt to mobilise community resources to find local solutions to local problems. There is a strong emphasis too on encouraging both business start-ups and the further expansion of existing enterprises.29 The recognition that economic, social and policy change has given rise to new types of regional outcomes is the third theme within this book. We have already touched upon the growing income differentials between regions and the growing importance of regionalism. But the differences between current growth processes and those that operated 20 or 30 years ago extend further. Pat Mullins, the Queensland-based sociologist, has written at some length about tourism-based urbanisation in Australia. While this phenomenon is not unique to this country, a substantial percentage of

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Australia’s non-metropolitan population lives in regions such as the Gold Coast, the Sunshine Coast or the Central Coast of NSW that rely upon the tourism and retirement industries. The continuing growth of these large tourism-based regions represents the geographical expression of new economic processes, including the rise of the service economy, the strength of international tourism to Australia and greater affluence for some older Australians. The decline of many inland country towns represents the other end of this spectrum and brings into focus the unsentimental nature of market processes and market-led policies30. The fact that Australia’s regions now exist within a global — rather than national — network of regions, is another example of how regions have been transformed over the last 20 years. Economic globalisation has meant that at the same time regions have become more significant as a determinant of quality of life within Australia, key aspects of their economic performance — their attractiveness for investment, their rate of growth, wage rates and infrastructure et cetera — have been referenced against international benchmarks. Increasingly, Australia’s regions are part of a worldwide corps of regions, and competition for growth and investment has an international, as well as a national, dimension. Sydney will compete with Singapore, not Melbourne, for the Asia-Pacific headquarters of an information technology firm. Burnie in Tasmania will lose the contest for a titanium dioxide plant to a city in Malaysia, rather than to Portland, Victoria. The products of Australia’s agricultural regions compete head-to-head with commodities from European, African or American producers. These closer linkages between individual regions and the global marketplace influence their relationship with other Australian regions. In the past capital city ports dominated exports from their states but that stranglehold has weakened. For example, the growth of Australian exports within the global wine industry has fuelled the expansion of national production systems within the largest wine makers. Increasingly product from NSW, Victoria or Western Australia is taken to South Australia for bottling and export, rather than being packaged and exported locally. Sheep meat processed and prepared for export in Dubbo leaves the country through the Port of Newcastle rather than Sydney. A West Australian public relations firm has 80 per cent of its business in Indonesia but it is based in Bunbury, not Perth. Modern telecommunications means that the entire operation is independent of the State capital,

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except for flights to and from Jakarta. All these examples show how production for world markets challenges previously established economic relationships within Australia, generates new regional linkages and opens new possibilities for both growth and decline. To an ever-growing degree competition between regions on the global stage is seen to have a number of dimensions, some of which extend beyond simple price competition. There is a large and growing body of international research that shows regions in themselves can be a dynamic force in encouraging further economic development. Work on social capital,31 learning regions32 and industry clusters33 suggests that the concentration in a region or district of a number of firms from a single or similar industries can result in a region – and its enterprises – achieving long-term competitive advantage relative to other producers. This privileged position arises out of tangible factors such as a skilled workforce, access to specialist finance, well-developed supply and distribution chains and appropriate infrastructure. However, it also reflects factors that are more difficult to quantify, including a greater likelihood of innovation as firms share ideas and collaborate on projects that are too large to tackle individually. Understanding why this happens can help other regions grow and assist in the development of national economies.

THE GOALS OF THIS BOOK This book sets out to link theories of regional development with a discussion of how that theory is put into practice. Along the way we intend to critically evaluate both. It is important that we understand flaws within current theories on regional development as well as the failings of current administrative arrangements. We are especially interested in those cases where the structural arrangements for delivering regional assistance defy theory. The attempts of central governments — Federal or State — to impose ‘grass roots’ initiatives on reluctant local communities is one example that comes to mind. The stakes attached to developing appropriate regional policies and mechanisms for their delivery are high, as successful regional development actions will be central to the economic wellbeing of individuals, communities, and the entire nation in the future. A failure in this area can, and will, reduce incomes and living standards across Australia. The Hawke and Keating Labor Governments trenchantly refused to acknowledge regional issues for the first decade they held power, but explicit regional policies were introduced in

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1994 when it was realised that the nation as a whole was not recovering from the ‘recession we had to have’. Many regions had been crippled by high interest rates and tariff reductions and lacked the capacity to recover. Understanding the connections between regional development theory and regional development practice presents many challenges, some of which are unique to Australia. There are flaws in regional development theory, and many of the textbook approaches were developed in countries with larger economies and different systems of government. Australia’s Federal system has similarities with other countries – such as the United States or Canada — but there are important differences also, and these must be understood if we are to distinguish between what works and what doesn’t work in regional development in Australia. Population size is important, as are the tax base, welfare system and industry structure. Understanding these influences is a first step to developing better and more effective programs and policies.

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DEFINING LOCAL AND REGIONAL DEVELOPMENT

Understanding the theory and practice of local or regional development is an essential first step to improving the economies and wellbeing of regions. There is a considerable volume of material on the theories that underpin local and regional development but so much has been written that the reader can be confused rather than enlightened. At the same time there is often a considerable gap between the theories behind local economic development and the practice of local or regional economic development, and this can further baffle the casual observer. A number of questions about local economic development arise that need to be answered. These include: what separates local economic development and regional economic development? Have theories of local and regional development been applied rigorously in Australia or have other factors intervened to impose less pure models of development? How important are political processes in determining economic development outcomes? And, are there features of the Australian economic and political landscape that mean our place-based strategies for economic development differ significantly from those in other advanced economies? This chapter sets out to answer these questions and sheds light on both the theory and practice of local and regional economic development in Australia.

WORKING FOR GROWTH Regardless of whether we are discussing local or regional development, there is a remarkable consensus within international research and writing about what place-based economic development activities are and should be.1 The American author Michael Tietz encapsulated

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this nicely in his observation that most experts now see ‘the economic development process as an endogenous effort to enhance a local community’s ability to create and retain employment’.2 Tietz argued there had been a remarkable change in thinking about economic development during the 1980s. Endogenous development strategies — designed to encourage business start-ups and the growth of firms already within the region — replaced previous approaches that attracted firms into their regions via cash incentives, tax breaks, the provision of land or buildings and other benefits. Ed Blakely, a colleague of Michael Tietz at the University of California, provided a more comprehensive definition: Local economic development is process-oriented. That is, it is a process involving the formation of new institutions, the development of alternative industries, the improvement of the capacity of existing employers to produce better products, the identification of new markets, the transfer of knowledge, and the nurturing of new firms and enterprises.3 Similar ideas have been put forward in Australia, perhaps most notably in McKinsey & Co’s Lead Local, Compete Global. This publication argued that at least 80 per cent of the investment in a region comes from firms already in place or new businesses that grow spontaneously, and that furthering the growth of these establishments is the best way to promote development. Of course, McKinsey & Co were not the first in Australia to focus on the potential of locallyfocused initiatives4 but they brought the issue to policy prominence nationally. The goal of economic development is ‘to increase the number and variety of job opportunities available to local people’.5 Some would quibble with this objective, as they prefer to place the emphasis elsewhere. For example, some construe economic development to be concerned with the creation of wealth within the region, as a more prosperous economy has a greater number of jobs and those jobs tend to be more secure.6 Others make strengthening the local or regional economy their priority, and attempt to add depth and breadth to the employment base. For a third group, addressing poverty is the key issue and they seek to secure jobs for the unemployed and better jobs for the underemployed. Regardless of emphasis, it is clear that priority is attached to achieving economic growth

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within the region and advancing the number and type of jobs available. Local and regional development may be attached to other policy objectives, such as the better management of natural resources7 or achieving greater social cohesion. However, these tend to be peripheral concerns. What strategies and approaches are there for promoting ‘endogenous’ growth? To put it another way, what can local or regional economic development practitioners do to help the businesses within their territory grow? There are only three basic approaches and from these a number of strategies arise. They in turn generate opportunities for individual actions. The first approach is to make your region a better place in which to do business. This means taking steps that enhance the attractiveness of the region by making it a more profitable place for manufacturing, the running of a corporate headquarters, retailing, or managing a distribution network. In effect it is a supply side measure, addressing production issues that confront enterprises within the region. The second approach is to generate new markets for the commodities and services produced within the region. Actions that fall within this approach are demand side measures, boosting the demand for the region’s product. Third, is the creation of institutions that work to see further economic growth introduced into a region. This institutional approach recognises that organisations such as professional associations, business networking groups and tourism boards have a positive impact on regional performance.

A BETTER BUSINESS ENVIRONMENT AND MARKETING THE REGION Economic development agencies can take a number of measures to make their city or region a more productive environment for businesses. A multitude of strategies is potentially available and a selection of the most prominent are discussed here. The provision of appropriate infrastructure is one way of boosting a region as a place to do business. This provision might include building or upgrading roads, providing drainage or water supply systems, building groynes and piers, or introducing new and better telecommunications. Infrastructure is important as it can fundamentally affect the profitability of businesses and regions. For example, in the mid-1990s the Keating Government’s Regional Development Program (RDP) provided funding to secure a more reliable power supply in Shepparton– Mooroopna in northern Victoria. Previously the electricity supply had

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been unreliable and periodic ‘brownouts’ could put at risk the production of an entire eight-hour shift within the food-processing sector. The manufacturing process ground to a halt and fruit and dairy products turned bad. Greater security of power helped profitability and allowed further investment in the industry. In other regions inadequate transport is a major impediment to further growth,8 while many parts of non-metropolitan Australia struggle to attract skilled and professional staff because of poorer social facilities and services — such as health and education – when compared with the capitals. This impedes the development of resident businesses and the economic growth of these regions.9 In theory at least, addressing these problems should open the floodgates to growth. Improving the skills of the workforce is a commonly used strategy to enhance profitability. The Federal government’s Area Consultative Committees (ACCs) focus almost entirely on programs that will generate a labour force with skills that match the needs of local employers and potential employers. Their efforts include the general provision of training — such as Information Technology skills, support for apprenticeships and labour force planning — as well as work placements for the unemployed and those entering the labour force. The South Australian government’s Kickstart program, for example, provides on-site training for new and expanding businesses looking to take on staff. That is, the program pays to train a number of job seekers in the skills needed within that industry, and will do so on the firm’s premises. At the end of the course the business employs a number of the trainees. Increasingly universities, colleges of Technical and Further Education (TAFE) and schools have been drawn into the drive to provide vocationally relevant education.10 The provision of business advice is a fundamental tenet of many economic development agencies. Business Enterprise Centres in particular specialise in providing expert advice to business start-ups and small businesses. The provision of information on tax and accountancy matters, industrial relations issues, intellectual property and the forms of assistance available from other government agencies are part of the ‘soft’ infrastructure supporting business within a region. Businesses often express concern about their dealings with governments and government agencies. Many economic development agencies therefore play a facilitative role, helping prospective and existing businesses gain information or undertake specific tasks. Fasttracking a development application through the planning process is

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one common example, as is providing businesses within the region with ‘hands on’ assistance in gaining access to government programs. This coordination role also extends to developing links and collaborative arrangements between government agencies. Government bodies will pool their resources to meet the needs of their region. The promotion of industry clusters generates a more productive environment by furnishing businesses a sophisticated set of benefits derived almost entirely from their proximity to other firms within their industry. Industry clusters work by bringing together businesses in fast growing industries that can feed off each other’s success. Proponents of industry clusters have argued that the growth of places such as Silicon Valley in California was due to the concentration of a large number of firms within the one industry.11 Other international examples include Sophia Antapolis in France and the M4 region in England.12 Firms in these clusters have been able to piggyback off each other in the generation of new ideas, access to specialist finance, the ability to draw upon a pool of highly skilled labour and an entrepreneurial culture accepting of change and the peculiar demands of their industry. There are other examples across the globe but essentially clustering represents the rediscovery of the advantages of the economies of industrial agglomeration. Interestingly, South Australia is the only Australian State government to adopt a formal industry cluster policy and has done so for the defence, spatial information, water and multimedia industries.13 However, individual regional development agencies have pursued cluster strategies in other parts of Australia. Mentoring and networking strategies are the last of the business environment measures to be discussed in this overview. Mentoring and networking programs aim to improve the competency of small businesses and small business proprietors. Networking programs tend to offer two benefits. On the one hand they encourage members of the network to do business with each other — thereby raising activity levels and potentially reducing the leakage of expenditure out of the region — and on the other, firms learn from the successes and failures of others. Mentoring tends to reflect a more formal program of assistance to new or small businesses and can take place within a specialised environment — such as a business incubator — or within the broader economy, with junior firms learning from successful companies and enterprises. A region with skilled business people will be more competitive in national and global markets, and therefore more successful economically.

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BOOSTING DEMAND Local and regional economies grow if new markets are found for the services and commodities they produce. Perhaps the most obvious way to boost demand is to market the region, that is, promote it and its products to a wider audience. Promotion can occur through formal advertising campaigns, the development of a website, strategic research or other strategies. Unfortunately places are more difficult to market than conventional products14 and much depends on the goals of the promotional activity. Hosting major events is a prominent promotional activity and one that has been embraced enthusiastically across Australia. Whether it is the Winery Walkabout Weekend in Rutherglen, the Gay and Lesbian Mardi Gras, the Henley-onTodd Regatta in Alice Springs, Floriade in Canberra, the Barossa Jazz Festival or even the Sydney Olympics, the objective remains the same: attract customers for a short-term flurry of sales and in the longer term, raise the profile of the region and all that it offers. The development of new industries or the downstream processing of existing regional products is a strategy that has been pursued energetically by economic development agencies. Such techniques are attractive as they can result in value-adding employment, as well as adding breadth to the region’s employment base and raising the overall quantum of regional output. Examples include the development of Blue Gum plantations for woodchip production in South-West Victoria and South-West Western Australia; on-farm intensive aquaculture production of freshwater crayfish in Central Queensland; and, the emergence in and around Swan Hill in Victoria of high quality stone fruit production for export. In the latter instance, the introduction of new types of peach and other stone fruits, as well as the implementation of quality control processes, has resulted in the opening of niche markets in Asia. The region’s product now fetches a far higher price than ever achieved when fruit was produced for canning. Some strategies designed to boost demand are explicitly directed at engaging with global markets. It is an article of faith within local and regional economic development policy in Australia that our domestic markets are too small to guarantee prosperity and that businesses and regions need to inject themselves into international trade in order to secure a more prosperous future.15 Certainly this philosophy underpinned the Keating Government’s Regional Development Program and the Howard Coalition Government’s Supermarket to Asia initiative. Austrade, the Federal government’s trade agency,

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funds a program entitled Export Access/Trade Start which provides non-metropolitan communities with a staff member to work with local businesses to assist them in their export activities. At a more local level, many regions, cities and towns have entered sister city relationships in the expectation that cultural and personnel exchanges with other parts of the globe will eventually result in trade.16 Some places have taken direct action and invested in programs designed to propel their small and medium sized enterprises into export markets. In the mid-1990s local governments in the North West of Adelaide, and more recently the City of Onkaparinga on the southern perimeter of the metropolitan area, engaged a consultant to assist their smaller businesses to commence exporting. Attracting direct foreign investment performs a similar role, as firms based overseas will sell Australian-produced goods in their other countries of operation. At a more local level, Main Street Programs attempt to generate new markets — and revitalise existing markets — for small retailers. They use the beautification of the streetscape and marketing campaigns to lure back customers who might have been attracted away to a larger and more modern shopping centre. They also attempt to entice new customers to the district.17 Main Street Programs operate in both rural and metropolitan areas and there is sufficient evidence of their success for them to secure ongoing government support. A review of Main Street projects in NSW concluded the towns assisted had ‘an increased sense of community pride, an improved perception of the town and an increased number of visitors’.18

C R E AT I N G T H E I N S T I T U T I O N S F O R G R OW T H At first glance there appears to be little logic in economic development agencies attempting to promote growth by creating new institutions or groups. Surely regional economic development efforts should be directed at assisting businesses, not encouraging the proliferation of associations and committees? There is, however, firm justification for such strategies. First, it is important to take account of the practical reality that economic development agencies in Australia are relatively small and lack the capacity to exert a significant influence on the growth of all parts, and all industries, within their region. Generating community groups and associations multiplies their resources and impact.

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There are strong theoretical grounds for establishing appropriate institutions for growth. A number of prominent researchers have suggested that these institutions are central to creating more productive regions. In her review of the ‘economic miracle’ in Silicon Valley, Anna Lee Saxenian highlighted the establishment of professional associations and industry groups. The professional associations worked to ensure that engineers and other professionals in the Valley were kept at the cutting edge of a rapidly changing technology, while the industry bodies lobbied governments to address environmental and other problems that were threatening the region’s further growth.19 British researchers Nigel Thrift and Ash Amin argued that ‘institutional thickness’ is an important component of the growth of many successful regions, particularly those that have negotiated the process of industry restructuring. Institutional thickness is characterised by a strong institutional presence with a plethora of institutions, local chambers of commerce, training agencies and trade associations working as part of a network and collectively representing the region. 20 These institutions recognise they are involved in a common enterprise and have an established pattern of interaction, featuring co-operation, contact and information exchange. Overall it creates an ‘institutional thickness composed of institutional interaction and synergy…It is a “thickness” which continues to stimulate entrepreneurship’.21 Certainly Robert Putnam’s work on the ‘Third Italy’ suggests that region’s continuing economic success reflects the productive interaction between public and private sector institutions.22 Finally, we should look to the ideas on networks between firms and associations within regions. The concept of an ‘associational economy’ was brought to prominence by Phil Cooke and Kevin Morgan.23 Their work suggests that regions where firms and agencies develop networks of information exchange have a competitive advantage, especially when faced by restructuring.24 In the face of this overwhelming weight of opinion, perhaps we should conclude that too little attention has been paid in Australia to the development of these institutions.

BIDDING FOR JOBS If there is an apparent consensus on what local and regional economic development is — endogenous development — there is also a level of agreement on what it should not be — industry attraction.

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Policies and programs to attract businesses have a very long history in Australia and elsewhere. In large measure they revolve around governments providing an incentive for a firm to either come to their region, or stay in their region. That incentive can take any number of forms, ranging from cash handouts, to the supply of land and/or buildings, guaranteed orders, cheap loans, tax breaks and subsidised transport. Industry attraction/recruitment policies — or the more colourful American term ‘smokestack chasing’ — are widely recognised as bad policy. 25 Industry recruitment carries great risks for governments and communities. In the first instance, such subsidies are only likely to influence the location decisions of ‘footloose’ industries who are liable to move to a new donor region once the current subsidy arrangements expire. This was the experience of the UK Government in the 1970s and 1980s when they established low-tax ‘Enterprise Zones’. Darwin has similarly suffered in its attempts to attract Asian investment by providing a tax-reduced haven. Second, the provision of subsidies to some businesses encourages others to seek them also. In 1998 the transport firm Scotts of Mt Gambier in South Australia responded to media reports of extensive subsidies to incoming businesses by threatening to move their headquarters to Victoria if they were not offered an equal inducement. Third, the provision of incentives erodes the tax base of the local government or state and imposes additional costs on other taxpayers. Fourth, the footloose industries attracted by incentives may not become ‘embedded’ within the local economy. Their external origins mean they are less likely to develop business links with other firms in the region, thereby muting their impact on overall regional growth. Fifth, there is always another region or place willing to bid more. Companies likely to be swayed by incentives know no loyalty: in 1998 the South Australian government proudly announced an assistance package of approximately $5 million that secured the Berri Fruit Juice processing plant in the Riverland. Two weeks later, the Victorian government announced that the headquarters of the same company would be moving from Adelaide to Melbourne. There are clear dangers associated with industrial recruitment but it is an approach still pursued throughout Australia, as well as in the United States26 and Europe.27 Why it persists, and even thrives, will be discussed in Chapter 7, but it is sufficient for the moment to recognise its failure to fade away.

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THE AUSTRALIAN MODEL OF LOC AL AND REGIONAL DEVELOPMENT How is local and regional development in Australia organised? Or to put that another way, what is the framework upon which economic development activities and institutions in this country hang? The answer to this question is — in some respects — simple, as the three tiers of government, and the constitutional and financial arrangements that determine their relationship to each other, form the backbone of placed-based economic development initiatives. Australia’s federal system of government has a pervasive influence on how local and regional development is conceived and delivered. It has a first order impact on which tier of government delivers what type of development assistance. But there are also secondary effects. It largely determines who can afford to plan for, and implement, local and regional development, how economic development activities relate to the other actions of government, the priorities set by individual governments, and what type of activities are pursued. Importantly, it determines how much is spent on local and regional development and rules out some types of policy intervention found in other nations. T H E A U S T R A L I A N G OV E R N M E N T As a number of academics and pundits have argued, the Federal government is probably the only tier of government in Australia with the necessary resources to sustain a coherent and viable program of local or regional economic development.28 As the collector of 75 per cent of public sector revenues it has greater financial capacity than either State or local governments.29 But Federal governments have long shied away from an explicit involvement in formal regional development initiatives. Throughout the 1960s an Inter-Departmental Committee sat for eight years considering whether the Federal Government should act to promote decentralisation of people and economic activity.30 There was a brief flurry of activity in the early 1970s under the Whitlam Labor Governments, and then virtually nothing for almost 20 years. The Keating Government’s Regional Development Program31 was hastily jettisoned by the newly-elected Howard Coalition Government because it considered it had no constitutional role in the area, and that Federal involvement would result in overlap and duplication with State and local government efforts.32 In the year 2000 the Howard Government re-engaged with local and

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regional development issues — admittedly at an initially modest level — via the Regional Solutions Program. To a certain degree Federal government attitudes to formal engagement with local economic development are less important than what has happened in practice. On the ground, Federal programs have supported many economic development agencies and initiatives, and have done so over a considerable period of time. Throughout the 1980s and early 1990s programs run by the Office of Labour Market Adjustment (OLMA) supported community groups and economic development initiatives. In the mid-1990s Regional Development Program funding was available, but more considerable resources could be garnered from the Working Nation program. Since 1996 economic development bodies have been able to gain access to Regional Development Program funds administered by Area Consultative Committees (ACCs), but additionally, they have been able to tap into National Heritage Trust (NHT) monies, Networking the Nation (NTN) funding, the Export Access Program, as well as resources from the Regional Solutions Program. Federal funding has also been available for business incubators. In practice then, the Federal Government has been an important player in the local and regional economic development scene. Its role has been significant, if more modest than it might otherwise have been.

S TAT E G OV E R N M E N T State governments are probably the most visible participants in regional economic development and in aggregate would make the largest investment in encouraging growth locally. State governments are substantial investors in the infrastructure and services that sustain economic activity in metropolitan and non-metropolitan regions. The annual Budget Papers of any State government — or the newspaper summaries released immediately after – list the major investments in the wellbeing of the state and regional economies. New freeway construction, the building of power stations, the expansion of schools, the development of new information technology courses and facilities and the provision of public housing, all have a direct impact on the prospects of regional economies. The expenditure decisions of State governments — and for that matter, Federal governments also — have a far greater impact on the relative prosperity of regions than their stated regional or local development policies. Many would contend that State governments feather the nest of their

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capitals first: the NSW Country Mayors’ Association, for example, has long argued that NSW State Governments believe the state ends at the Blue Mountains and that country NSW has received too little funding for too long.33 If we accept that regional development policy is a product of what governments do, rather than what they claim to do, then most State governments have favoured their capital regions ahead of their non-metropolitan parts. Many State governments have a long history of involvement in formal regional development initiatives and in the immediate postwar period decentralisation programs were favoured.34 In line with the ‘growth pole’ theory of the time, State governments used tax breaks and financial incentives in an attempt to create growth centres.35 It was hoped that growth in these centres would become self-sustaining and result in a better balance between metropolitan and non-metropolitan growth.36 Paul Collits has suggested that the period 1965 to 1975 was the high water mark for these initiatives and this reflected the preference for dispersed development in Australia, recognition of the rising costs associated with the growth of Australia’s biggest cities, evidence that the rural population was in decline, and the strength of the Country Party. 37 In NSW, Development Corporations were funded by the State government and were used to advance the development of the selected growth centres. Many of these Development Corporations persisted into the 1980s. The decentralisation programs embarked upon by the governments in NSW and elsewhere can be considered an heroic modernist project, with wide ranging ambitions to halt the growth of the big cities and breath life back into the ‘bush’. Of course they failed, and did so because of competition from other states and because State government programs were more heroic in rhetoric than in reality.38 Since the early 1990s virtually all States and Territories have established frameworks for regional development and in large measure these reflect changed public sector attitudes away from decentralisation philosophies and towards notions of locally driven economic development.39 NSW and South Australia have State Government-sponsored Regional Development Boards, Western Australia has nine Regional Development Commissions, the Queensland Government supports a number of Regional Development Organisations,40 and in Victoria, local governments have held responsibility for local economic development since their reform by the Kennett Government in the mid-1990s. The titles of

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these organisations vary, but their role is essentially the same in all parts of Australia. They serve as the primary organ for helping businesses grow within their region, coordinate public sector economic development initiatives, engage in planning studies, provide advice, market the region, and support the work of community and other smaller groups. Curiously, these regional development organisations are almost entirely restricted to areas outside the capitals. It is as if metropolitan regions are homogenous, with all parts sharing equally in metropolitan prosperity. It also reflects both the last vestiges of decentralisation philosophies, and the body politic responding to the demands of a disempowered and disenfranchised non-metropolitan electorate. At a more local level, the majority of State governments also support Business Enterprise Centres, Main Street Programs,41 and labour market training initiatives. There are deep-rooted tensions within the regional development programs of State governments. It can be argued on many objective measures that they have failed, especially in non-metropolitan regions that continue to experience a loss of population and productive capacity. Sorenson commented that ‘they have pursued regional development in a desultory and erratic manner’.42 In part this reflects the shifting priorities of governments: in NSW a commitment to decentralisation and balanced state development was replaced in the 1980s by fervent actions to secure Sydney’s place as the corporate hub of the Asia-Pacific region.43 The aggressive pursuit of the headquarters of multinational companies left little margin to wonder about the impacts on the middle and outer suburbs,44 and none for regions beyond the capitals. Questions of scale lie at the heart of this tension in State programs, as governments have attempted to extend the reach of local economic development models. The work of Blakely and others on the ‘new economic development paradigm’45 was concerned with strategies and actions conceived and implemented by individual communities — that is, individual towns or cities. In Australia these ideas were implemented across whole regions. Regional development organisations simply substituted their previous styles of operation — based on the payment of subsidies to relocating firms — with a philosophy of endogenous development. 46 This change received endorsement at the national level,47 without questioning how a single organisation covering a territory of thousands of square kilometres could adequately work for the local development of all its constituent settlements and districts.

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L O C A L G OV E R N M E N T Most local governments have some formal role in economic development activities, though involvement varies considerably by state and location. As noted above, local governments have been the primary agents for economic development in Victoria since the mid1990s while local governments in Queensland have always played a much broader role within their communities than elsewhere in Australia. Their participation in the provision of major infrastructure — such as water supply, roads and electricity — has given them a greater capacity to influence growth. Local governments remain the smallest and poorest tier of government in Australia and their circumstances are worsening. Over the last two decades the real value of financial support to local government from the Federal government has fallen — as has state financial support in some jurisdictions — while the tasks mandated to local governments by the other tiers of government have grown.48 But this has not stopped local governments from promoting their local economy. Many provide cash incentives or infrastructure to attract firms, and the majority would employ at least one staff member with responsibilities for economic development. In some places — notably Victoria — there are large Economic Development Units within individual local governments. While there is considerable variation around Australia, it is common for them to join State governments in funding regional development agencies, Business Enterprise Centres and or initiatives. Often they host special events designed to draw in tourists and will market their region nationally and internationally. Some have adopted very innovative approaches. The Richmond River Council in NSW, for example, developed a new bridge-building system and applied that technology to win contracts that brought work into its region.49 Others, such as the Dubbo City Council, have sponsored their own Development Corporation. C O M M U N I T Y G R O U P S A N D T H E P R I VAT E S E C TO R Neither the private sector nor self-help groups representing a town or smaller settlement have played a significant role in local or regional economic development in Australia, though that might be changing. In the US the private sector has a strong influence on the economic development scene, either through groups of locality-based entrepreneurs coming together to form ‘growth coalitions’50 that seek out investment for their region, or through private sector funding of

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established economic development agencies. The utility companies, for example, often contribute financially to local economic development efforts. By contrast, private sector funding is a minute proportion of the total received by agencies in Australia.51 Business organisations — such as Chambers of Commerce — rarely address local or regional development issues, though there are exceptions.52 In the US development efforts are often organised at the level of the individual town or city, but to date that model has not been prominent in Australia. Queensland is, perhaps, the exception. It has a number of successful economic development bodies that rely upon voluntary labour. Some communities have managed to ‘pull themselves up by the bootstraps’ by organising locally. The town of Coolah, for example, in the Central West of NSW faced harsh times when its sawmill closed due to government imposed restrictions on logging. A series of meetings galvanised public action which in turn resulted in the formation of a ‘community combat group’ and the securing of over $2 million of government grants for information technology training and streetscaping.53 By 2001 Coolah was mooted nationally as an example of how small towns can revive themselves.54 Cummins on the Eyre Peninsula offers a further illustration: it fought off its expected demise by organising a very successful tourism event based around Kalamazoo racing. The overall impact on the town’s economy is slight, but it has provided a fillip to local attitudes and a flourishing weekend of trading once a year. Unfortunately, these are relatively rare exceptions and community-based initiatives have not been a significant feature of the economic development scene in this country. Without resources and without professional staff, community groups often languish, depending upon regional development agencies and local governments for their continuing survival. Even success stories, such as Coolah, rely heavily on funding from government and quasigovernment bodies. Since the mid-1990s some governments have attempted to strengthen this sector through programs aimed at fostering regional leadership and encouraging greater numbers of residents to become involved in community-building. The South Australian, Victorian and Federal governments55 have all espoused philosophies of selfhelp and self-reliance for non-metropolitan communities. Regrettably, the promotion and implementation of community development approaches in Australia have been flawed as they have

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been without systematic support and funding. A philosophy that believes communities should be self-reliant is admirable in many respects, but it inevitably generates winners and losers. As Sorenson observed back in 1994: If past form is any guide, there are some localities well versed in the grantsmanship game who will predictably scoop the pool. There is a real risk that money will flow not so much to the deserving cases as to the articulate and connected.56

L E S S O N S F R O M OT H E R C O U N T R I E S Before turning our attention to other topics it is valuable to consider how local and regional development is organised and delivered in other advanced economies. The similarities and differences with Australia can highlight both the strengths and weaknesses within our own system. Regional development in the European Union presents a very different cut on economic development when compared with Australia. Ours is a small-scale affair when compared with the nations in the European Union. The significance — both in terms of impact and sheer size — of regional development assistance within the European Union should not be underestimated. Ireland provides an illuminating example of the impact of regional development policies in Europe because it has been a substantial recipient of regional assistance. Mac Sharry, White and O’Malley57 report that European Union regional development policies in the form of structural assistance funding raised Ireland’s GNP through the 1990s ‘by between 3 and 4 per cent above the level it would have reached without EU transfers’. Some £3.1 billion was received between 1989 and 1993 under the first tranche of structural funds in four main areas: agriculture, fisheries, tourism and rural development. As Mac Sharry et al commented, the impact of this funding was substantial: Some 8600 farms were supported, with 120 000 farmers receiving compensatory allowances. In the food-processing sector, 102 projects helped create 3363 jobs, while a total of 2030 young trained farmers received installation aid. The industry program contributed to the development of the manufacturing and international-services sector. Industrial output expanded by almost 7 per cent annually over the period,

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with similar rates of increase in the manufacturing and building sectors. Between 1989 and 1993, some 307 km of national primary roads were improved or upgraded, along with 170 km of roads supporting industrial and tourism development. Facilities at Dublin, Shannon and Cork airports were upgraded, and the Dublin–Belfast rail link was improved. In addition, investment has been concentrated on ports. Over the first programming period, some 250 km of sewers and 166 km of trunk water mains were installed, and 52 sewerage pumping schemes were constructed.58 The second tranche of European Union funding (referred to as Delors 2) provided an even greater level of assistance to Ireland. Some £4.6 billion (A$ 9bn) was received from Community Support Framework Programs between 1994 and 1999. This second round of funding aimed to ‘capitalise on the strengths of the Irish economy, while remedying some of its structural weaknesses’.59 Funding went into agriculture, forestry and rural development, as well as raising the skills profile of the workforce through investment in education and training, including the provision of 255 000 apprenticeships. And we should bear in mind that all this assistance was directed at a country with a population of 3 million! It is important to acknowledge the immense size — by Australian standards — of regional development assistance in Europe. Admittedly, Ireland has been one of the largest recipients of European Union structural assistance and so may be considered atypical. However, Ireland’s experience is indicative of the scale of programs within the European Union. The assistance made available by the European Union is of an order of magnitude greater than any program initiated by Australian governments — Federal, State or local. The Keating Government’s Regional Development Program — which was seen as a major step into regional development by that government — had funding of just $150 million over five years60 while the Regional Solutions Program has a budget of $90 million over four years. Of course, European Union funding is a special case, with Structural Adjustment funding aimed at raising the economies of the worst-performing nations. European Union funding doesn’t reflect the commitment of individual nations to regional development. Taking the United Kingdom as an example, the British Government has long

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played a leading role in either promoting or controlling the geography of economic development. Formal regional planning was in place from the 1940s to the early 1970s.61 Through the 1980s and 1990s Urban Development Corporations — of which the London Docklands Authority was best known — operated at a number of sites throughout the country62 rehabilitating degraded industrial landscapes and directly investing in the wellbeing of regions. More recently, the Blair Labour Government established eight Regional Development Agencies (RDAs) that encompass all of England, except London.63 They have substantial budgets ranging in 2000-01 from £31.4 million for the Eastern RDA, through to £176 million for the North West.64 Across England £911 million was spent by RDAs in 2000–01 and the budget is expected to rise above £2 billion by 2002-03. The experience of economic development policies and programs in the US provides keen insights on how another nation has dealt with the challenge of encouraging growth. Like Australia, the US is a Federal system, it has a low tax regime and a preference for private sector solutions to problems of public policy. As in Australia, placebased economic development activities in the US are the responsibility of State governments and local communities. The similarities between local and regional economic development in Australia and the US extend to the types of intervention pursued: there is a primary focus on securing growth by encouraging the development of businesses already within the region, as well as business start-ups. Business incubators, networking programs, and business capacitybuilding initiatives are the working tools of trade employed by communities committed to ‘economic gardening’, to use the language of one American practitioner.65 However, as in Australia, industrial recruitment persists. In some cases it is seen as a profitable investment, in others it is not. Individual communities in the US take a strident role in securing growth, but their experience differs from the Australian case because often they are the local government. Crucially they have tax revenues to support their economic development activities. American ‘City Fathers’ are not shy about ‘adding a penny’ to sales taxes to fund economic development, nor do they hide from bed taxes on hotels, or a levy on commercial property rates.66 This is probably the most significant difference between American and Australian approaches as Australia’s local development agencies don’t have access to the resources available to their counterparts in the US.

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THE PLACE OF SOCIETY WITHIN ECONOMIC DEVELOPMENT How Australia pursues placed-based development is clearly very different from the European or American models of local and regional development. When compared with the Europeans, Australian efforts can only be characterised as local development, because of their limited scale and funding, as well as the failure to address questions of major infrastructure provision. As local economic development, Australian strategies and actions are less appropriately organised and resourced than those in the US. There are some types of economic development activities that local and regional development policies in Australia have avoided. Significantly, there is no social dimension to place-based economic development strategies in Australia. Other nations have recognised that local economic development alone will not address the problems of regions with intractable problems such as high rates of long-term unemployment, a degraded environment or poor skill levels. In Australia, economic development has been separated from community development with the latter term used to refer to programs dealing with the problems confronting the marginalised or disadvantaged. They have attempted to advance the welfare of the disadvantaged by facilitating greater levels of social interaction, providing financial support, improving housing conditions, meeting service needs and helping the unemployed find jobs. Human services departments, church groups, State Housing Authorities, health bodies, social security agencies and departments of rural development have been active in this field. Significantly, economic development agencies have not been involved in these initiatives and there have been few attempts to ‘join up’ social and economic assistance. The poorer regions of our cities have probably been the biggest losers as a consequence of the failure to integrate economic development and community development. The outer metropolitan regions and old industrial estates have the greatest concentrations of lowincome households, households without adults in employment and dependency on social security and other government payments.67 These regions have effectively been denied assistance by mainstream State regional development programs because they fall within the metropolitan area, and they have not benefited from Federal interventions because of the national government’s aversion to participation in this area.68 Large-scale government programs in these areas

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are few and far between, and mainly limited to the development of run-down public housing estates in places such as Elizabeth and Salisbury North in Adelaide, or Holroyd in Sydney. Graham Haughton, the British academic and expert on economic development, observed a similar phenomenon in England. He too noted the tension between economically focused approaches to improving local wellbeing and those that dealt with social exclusion. He observed that through the early 1990s: Community development became the sole province of workers in social work or housing departments. In effect anti-poverty work became less of an integrated strategic approach to improving local wellbeing and more of a necessary residual activity catering for those bypassed by strategies to improve local wealth creation as the means and ends of improved local competitiveness.69 Haughton argued that it is possible to develop an integrated approach to community development that embraces both the advancement of the local economy and issues of social exclusion. His model is built upon solid intellectual foundations. The OECD publication Reconciling Economy and Society: Towards a Plural Economy critically examined social exclusion and attempted to integrate the work of the French historian Braudel on the architecture of society into a policy and operational framework. The OECD attempted to: …establish an architecture of society which sees the economy as consisting of at least three layers: subsistence, the local market economy, and a world economy. The argument broadly speaking is that a policy which addresses just the top layer misses important issues of survival and nurturing at the local level… Rather than constructing policy around a single, flat economy, focused on building competitive advantage in world markets, it is important to construct policy around all three layers, including policies for everyday survival for the individual.70 The implications of this work, and this approach to the understanding of community development, are profound. No longer should economic development be given precedence over the needs of the poorest and most marginalised within society. Community development:

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extends beyond the formal economy to consider the needs of the population at large, and that in setting about its task it aims to balance economic, social and environmental concerns, rather than prioritising the economic approach above all else.71 Haughton argued that governments should strive to establish community economic development policies and programs that address each of the three tiers identified by Braudel and the OECD. That is: •

At the level of the subsistence economy attention is given to the nonmarket and informal sector activity. The intention is to help individuals with basic survival and to build up local kinship and friendship networks;

•

The local market economy is addressed by promoting self-employment, small business development and community initiatives, such as co-operatives. Here the objective is to develop an integrated economy where businesses trade amongst themselves, thereby reducing the leakage of expenditure and increasing the range of economic activities within the community;

•

At the level of the global economy, community development can provide training and work experience to help people overcome social exclusion and assist individuals move into jobs with globally-active firms. Community development is also seen to serve a role in lobbying to ensure the provision, and maintenance, of services and infrastructure.72

Haughton’s model of community economic development — to adopt his language — has much to commend it, particularly in the way it integrates concerns with the poorest in society with strategies to promote localities within the global market place. It recognises that the unemployed and the low skilled often miss out when programs are directed solely at creating economic growth, and that it is important to break down attitudes and barriers that keep some out of the formal workforce. The practical importance of this is beyond dispute. Researchers based in Newcastle (NSW) have noted the presence of ‘Green Walls’ within the Hunter Valley labour market. This refers to the barriers that stop the unemployed from the traditional coal-mining communities finding work in the fast growing viticulture and winemaking industries.73 There has been growth within the region but cultural, educational and other factors have stopped these job-seekers from reaping the benefits of that boom.

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European governments have accepted that social programs are an important armament in meeting the needs of the poorest regions and towns. The UK government has made Area Regeneration Programs the primary function of its new Regional Development Agencies.74 They will build infrastructure and facilities to enable economic development but at the same time, they will be responsible for strategies designed to improve living skills, social capital and employability. At a broader level, the European Union, the French and Irish governments have accepted the need to embrace Social Economy solutions within their suite of programs for addressing disadvantage. The Social Economy is a term used to refer to worker- and community-owned organisations that have ‘an explicit commitment to improving the quality of life in a community’.75 It includes Housing Associations, Credit Unions, co-operatives, community enterprises and charitable and self-help organisations. It reflects members of the poorest communities working together to meet their social and economic needs. Governments have chosen to support these strategies by providing facilitative funding with the Irish government, for example, budgeting over £60 million per annum for Social Economy measures. There is considerable potential for this approach in Australia, especially in communities that have lost services or are confronted by job losses, but to date governments appear to have been oblivious to this potential.

CONCLUSION What local and regional economic development is, and should be, is known. The philosophies and strategies that can help a region or place grow economically have been documented by numerous researchers and implemented around the globe. The long-term growth of regions and localities reflects their intrinsic strengths — the capacity of their labour force, their natural resource endowments, their inventiveness, their ability to take advantage of world markets — and local and regional development programs need to capitalise on existing competencies and generate new abilities. Economic development agencies have choices in how they pursue these strategies and need to tailor their actions to local circumstances. In many ways the theory of local and regional economic development is far less problematic than its implementation: making the theory work and developing strategies that are appropriate for each nation, region, town and remote settlement is the greater challenge.

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The differences between local and regional development in Australia and elsewhere reflect practical factors rather than a different interpretation of the same corpus of theory. Australia has a much more restricted approach to regional development than other nations, and the theory of local and community development sits uncomfortably with the institutions we have created for its implementation. The penny-pinching attitude of governments is one of the culprits, as is the nature of Australian Federalism. Federalism in Australia ‘has a tendency for spatial inertia, frustrating the potential of more systematic or ambitious planning of urban and regional development’.76 The European Union has embraced the concept of ‘subsidiarity’, the principle that government programs should be delivered by the lowest tier of government competent to do so. That principle isn’t evident in the workings of Australia’s system of government and too often it has meant that place-based economic development has been consigned to a sort of limbo. The outer urban regions of the capitals have been completely ignored by State government programs, as have other disadvantaged metropolitan areas. Outside the capitals regional development bodies have been created with limited funds and huge territories while both metropolitan and non-metropolitan local governments have been left to pick up where they can. The absence of a better-organised approach to the wellbeing of regions and communities has contributed to some significant failings and omissions within economic development in Australia and ultimately, the economic performance of the nation.

KEY LESSONS IN LOC AL AND REGIONAL DEVELOPMENT W H AT D O E S L O C A L A N D R E G I O N A L D E V E L O P M E N T AT T E M P T TO D O ?

Local and regional economic development programs attempt to make their regions and towns better and more productive places to do business. They work with existing firms to encourage further growth, as well as nurturing the emergence of newly established enterprises. Boosting demand for the region’s product is another important strategy for securing long-term growth and this can be approached through marketing, the development of new industries and adding further value to existing regional products.

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H OW I S I T D O N E ?

Local and regional development objectives are pursued by Federal, State and local governments across Australia, although the latter two are the most significant. The expenditure decisions of governments have a direct impact on local and regional wellbeing, but this is generally not recognised in a formal sense. Most State governments have created regional development bodies with a mandate to pursue local economic development. However, in Victoria local governments are responsible, and in Queensland community-based organisations are more active. W H AT C A N W E L E A R N F R O M OT H E R C O U N T R I E S ?

The European Union funds development programs that are significant at the regional level. It provides substantial grants to member countries, sufficient to fund major infrastructure works and large-scale employment and industry adjustment assistance. Member states within the European Union make substantial investments in regional development also. European approaches to addressing the problems of disadvantaged cities and regions include social, as well as economic, tools. The US model of economic development is much more similar to Australia’s experience, but local communities are better placed because they use local sales tax and other taxes to fund economic development activities.

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W H AT I S A R E G I O N A N D W H Y D O E S I T M AT T E R ?

Any discussion of regional development issues and policies must examine the concept of the ‘region’, as this is a term with a wide range of meanings. In some contexts regions are groupings of nations, such as the Association of South-East Asian Nations (ASEAN) or the European Community (EC). In others, regions are areas that are smaller than the nation, and this is the meaning used in this book. These sub-national regions are areas like the Riverina in New South Wales, the Darling Downs in Queensland, the Wheatbelt in Western Australia or the Melbourne metropolitan area. Although in Australia the term ‘regional’ generally means areas outside the capital cities, it must be stressed that regions exist in both metropolitan and non-metropolitan settings. Which regions are then selected as the sites for government involvement in regional policy is a political decision, with Coalition Federal governments largely excluding the cities and Labor Federal governments including them. Regions can also be defined at various scales. People in Western Australia or South Australia may identify ‘the eastern States’ as the economically and politically dominant (and dominating) region of Australia. But this latter area can be broken down into smaller regions, such as the Illawarra or the Central West of New South Wales, whose inhabitants may perceive Sydney as just as dominating as do the South Australians. So why are regions significant, how are they defined, and why is it useful to identify them? This chapter examines these questions.

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THE SIGNIFICANCE OF THE REGION IN REGIONAL DEVELOPMENT There are a number of reasons why regions have become a growing focus for policy and practice in economic development. First, there is the continuing problem of regions with high unemployment, below average incomes, poor educational attainment and, in the rural areas, declining levels of service provision. The persistence of these regional problems suggests the need for a regional rather than a solely national approach to these problems, although what this approach should be is a matter of considerable debate. Second, it is claimed that the reduced power of the nation state, as a consequence of globalisation and trade liberalisation, has elevated the relative significance of the region as the scale at which public policy can have some influence on economic competitiveness.1 Third, ‘the region has been rediscovered as an important source of competitive advantage in a globalizing political economy’.2 Scott contends that: ‘Regions are once more emerging as foci of production and repositories of specialised know-how and technological capability, even as the globalization of economic relationships proceeds at an accelerating pace’.3 Similarly, Keating argues that contemporary approaches in regional development policy see ‘place as a complex of social relationships, norms, institutions and understandings’ which have become a factor of production like distance from markets, labour and raw materials.4 There are a number of key ideas in this new approach to regional development policy. These include the importance of local and regional institutions, the role of regional social capital, the concept of the learning region, and a recognition of the economic advantages of proximity.5 For example, an essential component in the ‘new regionalism’ view of the region as a source of competitive advantage is the existence of a set of regional institutions that promote collaboration, innovation and learning. Cooke and Morgan argue that: … successful innovation is becoming ever more dependent on the associational capacity of the firm — that is its capacity for forging co-operation between managers and workers within the firm, for securing co-operation between firms in the supply chain, and for crafting co-operative interfaces between firms and the wider institutional milieu, be it local, regional or national. This institutional milieu is understood in a dual sense, consisting of both ‘hard’ institutions (the ensemble of organizations, like

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government agencies, banks, universities, training institutions, trade associations, etc, which have a bearing on economic development) and ‘soft’ institutions (the social norms, habits, and conventions which influence the ways in which people and organizations interact).6 Consequently, it is contended that it is at the regional level that clusters of firms form and become competitive through enhanced external economies and enhanced innovation, and that this is therefore the appropriate level for public policies to support innovation and competitive industries. Social capital is an important part of this ‘institutional milieu’, and it is largely produced at the local and regional levels through the relationships or associations between people in a community. By working together within neighbourhoods, community organisations, business associations and firms, people develop shared norms, values and understandings, and a wide range of social connections.7 These constitute the social capital that enables communities to work together to solve common problems. In business, trust between firms is the basis of the co-operative networking that facilitates innovation and its diffusion, as noted above.8 A small number of studies also suggest that regions with high levels of social capital have higher levels of investment, better levels of governance, and higher rates of economic growth than regions with lower levels of social capital, when other factors are controlled for.9 In the opinion of the National Economics team responsible for the annual State of the Regions reports: Social capital is important in both economically successful and marginalised communities. In high growth knowledge based communities, the creation of social institutions and meeting places, vibrant business and professional organisations, and community-based networks for childcare often underpin continuous innovation. In marginalised communities strong social capital is crucial to successful revitalisation of local business centres and self help for households to patch together the resources for learning and employment.10 As a result of these arguments about the role of the region in regional development, policy makers have become increasingly inter-

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ested in regionally-based industry and innovation strategies, such as cluster formation, and in the regional institutions and social capital on which these strategies are thought to depend. These questions are examined further in Chapter 6. However, there can be dangers in this focus on the region as the level for addressing regional problems and industry development. First, we cannot assume that a region constitutes a community with common interests. Regions have internal economic and social divisions, and often conflicting interests, so the question of how regional agendas are determined is an important issue of regional governance.11 In addition, many people, and particularly those living in the major cities, may not feel that they belong to a region, but see themselves living and working at a national or even international scale. The major firms may also have only a limited attachment to the region in which they are located, particularly if they are branch plants whose management belongs to the corporation rather than the region. If there is a limited sense of regional identity, there may be a limited ability for people to work together for regional development. Second, regional problems cannot be tackled solely at the regional level. They are largely the result of national and international policies and forces, and they require support from State and national policies. The argument that globalisation has led to a decline in the ability of the nation-state to regulate economic activity within its borders should not be pushed too far, as there continue to be differences between nations in the ways they regulate finance, business and labour, as well as shifts within nations over time. Third, the adoption of policies based on trying to emulate a handful of successful regions, such as Silicon Valley in California, Baden-Württemberg in Germany and Emilia-Romagna in Italy, is problematic, as the institutional basis of their success (which even differs between these regions) is difficult to reproduce. Some of these issues are also discussed in Chapter 6.

TYPES OF REGIONS A region is a group of adjoining areas or places that have something in common.12 Geographers identify several types of region, according to what it is that they have in common. The first type is homogeneous or uniform regions, which consist of areas that are similar in one or more of their characteristics. They could be climatic regions (areas with similar climates), bioregions (areas with similar biophysical

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environments, increasingly used in planning for natural resource management), economic regions (areas with the same economic base, such as manufacturing, wheat/sheep production, or tourism), or social regions (areas with a common history, ethnicity, culture and identity). Social regions are difficult to identify in Australia, but possible examples include areas of strong Aboriginal land ownership, or areas with distinctive histories of European settlement, such as the Barossa Valley. Some homogeneous Australian regions are clearly identifiable, because they are recognised by their inhabitants and the rest of Australia as distinctive areas. The New England region in New South Wales, Far North Queensland, and the Western District of Victoria are regions that are widely recognised. They combine distinctive physical environments with distinctive histories, economies and even social structures, and their inhabitants identify themselves as belonging to their region. Compared with Europe and even North America, however, Australia lacks the cultural variation that helps to define regions in areas of longer European settlement. While Aboriginal cultures could be divided into some 250 distinct languages, and further divided dialectically into some 600 distinct linguistic varieties,13 European settlement destroyed much of this regional identity except in relatively remote places like Arnhem Land or the Pitjantjatjara area of central Australia, and replaced it with a high level of cultural uniformity. For example, there are no regions like Normandy or Provence in France, with distinctive cultures and cuisines, although the Barossa Valley in South Australia does have a regional cuisine based on the Silesian traditions of the early German-speaking settlers.14 And while many Australians claim to be able to pick the state of origin of a speaker by the way he or she pronounces particular words, and these subtle differences between the States are supported by linguistic research,15 variations in pronunciation between regions are much less than those within regions related to socioeconomic status and education. There are also regional variations in a number of words for common objects. For example, a swimming costume is a generally a cossie in New South Wales, bathers in Western Australia, South Australia, Victoria and Tasmania, and togs in Queensland. Bryant16 identifies four main lexical regions in Australia — Western Australia; south-east South Australia; Victoria, Tasmania and the Riverina; and New South Wales and Queensland — with some overlap between the last three.17 However, these are all very large

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regions, and do not help to identify the smaller regions used in regional analysis and policy. In the past, beer and football codes helped to define each state (as well as to measure the spread of Victorian influence into southern New South Wales), but now the national marketing of beer and the AFL (Australian Football League) has blurred these differences. Perhaps the nearest Australia has come to developing regional identities has been in the proposals for new states. The most persistent pressures for the creation of new states within the Federation have been in central and northern Queensland, and in the New England and Riverina areas of New South Wales. The secession movement in Western Australia in the early 1930s, which was supported by the majority of voters at a State referendum in 1933, was also a manifestation of regionalism. However, none of these political movements for greater regional autonomy have lasted, most dissipating when economic prosperity returned to the region.18 So in many parts of Australia homogeneous regions based on culture and regional identity are difficult to identify. On the other hand, regions based on the characteristics of their economic base are much easier to find, and this type of region is likely to be of particular relevance to economic development practitioners. Economic regions are not only identified by their economy, but also have populations, and social and political structures, that have been strongly influenced by this economy and its historical development. Regions dominated by tourism, such as Far North Queensland, for example, differ from manufacturing regions such as the Hunter Valley or mining regions such as the Pilbara in much more than their economic structure. Within the capital cities, on the other hand, regions may be determined not by production but by consumption, with differences based on wealth and lifestyle,19 as in the broad contrast between eastern and western Sydney. The second type of region is the functional region. These consist of areas that are integrated through the functional connections between the parts of the region. For example, cities and towns link together the areas for which they are marketing, processing, transport or service centres, into what is termed a ‘nodal region’ because it centres on a node or focal point.20 A particularly interesting example of a functional region is one defined by the linkages between its industries and firms, because such a region is a functioning unit within which are contained the majority of the backward linkages of the

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key industries, up to the stage of exporting the product. Analysis of these linkages may indicate ways to strengthen and develop the regional economy. Another type of functional region is the labour market region, the area within which people are willing to commute from their place of residence to their place of employment. According to the Organisation for Economic Co-operation and Development (OECD) the labour market region defined through commuting patterns is the most common functional region defined by its member countries, although in several nations these commuting patterns are delineated in relation to an urban centre.21 In such cases a labour market region is therefore also a nodal region. A water catchment could also be described as a functional region, as it combines areas that are integrated by flows of water, soil and pollutants. An important type of region, and one that could be considered as either homogeneous or functional, is that resulting from ‘the persistent, deep-seated importance of local, personal interaction with real people in familiar place settings in the formation of identity and a feeling of place-belonging’.22 In studies of rural South Australia extending over a quarter of a century, Smailes demonstrates the continuing importance of local communities, based on social, sporting, church and visiting networks and on people’s identification of the town they ‘belong to and feel most at home in’, even though over this period their shopping, services and business linkages expanded to cover a much wider region. In non-metropolitan areas these regions, whether the more local social regions or the wider shoppingbusiness regions, are important because they are based on people’s sense of identity and belonging, and can form the basis for mobilising support for regional development activities.23 A third type of region is the administrative region. These are the regions defined by their administrative or institutional boundaries, such as the States and Territories in Australia, or local government areas. A specialised type of administrative region is the planning region, an area delimited for the purposes of land-use and environmental planning. Western Australia, for example, has ten planning regions, which can be broken down into smaller and more manageable regions for the development of regional plans. The statistical areas of the Australian Bureau of Statistics are another type of administrative region and a particularly important one in that they determine the areas for which economic and social data are available.

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However, they could also be considered as functional regions, as outside the capital cities Statistical Divisions are defined on the basis of identifiable social and economic links within the region, as described later in this chapter. Importantly, many places in Australia sit within more than one administrative region and this may confound the development of a regional identity and complicate development initiatives. Some of the administrative regions for the town of Mudgee in NSW are shown in Figure 3.1 and the map demonstrates how a locality can find itself within regions of varying scale and direction. Figure 3.1 Administrative regions for Mudgee, NSW

200

0

200

400

Kilometres

Central Western ACC

Commonwealth Electoral District of Gwydir

Mudgee Council

Statistical Region

Orana RDB

State Electoral District of Upper Hunter

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Most of the types of regions described above have been created by economic, social and political processes, and therefore change over time as economies and societies change. Economic processes are perhaps fundamental in Australia, as cultural variation is weak. Consequently if the industry which historically defined a region declines, as in the case of the pastoral industry in the Kimberley in the Northern Territory, the identity and boundaries of the region may also change (see chapter 8). Economic change at the regional level may be the result of world market trends, but may also be the product of political ideologies, as the way in which the national economy is regulated or deregulated determines the nature and strength of economic growth processes at the regional level.24 Regions within cities that are based on wealth, consumption and lifestyle, and nonmetropolitan regions that are based on retirement, welfare-led or lifestyle migration (such as parts of coastal New South Wales and Queensland), are in turn the product of social and demographic changes and residential preferences. There is therefore nothing immutable about regions, and they may need to be redefined to keep them relevant to changing conditions. Furthermore, regions are social constructs. There is no objective set of regions out in the world waiting to be discovered. Instead, they are defined by people, communities and organisations for particular purposes;25 they result from our attempts to impose some spatial order on our surroundings. Regions can be of any size that suits the purpose for which they are being defined. Adelaide and its outlying dormitory suburbs, for example, could be considered as one urban region within South Australia, or as up to four or five different socioeconomic regions, differentiated principally by their economic structure and levels of income and education. National Economics, in their annual State of the Regions Report,26 divides Sydney into seven regions on the basis of their economic and social characteristics. These range from Global Sydney (centred on the central business district, the CBD) to Sydney Mid West (centred on Parramatta). In 2001 Global Sydney had an estimated per capita income available for consumption of $23 074 and an unemployment rate of 3.7 per cent, while Sydney Mid-West had a per capita income available for consumption of $13 583 and an unemployment rate of 10.2 per cent. In contrast, McManus and Yiftachel,27 rather than dividing Perth into separate regions, argue that the city no longer makes sense as a metropolitan area on its own, but is a component of a south-west of Western Australia region,

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stretching from halfway to Geraldton in the north, to Albany in the south. This wider region is linked to Perth through commuting, recreation, rural ‘retreaters’, environmental pressures and production linkages. Homogenous and administrative regions can be of almost any size, but functional regions need to be big enough to contain the functional linkages that identify them. For example, it is difficult to split cities into several functional regions, because all areas in cities have economic linkages with each other, and particularly with the central business district. The smaller the region, however, the greater the likelihood that ABS statistics will be unavailable (the ABS does not release data if individuals or firms might be identifiable), or based on too small a sample to be reliable, which limits the utility of small regions as a basis for economic development activities. We can also make use of a hierarchy of regions, with different sizes of regions being used for different functions. For example, a case can be made for regional development agencies to operate at two levels, with agencies for large regions dealing with industry development, regional infrastructure projects and large enterprises, and agencies for small regions assisting the business development of individual small and medium firms. This is the pattern in States like Western Australia, where Business Enterprise Centres and some local development agencies form the lower level and the Development Commissions the upper level of development agencies. However, this hierarchy is not the result of conscious planning or agreement between the levels, and the Business Enterprise Centres would probably object to being called the lower level.

EXAMPLES OF AUSTRALIAN REGIONAL C L A S S I F I C AT I O N S A number of Australian examples of regional classifications can be used to illustrate the varying types of regions, and the different purposes for which they are identified. The examples outlined below are the Standard Geographical Classification of the Australian Bureau of Statistics, which forms the framework for the publication of Australian statistics, the much more fluid and overlapping regions of the Australian Broadcasting Commission’s (ABC) regional radio network, the varying types of regions associated with regional development agencies, the regional framework used in the annual State of the Regions reports, and a set of regions produced to illustrate a proposal for regional government in Australia.

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T H E A U S T R A L I A N S T A N D A R D G E O G R A P H I C A L C L A S S I F I C AT I O N O F T H E A U S T R A L I A N B U R E A U O F S TAT I S T I C S

The most common starting point for grouping areas into regions is the Australian Bureau of Statistics’ Australian Standard Geographical Classification. The basic unit in this classification (apart from the Census Collection Districts which are useful for detailed analysis but too small for defining regions) is the Statistical Local Area (SLA), which tends to correspond to the boundaries of local government areas where these exist. Some local government areas constitute a single SLA, while others are split into two or more SLAs. SLAs are grouped into Statistical Subdivisions (SSDs), defined as ‘socially and economically homogeneous regions characterised by identifiable links between the inhabitants. Moreover, in the non-urban areas ... an SSD is characterised by identifiable links between the economic units within the region, under the unifying influence of one or more major towns or cities’.28 SSDs are in turn grouped into Statistical Divisions (SDs). SDs have been defined for each capital city to contain the anticipated growth of the city for a period of at least 20 years, while outside the capital cities an SD is defined in almost the same way as the smaller SSDs.29 At the 2001 census there are 1353 SLAs, 207 SSDs and 66 SDs covering the whole of Australia. Because this classification uses the concepts of homogeneous and nodal regions, coincides with local government boundaries, and groups areas according to both socioeconomic criteria and measures of interaction such as transport patterns, telephone traffic, retail shopping and media reach, it forms a ready-made framework for the delimitation of regions for a range of specific purposes. In some States and Territories the Statistical Divisions correspond to planning regions, but not always. ABC REGIONAL RADIO

ABC Radio communicates at three levels of radio space: national, State and regional. Regional radio is most strongly developed in Queensland, New South Wales and Western Australia, where regional stations typically have about five staff, and provide a blend of local, state and national content that varies with the region. There is likely to be a rural or resources reporter who contributes material on the local economy, and a local news reporter. In keeping with the greater degree of decentralisation of population in Queensland, the stations in centres like Townsville and Rockhampton are significantly larger,

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and contribute more content to other stations than is the case elsewhere. To be successful a regional radio station must have a good knowledge of its audience, and therefore be able to identify the area it serves and the interests of the people within that area. The stations and their radio spaces therefore correspond to a fair degree to recognisable regional ‘communities of interest’, and in some cases have been adjusted to take account of shifting regional identities, but financial constraints limit the ability of the ABC to cover all regions. Nevertheless, the radio regions that have been created provide a particularly interesting case of regionalisation in Australia.30 They are an example of a very flexible and overlapping set of regions, very different from those defined by the ABS. R E G I O N A L D E V E L O P M E N T AG E N C Y R E G I O N S

Most States and Territories in Australia have a number of regional development agencies. In some States these agencies have been formed through State government collaboration with local government, as in South Australia and Western Australia, and represent a formal regionalisation of the State. In Western Australia, for example, nine regions have been defined, each with its own Regional Development Commission. These regions are formed from groups of local government areas, and mostly match the ABS Statistical Divisions, but with a few deviations. They have the advantage that they are also the regions used by some other State Government departments and agencies, particularly the Planning Commission. They are large regions in area, although not in population, and some have sufficient size and internal variation to require the Commission to have up to four offices scattered across the region. Only two regions have a single office. They are mostly closer to planning regions than to functional or homogeneous regions. As in several other States, the Development Commission regions do not include the metropolitan area of Perth, in keeping with a widespread Australian view that regional development means non-metropolitan development. New South Wales has had a similar system of regions in place since 1972 for its Regional Development Boards, based on the State’s administrative and planning regions, which largely coincide with the ABS Statistical Divisions for the State. These two States therefore contrast with Queensland, where the community-based Regional Development Organisations are generally smaller, have been created by local governments, communities and business

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groups, are more likely to be functional regions focused on an urban centre, and do not form part of the Queensland Government’s administrative and planning regionalisation of the State.31 N AT I O N A L E C O N O M I C S ’ R E G I O N S

Each year National Economics produces a State of the Regions report for the Australian Local Government Association, and this contains perhaps the most comprehensive classification and delimitation of Australia’s economic regions. The latest report identifies six types of regions: 1.

Core metropolitan regions, which represent the central areas and sometimes the inner suburbs of the major cities.

2.

Dispersed metropolitan regions, which are predominantly residential suburban areas whose workforce commutes to employment in other regions.

3.

Industrial production regions, which are characterised by concentrations of manufacturing and include both metropolitan areas like Western Sydney and non-metropolitan areas like the Hunter and Illawarra in NSW, and the Geelong and Westernport regions adjacent to Melbourne.

4.

Lifestyle regions, which have environments which have attracted retirees, tourists, holidaymakers and people in the workforce choosing a non-metropolitan and coastal lifestyle. These are commonly termed ‘sea change’ regions after a popular TV series.

5. 6.

Rural-based regions, in which agriculture is the basic industry. Resource-based and remote regions, with economies based on minerals and energy, sometimes with the addition of pastoralism and tourism. Most of these regions have significant Aboriginal populations.32

The result is a regional classification that covers the whole of Australia, divides the major cities (which contain about 70 per cent of the national population) into three different types of economies, and the rest of the country into another three types. It provides an excellent base for broad analyses of regional conditions and trends, and each report contains a new set of economic and social data on the regions. However, many of the non-metropolitan regions are much bigger than even the Western Australian Development Commission regions, and are too big to provide a framework for regional development action. The regions also follow State boundaries, which makes for administrative convenience and matches the boundaries of political power and interest, but splits up a few functional economic regions that straddle State borders.

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R E G I O N S F O R R E G I O N A L G OV E R N M E N T

Several commentators have argued that regional development would be enhanced by the replacement of the present States with a regional level of government bigger than the existing local government units. Regional government at this level, it is claimed, would be more responsive to the particular development needs of each region, would facilitate the provision of the region-specific industry support programs advocated by the ‘new regionalism’, and counter the dominance of the capital cities. One proposal suggests 44 regions, with Sydney and Melbourne split into several areas, and Brisbane, Adelaide and Perth each forming one region.33

DEFINING AND DELIMITING REGIONS The examples above illustrate different types of regional delimitation designed for different purposes. There is no single best way of defining and delimiting regions, and the method used must be determined by the purpose for which regions are being defined. In Australia regions that are groupings of local government areas have the advantage of the availability of ABS and other statistics, which assists analysis of the economic and social conditions of the region and the monitoring of the region’s performance. Such regions also facilitate the involvement of local government, which is becoming an increasingly important actor in regional development. However, individual local government areas may be too small, particularly in the cities where they form only a part of the local labour market or the regional economy. Regions based on local government areas that stop at State borders, as is the case with State planning regions and ABS Statistical Divisions, can also split functional regions in half. Examples of this problem are the Green Triangle Region centred on Mount Gambier, which includes south-western Victoria and southeastern South Australia, and the Murray Valley, where functional regions spread across both New South Wales and Victoria. Regional development agencies in these areas should logically cover the whole of the economic region, but administrative and funding problems between States may make this difficult. A functional economic region is probably the most logical basis for regional economic development, because it maximises the number of activities important to the region’s development that will be contained within the region. However, it is difficult to create regional

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development agencies that do not coincide with administrative areas, particularly given the role of local government in local and regional development, so functional regions are created by grouping together several local government areas. The result may not be a perfect delimitation of the economic region, but it is likely to be administratively and politically easier to work with. Where regions are the basis for industry development it can be important to define them so as to include the main actors in this development. As noted earlier in this chapter, these include the main firm or firms in the target industry, their suppliers, their support services (including finance), vocational training institutions, research and development institutions, business associations and the relevant government agencies. However, in non-metropolitan Australia it is often difficult to find the full range of actors and agencies, as many of the important actors will be located in the major cities, and the role of the development agency may be to help local firms to overcome the absence of local suppliers, training institutions and specialised research and development institutions. Different methods may be used to identify regions in different areas. For example, the most thorough regionalisation of Australia so far undertaken selected nodal regions for the non-metropolitan areas and homogenous regions for the major cities.34 It was argued that regions based on interaction could not be identified in the large cities because these were functionally too complex, and that the important spatial differences within these cities were in the social and economic characteristics of their populations. Nodal regions in the non-metropolitan areas were identified by analysing telephone traffic, while homogenous regions in the metropolitan areas were identified on the basis of socioeconomic status, demographic characteristics, dwelling type and ethnicity. There have been several schemes in the past to delimit regions as part of a national regional planning or development initiative, but none of these have survived subsequent changes of government. During the 1940s the Commonwealth Department of Post-War Reconstruction, in collaboration with the States, started a program to plan and decentralise development on a regional basis, with the particular aim of promoting the settlement and development of sparsely populated areas. However, the States were responsible for defining regions within their jurisdiction, and they each used slightly different criteria. While 97 regions were delimited, the regional

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development program was abandoned when the Labor Government lost office in 1949. The Whitlam Labor Government of 1972–75 instituted a second national regionalisation exercise, with the aim of promoting decentralisation from the metropolitan centres. Within the metropolitan cities regions were defined on the basis of their homogeneity, grouping together areas with similar economic and social conditions. In non-metropolitan Australia functional regions were defined. ‘These regions were thought to be most appropriately focused on major urban centres, and their catchment areas would be defined in terms of road traffic flows, bus services, telephone traffic, newspaper circulation areas and patterns of retail sales’.35 However, the departure of the Labor Government in 1975 again led to the abandonment of this regional development program, making the regions redundant. Both the regionalisation exercises noted above were top–down exercises, in that the regions were delimited by government agencies rather than by communities, and they involved quantitative analysis of social and economic data rather than qualitative analysis of community opinions. During the 1990s regions were once again formed across Australia as part of the Federal Labor Government’s Regional Development Program,36 and a small number of these were defined through a process that included community consultation. For example, in the Murray Valley region of Victoria and New South Wales the process of region formation was managed by a local steering committee on which local government was strongly represented. As the guidelines specified that the geographic coverage of a region should be ‘appropriate for creating the links between activities needed for an export-oriented, growth-generating regional economic strategy’,37 the first step was to identify the main export industries and their production linkages. This was undertaken through a review of existing reports on the area, the analysis of statistics, holding community workshops, and interviews with key informants. A recommendation on the boundaries of two regions was then put to community meetings in four centres from Shepparton to Mildura, which led to a shift in the boundary between the western and eastern regions at the request of the community located on that boundary. The outcome of this process was to create two regions incorporating areas in both New South Wales and Victoria. The two regions had distinctive economies and distinctive water manage-

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ment problems, and were recognised by residents as different communities of interest. The cores of the two regions were defined by industry linkages, but the boundary between them was defined by community perceptions of which region they belonged to. This in turn was strongly based on social and service provision linkages of the type discussed earlier, not on industry linkages. The exercise produced regions that were smaller than the Commonwealth would have liked, with populations of around 90 000 in the western region and 150 000 in the eastern region, because this was the size of area that the communities felt able to work with. The communities also argued to exclude from their regions the city (Bendigo) that dominated their area, as local service provision within their regions was a major issue, and they feared that Bendigo would dominate the activities of the new regional development agencies if it were included.38 The regional development programs of the Labor Governments of the early 1990s actually created two sets of regions for two separate departments. The Department of Housing and Regional Development sponsored Regional Development Organisations (RDOs) across Australia, whose main purpose was to develop regional partnerships to promote the development of export-oriented industries, while the Department of Employment, Education, Training and Youth Affairs created Area Consultative Committees (ACCs) to advise on and support training and employment programs in the regions. Clearly the functions of these two regional bodies overlapped, and some States insisted that the boundaries of the two be rationalised in some way. However, many regions ended up with a State-based regional development agency, two Commonwealthsponsored agencies (an ACC and an RDO) and sometimes a local government-based economic development agency, all following different regional boundaries. This complex, frustrating and inefficient outcome was the result of the inability of Commonwealth, State and Territory governments, and even of ministers and departments in the same government, to co-operate for the benefit of regional communities. It is not surprising that one of the proposals to come out of the 1999 Regional Australia Summit was that all levels of government, and ATSIC, ‘accept joint responsibility to ensure that there is only one recognised regional forum for each regional community and that the body used is the best existing body serving its region’.39 So far nothing has come of this proposal.

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CONCLUSION Regions can be identified in different ways, at different scales, to suit different purposes. So does it matter how a region is defined and delimited? Regional development practitioners sometimes argue that regional development is produced by good leadership, and that good leaders can make any type of region work. There is some truth in this, but the task of a regional leader, and of a regional development agency, is likely to be made easier if the region groups together people, communities and businesses who can identify a common purpose and a reason for co-operating. Conversely, agencies whose regions have very diverse and unconnected economies can have difficulty deciding on their priorities and gaining widespread community support. Logical regions can be formed from: •

areas with similar industries (such as broadacre farming or tourism);

•

areas dependent on the same resource (such as irrigation water);

•

areas dependent on the same infrastructure (such as a port and the transport lines to it);

•

areas whose economies are part of the same dominant industry or industries (such as food processing or automobile manufacture);

•

areas with common problems (such as restructuring in manufacturing or agriculture); or

•

areas whose social, service or business linkages focus on the same town or city.

However, few if any parts of Australia can be neatly divided by any of these criteria into mutually exclusive regions which do not have commonalities with other regions. Neither is it possible to define regions which contain within them all of the significant linkages of their dominant industry or industries. While service linkages are predominantly regional, production linkages can be global, and in many regions the important industry linkages will be national and international rather than local.40 What is important, we believe, is to define regions within which business and community groups can perceive enough common interests and issues, even if they are ones on which there is disagreement, to encourage them to work together. The organisational structures for these regions should not be so rigid as to prevent areas within a region from sometimes linking with a neighbouring region with which they have a specific common interest.

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Neither should they prevent the boundaries of regions changing as regional economies develop and economic issues change. It also helps if there is agreement between the levels of government on a single regional body, and therefore region, to represent community and business interest in regional development. Ryan, reviewing the regional development experience of the Goulburn Valley in Victoria in which he had been involved, and where there had been a succession of relatively short-lived development organisations with different boundaries and different objectives, believes that the development of the region could have been better if there had been ‘clear identification of the region in terms of economic units and communities of influence — then put it on a map and stick to it’.41

4

A U S T R A L I A’ S D I V E R G I N G R E G I O N S : CAUSES, OUTCOMES AND POLICY CHALLENGES Recent decades have witnessed significant shifts across Australia in the spatial distribution of economic growth, socioeconomic status and lifestyle. We have seen the emergence of a new regional geography comprised of winners and losers. Debates on the pace, depth and reasons for these shifts have ricocheted through politics, academic research, policy development and the popular press. Often politicians and commentators have presented off-the-cuff explanations, perceiving these developments as either a gift or windfall arising out of government-led economic globalisation or as an unfortunate — and somewhat unexpected — outcome of economic restructuring and faceless international markets. Reality, however, defies such simplistic models. The increasing complexity of socioeconomic status, economic performance and demography within Australia at the State, regional and sub-regional levels is an outcome of known processes. Technology change and the global economy have played their part, government policies have been critical also.1 The increasing complexity of regions and regional outcomes is of central concern to regional and local economic development practitioners. An understanding of national and regional processes plays a critical role in informing the construction of regional strategies. In recent years some commentators have suggested the emergence of an Australian ‘rust belt’ and ‘sun belt’. Others have argued that inland and metropolitan Australia is giving way to an ascendant ‘coastal’ Australia. Some analysts have discussed Australia’s spatial restructuring in terms of ‘new’ or ‘informational’ economy activities; while others have called attention to the growth of regional economies based on resource and extractive industries. Local and regional

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economic development strategies need to be attuned to these processes. Capable economic development policies, practitioners and agencies can recognise the processes affecting their region, harness their potential and oversee the growth of those industries. Those that lack this ability to recognise and act upon the key drivers within their economy — both now and in prospect — pursue fruitless development alternatives.2 What then are the processes separating high growth and low growth regions? Are all rural regions locked in a downward spiral comprised of declining services, falling population and shrinking economic opportunities? Is the continued growth of Sydney inevitable? What role can national government policy play? How can policy applicable across the nation advance the welfare of individual regions?

W H AT S C A L E O F R E G I O N ? Any discussion of regional performance and outcomes is confronted by controversy and potential conflict over the nature and scale of regions. Attempts to define and characterise ‘regional spaces’ raise difficult issues of how and to what end a ‘region’ is constituted. These debates have been covered in the previous chapter but it is worth noting that depending on the purpose of analysis and the stakeholders involved the measurement of ‘regional performance’ can involve regions of varying scales and shapes. For example, a State government’s interest in measuring regional performance will result in a different formulation of ‘regions’, than that emanating from a local government association, an environmental organisation, or a private company. There is no single ‘correct’ classification schema for the analysis of regional structures and performance and there is no benefit to be gained in becoming bogged down in definitional issues. Such arguments neglect both the real needs of regional development practitioners and policy makers to examine the growth of their region against others on the one hand, and the importance of administratively determined regions on the other. This chapter proceeds by examining the structures and performance of the Australian States and Territories, then provides a critical review of regional analyses at smaller scales. It then moves on to assess key attributes of contemporary Australian regional restructuring and the ability of national — and even State — policies to meet the needs of all regions within their territory.

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S TAT E - L E V E L P E R F O R M A N C E The division of the Australian landmass into the various States and Territories reflects the historical prerogative of colonial London to draw lines on maps, over lands often unexplored by Europeans. Adelaide, Brisbane and Perth are situated in the extreme corners of their jurisdictions, potentially creating difficulties for the management and delivery of services, and the extent to which some citizens may feel ‘connected’ to their State administrations. Residents in North Queensland and the Kimberley frequently bemoan the distance to their State capitals and the alleged neglect or lack of understanding of their region by State bureaucracies, whereas those of western NSW complain of a ‘sandstone curtain’ that supposedly blinkers Sydney policy makers and politicians to their needs. There are strong arguments that Australia’s State borders do not provide the optimal set of administrative and political divisions within the nation, yet any change to current borders seems difficult to envisage given the intractability of current arrangements and the probable impossibility of generating a consensus on the preferred nature of changes. Notwithstanding these arguments, economic and social data tend to be collected at the State or Territory level, and this is the most common scale at which regional comparisons are made. Table 4.1 summarises the contributions of each State and Territory to Australia’s population and gross domestic product (GDP). Several points are apparent from these data. First, there are divisions between the States/Territories that have increased their share of the Australian population and economy (Queensland and Western Australia); those that have increased their economic shares in the context of declining or static population shares (New South Wales and the two Territories); and those that have experienced relative decline in both population and gross product (Victoria, South Australia, and Tasmania). Second, comparing the contribution of population and gross product for each State and Territory reveals significant variations in per capita gross product. In 2000–01, New South Wales, Victoria, Western Australia, and the two Territories made higher contributions to Australia’s GDP than their population shares would suggest, suggesting relatively high levels of per capita gross product. The opposite was true for South Australia, Queensland and Tasmania. These differences are highlighted in Figure 4.1, which tracks per capita gross State product over the 1990s. The three States above the national average (that is, above

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100) have exhibited increased per capita gross State product levels over this period, whereas per capita gross State product levels in South Australia, Queensland and Tasmania have declined.3 Table 4.1 State and Territory contributions to Australia’s population and economy, 1990–91 and 2000–01 Population, Percentage of Australian Total 1990–91 2000–01 New South Wales 34.1 33.7 Victoria 25.5 24.9 Queensland 17.2 18.7 South Australia 8.4 7.7 Western Australia 9.5 9.9 Tasmania 2.7 2.4 Northern Territory 1.0 1.0 Australian Capital Territory 1.7 1.6

Gross State Product, Percentage of Australian Total GDP 1990–91 2000–01 35.2 35.6 27.2 25.6 15.0 16.3 7.5 6.4 10.0 11.1 2.1 1.7 1.1 1.3 1.9 2.0

Figure 4.1 Per capita gross State product, 1992–93 to 2000–01, six States

SOURCES

Gross State product ABS 5220.0, table 4.

Variation in relative per capita gross product among the States raises important questions about regional performance. During the early 1990s the ‘sun belt–rust belt’ dichotomy proved popular in the media as a basis to describe State performance. This term entered the Australian lexicon from the United States, where it was used as a

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broad descriptor of an emerging dichotomy between fast-growing economies in the south and west and slow-growing economies in the north and east. This slogan, like many such labels, conflated quite complex trends because the ‘sun belt’ was comprised of a mix of regional circumstances including the ‘new south’ economies of Georgia and the Carolinas, the ‘retirement belt’ economies of Florida and Arizona, and California, with its own mix of growth industries. Similarly, the north included slower-growth northern manufacturing states such as Ohio, Pennsylvania, Illinois, and Michigan but the economies of places such as Massachusetts and New York boomed. The term gained traction in the 1980s and early 1990s in Australia because of higher rates of unemployment and job losses in the southern states, as well as the pronounced loss of population to other parts of Australia. This image was reaffirmed in the early 1990s when the State governments of Victoria, South Australia and Tasmania all confronted fiscal crises. Victoria, South Australia and Tasmania fared the worst during the recession of 1991–92, as a result of the higher exposure to manufacturing, combined with the spectacular collapse of State-based financial institutions. Banking sector bailouts in Victoria (Pyramid Building Society, Tricontinental, State Bank of Victoria) and South Australia (Bank SA) cut deep swathes into the budgets of State governments, forcing expenditure cuts during the first half of the decade. In Tasmania, the State budgetary position deteriorated rapidly between 1989–91, necessitating a round of State tax increases and expenditure cuts. Contrasting with this, Queensland experienced relatively buoyant economic conditions over this period as strong net in-migration from the southern states boosted local demand, giving rise to the argument that, as a ‘sun belt’ economy, it was cushioned from economic downturns.4 Yet as the 1990s progressed, the ‘rust belt–sun belt’ model seemed less generally applicable to the Australian situation. Socioeconomic and demographic restructuring at the State and Territory level has been characterised by a set of processes more diverse than suggested by the ‘rust belt–sun belt’ dichotomy. For its part, Victoria by the mid-1990s was recovering strongly. Encouraged by capital works spending, Melbourne’s economy had made a significant recovery. Although Sydney remained the nation’s chief location for corporate and financial sector functions, Melbourne re-asserted its role in the mid-1990s. Published research during this period sug-

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gested that the severity of Victoria’s early 1990s economic downturn rested pre-eminently on cyclical rather than structural factors.5 At the same time, the mid-1990s saw Queensland’s growth rate falter. Whereas in the early 1990s Queensland was attracting net interstate migration of 55 000 persons annually, by the middle of the decade this had fallen to about 30 000 and, in the four years to 2000–01, the State received annual average net migration flows of just 18 500.6 Between 1991 and 1996 Queensland’s share of the national population increased from 17.1 per cent to 18.8 per cent; but from 1996 to 2000 fell slightly to 18.7 per cent.7 During the decade questions were raised over the State’s capacity to service high population growth, in the context of low public sector spending when compared to the national average.8 These factors underline the reality that much of Queensland’s population growth during this era has been linked to retirees and persons escaping higher living costs in Sydney and Melbourne. Throughout this period Bob Stimson of the University of Queensland questioned the sustainability of a settler economy in South-East Queensland where newly arrived migrants constituted the only ‘export’ market for the region’s product, and where many arrivals proceeded immediately to Federallyprovided income support. As illustrated in Figure 4.1, Queensland’s per capita gross State product is well below the national average and actually declined during the 1990s. In Queensland, relatively strong population growth was not matched by an equally strong economic performance. The indeterminate position of NSW and WA has also compromised the applicability of the ‘rust belt–sun belt’ model in Australia. NSW experienced a dramatic fall in manufacturing employment in the period leading to the 1990s recession, giving it elements of a supposed ‘rust belt’ economy. In the two decades to 1991, Sydney’s manufacturing sector shed 140 000 jobs, compared to 100 000 in Melbourne.9 The relative decline of Sydney’s manufacturing base accelerated from the mid-1980s, with 41 000 jobs lost in the decade 1986–96, compared to just 8400 in Melbourne.10 Yet these job losses were more than compensated by strong growth in the services sector and, importantly, through the expansion of high paying corporate headquarters and finance sector employment. In 1999 nearly half (45.2 per cent) of Australia and New Zealand’s top 500 companies were headquartered in New South Wales, and Sydney hosted the headquarters of 76 per cent of Australian banks.11 The clustering of these activities in what has been labelled ‘Global Sydney’ (see below)

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raised incomes and living costs in Sydney. Using a benchmark definition of a high income household as one with an annual income of $78 000 or greater, Sydney’s incidence of high-income households significantly exceeds those of the other capitals, and is approximately twice as high as in Adelaide (Figure 4.2). This wealth breeds higher property prices. The top 25 per cent of Sydney’s houses rose in price by about 80 per cent from 1993-98, a rate of increase far exceeding that in any other capital.12 In 2001, there were 3800 Sydney residential properties sold for over $1 million, compared with 458 in Melbourne.13 As of April 2002, the highest price paid for a house in Sydney was $28.5 million (‘Altona’, in Point Piper, purchased in 2002) and the highest price paid for an apartment was $13.9 million (for an apartment in ‘Bennelong’, otherwise nicknamed ‘The Toaster’, Macquarie Street, purchased in 1998). The twin effects of Sydney’s internationalisation and higher living costs have encouraged strong international migration inflows but net interstate outflows. During the six years to 2000–01, NSW (mainly Sydney) benefited from the arrival of an average of 40 645 international migrants each year, but during this same period the State suffered from the net loss of an average of 14 488 NSW residents per year to other states.14 These migration flows have impacted noticeably on Sydney’s urban fabric, with certain parts of the city being magnets for particular migrant groups. Decisions to allow medium density apartment complexes adjacent to suburban railway stations have encouraged high population concentrations of non-Australian born residents in key suburban localities including Chatswood, Ashfield, Hurstville, Strathfield and the traditional Indo-Chinese area of Cabramatta. According to the 2001 Census, the percentage of residents who spoke a language other than English at home was 59.8 per cent in the Canterbury–Bankstown statistical sub-division, and 61.2 per cent in the Liverpool–Fairfield statistical sub-division.15 WA’s position is also difficult to pigeonhole within the ‘rust belt–sun belt’ dichotomy. In terms of economic and population growth, WA was the ‘star performer’ among the states over the 1990s (see Table 4.1). Growth however has come from a relatively limited base in the mining sector. Between 1992–93 and 2000–01, the contribution of mining to the State’s economy rose from 17.4 per cent to 23.1 per cent.16 The structural characteristics of this sector impinge upon the State’s broader economic base. As discussed in Chapter 5, the mining sector tends to be associated with limited

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Figure 4.2 Proportion of households with incomes of $78 000 or over (in 1996 dollars) five mainland capitals

SOURCE

Lloyd et al 2000, p 283.

economic multipliers and weak connections at the regional scale. Wages and salaries account for a relatively small element of the sector’s economic activities, reducing its capacity to act as a generator of jobs. In 2000–01 in WA, the mining sector’s wages and salaries payments accounted for just 13.9 per cent of total factor income,17 compared with a State average of 45.9 per cent of total factor income paid as wages and salaries.18 Because of the importance of minerals to the WA economy, if anything it is better described as a ‘rock belt’ rather than a ‘sun belt’ economy. This leaves Tasmania and South Australia. Both have exhibited below-national average rates of economic and population growth during the past two decades, and Tasmania hasn’t grown at a rate above the Australian average since the 1930s. In South Australia during the 1990s the State Government embarked on a series of controversial policies to kick-start growth, including the privatisation and contracting out of government services on a massive scale and the widespread use of industry subsidies to attract investors. The impacts of these initiatives are contested widely. Meanwhile, the State’s traditional manufacturing base remains under significant pressures. Strong growth in SA manufacturing real output has not been translated into increased employment, because of the shift towards

AUSTRALIA’S DIVERGING REGIONS

• 65

capital intensity.19 Debate on the future of the car industry dominates broader questions on the SA manufacturing sector. Moreover, although there has been robust expansion in some of the State’s agro-industries during the past decade (particularly wine and aquaculture), the SA agricultural sector as a whole has not exhibited significant growth. As detailed in Table 4.2, the net incomes of SA farmers grew in the mid-1990s before falling to levels broadly in line with those earlier in the decade. This contrasts with the generally stronger growth performance of agriculture in NSW, Victoria, Tasmania and Queensland. These economic factors have contributed to relatively low population growth in the State. South Australia has faced difficulties attracting international migrants and has experienced net interstate population losses. Since 1973, SA’s share of the national immigration intake has been lower than its share of national population.20 In 2000–01, only 3602 international immigrants arrived in SA, just 3.3 per cent of the national total.21 During the same year, net interstate migration flows saw SA lose 4234 persons. These trends are contributing to a rapid ageing of SA’s population. The ageing population combined with generally slower employment growth results in the State having generally poorer labour market conditions — as reflected in unemployment rates, vacancies advertised and wages — compared with the national average. In January 2002, only 38.9 per cent of SA’s civilian population over 15 was employed full-time, compared with 43.0 per cent nationally and 43.5 per cent in NSW.22 Table 4.2 Agricultural income, by State, current prices ($m) 1992–93 to 2000–01 NSW 1992–93 1993–94 1994–95 1995–96 1996–97 1997–98 1998–99 1999–00 2000–01 SOURCE

487 569 –231 858 1685 672 720 2253 1424

ABS 5220.0 (2001).23

Victoria Queensland South Australia 1442 662 417 1743 809 566 1037 660 433 2122 755 983 1826 513 738 1625 438 908 1725 1222 738 1263 497 764 2358 1315 403

Western Australia 532 602 720 1345 925 876 267 156 624

Tasmania 34 102 63 70 114 103 165 156 160

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

Tasmania faces an uncertain future. The State possesses an ageing population, net interstate migration loss and relatively few international migrant arrivals. Tasmania is unique amongst the States and Territories in that during the second half of the 1990s its population fell. In 1995–96 the State’s population was 474 443, but in 2000–01 it was only 470 272.24 Moreover, despite strong growth in certain parts of its economy, notably agro-food processing, Tasmania’s per capita State product is well below the mainland (Table 4.1). Over time, the island State has seen an erosion of office and decision-making activities, as firms and public sector agencies have rationalised these functions and administered Tasmania from Melbourne. All of Tasmania’s key urban areas have experienced declining national status over recent decades. Between 1961 and 1996, Hobart moved from the eighth to the 11th largest city in Australia, Launceston moved from tenth to 17th, and Devonport moved from 48th to 50th.25 It is important to recognise that these State-scale changes to incomes, population and economic activity within Australia represent the outcomes of interconnections between both market processes and government activities. Australia is a Federation and, as such, one of its central pillars is the notion that all citizens should have an equal opportunity to gain access to certain services and amenities. Whereas this pillar has never been implemented to its full and proper extent (a fact pointed out by successive Aboriginal and Torres Strait Islander Social Justice Commissioners), nevertheless it has required the Federation to develop compensatory mechanisms to assist the poorer States and Territories. As the body charged with making recommendations to this end, the Commonwealth Grants Commission (CGC) attempts to calculate the relative revenue raising and expenditure capabilities of each State and Territory. As illustrated in Table 4.3, the CGC has argued that each of the States and Territories require differing amounts of assistance per person if there is to be potential equity in service delivery across Australia. In 2001–02 the CGC recommended that to equalise service delivery capabilities across the nation, for every dollar per person provided to the Victorian Government in Financial Assistance Grants, the Tasmanian Government should be provided with A$2.099 per person and the Northern Territory Government should be provided with A$6.256 per person. The major beneficiaries of this process have been States and Territories with smaller populations and greater service delivery difficulties (‘disabilities’, in the CGC’s terminology). Significant shifts in relativities among the States and Territories over the past

AUSTRALIA’S DIVERGING REGIONS

• 67

decade are also apparent in Table 4.3. Critically, the CGC has recommended lower relative per capita funding provision to Western Australia and Queensland, and significantly higher relative funding to Tasmania and the Northern Territory. Increased recommendations to Tasmania relate to ongoing economic problems in the island State, whereas the higher amounts recommended for the Northern Territory relate mainly to enhanced recognition by the CGC of the funding needs of remote Aboriginal communities. The precise way that the CGC makes its recommendations is locked within labyrinthine financial mechanics, not well understood outside of the CGC itself. Of course, given that these calculations potentially influence the allocations of millions of dollars in Commonwealth funding, States and Territories continually lobby the CGC for changes in funding methodology. In the late 1990s, the NSW and Victorian Governments launched a public campaign for changes to the CGC’s financial calculations, challenging the traditional ‘gentleman’s club’ approach to these issues and foreshadowing the emergence of more robust, public debate on State-government funding in the twenty-first century. Table 4.3 Per capita financial assistance grant relativities, States and Territories,Victoria equals 1.000 New South Wales Victoria Queensland Western Australia South Australia Tasmania Northern Territory

1991–92 1.015 1.000 1.335 1.408 1.526 1.731 5.673

2001–02 1.031 1.000 1.246 1.110 1.547 2.099 6.256

SOURCES 1991–92 from Walmsley and Weinand (1997: 264)26; 2001–02 from Commonwealth Grants Commission (2002) State Revenue Sharing Update, CGC, Canberra, p 17.

The ACT is excluded because it was not fully incorporated into the CGC framework in 1991–92.

NOTE

I N C R E A S I N G P O L A R I S AT I O N , I N C R E A S I N G D I F F E R E N T I AT I O N The structure and performance of regions across Australia cannot be explained by analysis looking solely at the State/Territory-scale, or by employing crude dichotomies such as ‘rust belts’ or ‘sun belts’. Analysis of this issue requires an appreciation of the complex character

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

of spatial difference and performance within the nation, and the multi-faceted roots that give rise to these outcomes. Evidence of widening spatial inequality within the nation attracted media, academic and policy attention during the 1990s. Robert Gregory and Boyd Hunter analysed census data from the early 1970s to early 1990s to reveal a profound deepening of locational disadvantage at the scale of Census Collector Districts (CCDs) within Australian cities. CCDs are the smallest spatial unit at which Census data is collected, usually encompassing 200 to 300 dwellings. They used principal components analysis to measure and rank socioeconomic wellbeing within CCDs over this extended period. Gregory and Hunter were able to document a significant decline in socioeconomic wellbeing within the poorest CCDs, and the opposite in the wealthiest precincts. They concluded: the forces making for increased income inequality across households exert a strong and systematic neighbourhood effect. These forces have either impacted upon individuals, according to the neighbourhood in which they live, and/or there is a geographic sorting process at work so that households which lose income are moving to poor neighbourhoods and households which gain income are moving to high income neighbourhoods.27 Gregory and Hunter’s findings expose a critically important element of contemporary Australian (urban) change, but leave unanswered the question of ‘where’ these shifts are taking place. In the late 1990s considerable geographical research was undertaken to clarify this issue. Studies have reported a range of factors influencing socio-spatial differentiation. According to two researchers: no one State and no one type of region dominates the ‘winners’ or the ‘losers’. Rather, the pattern is one of increasing differentiation with the overall pattern.28 This begs the question of how spatial differentiation is best measured within contemporary Australia. The array of data and analysis contained within the annual State of the Regions reports means they are of great benefit to regional development practitioners. As noted in Chapter 3, there are six categories of region covered within these reports and the considerable

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AUSTRALIA’S DIVERGING REGIONS

attention given to the issue of what constitutes regions and regional categories raises important conceptual questions about Australia’s spatial restructuring. Because the authors of the State of the Regions report define regions and the size of regions flexibly, the report can move beyond a ‘one size fits all’ mentality and hence can identify and highlight particular trends. At the same time however, this flexibility also means that the approach is dogged by questions over regional definitions, boundaries, and the comparability of data concerning regions of differing scales. The smallest region in the 2001 State of the Regions report, ‘SA South-East’, possessed a population (62 794) less than 5 per cent of the largest region (‘Sydney Mid-West’, with a population of 1 299 441). As the report’s authors have acknowledged in successive editions of The State of the Regions, questions remain concerning where boundaries should be drawn, and into what categories regions should be classified.

473 582 394 703 569

230 793 109 438 499

Gross regional product, per person employed, 2001 ($)

Production regions Adelaide Plains NSW Hunter NSW Illawarra Melbourne North Melbourne West

Wages/salaries per capita, 2001

Core metropolitan areas ACT 313 520 Adelaide Central 374 449 Brisbane City 900 042 Melbourne Inner 304 254 Perth Central 428 697 Global Sydney 694 086 Sydney Inner West 227 564 Tasmania South 229 014 Darwin 108 255 Total 3 579 881

5.5 8.9 8.4 7.3 8.7 3.7 3.5 16.6 12.0 7.5

27 348 16 470 17 584 25 174 18 835 26 523 25 702 12 222 23 270 21 196

62 090 63 594 59 599 77 748 59 050 87 396 76 047 51 660 59 526 ——

15.8 13.7 12.2 10.5 11.7

12 16 15 16 16

57 59 59 59 58

Unemployment rate, 2001

Population, 2001

Table 4.4 State of the Regions regional categories and key indicators, 2001

064 674 875 090 940

167 550 776 074 300

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

Qld West Moreton Sydney Mid-West Vic Barwon Melbourne Westernport Total

180 525 1 299 441 252 886 749 800 5 205 721

12.1 10.2 12.7 9.6 11.5

13 646 15 489 14 989 16 515 14 576

47 705 58 178 52 833 52 094 ——

359 294 288 272 835 590 353 650 432 662 527 691 296 620 631 521 232 278 316 392 434 514 708 484

10.3 11.9 5.0 6.2 7.7 8.7 11.7 2.2 8.1 7.3 4.4 6.7

14 207 13 825 22 105 20 369 15 786 15 982 14 338 28 079 18 274 19 241 21 107 19 436

53 463 46 305 64 096 65 356 48 161 55 631 53 144 81 520 51 864 55 566 70 621 ——

227 532 756 347 243 082 212 895 275 964 185 443 1 901 263

13.6 12.6 16.0 21.3 21.3 12.8 15.1

11 631 14 117 12 356 9 884 9 496 11 878 12 232

48 567 44 423 40 754 40 061 41 014 49 156 ——

Rural-based and remote regions NSW Central West 174 174 NSW Far & NW 141 275 NSW Murray 110 671 NSW Murrumbidgee 149 549 NSW North 173 810 Qld Agric SW 204 588 Qld Wide Bay-Burnett 237 337 Qld North 203 075 Qld Mackay 129 129 SA Eyre & Yorke 164 043 SA Murraylands 68 270 SA South-East 62 794 Tasmania North 108 022

11.8 13.8 9.8 8.7 13.2 9.5 20.8 12.3 9.5 16.7 10.7 7.9 15.1

14 13 15 16 13 14 9 13 18 10 13 15 10

51 52 51 52 55 46 40 56 60 57 55 51 53

Dispersed metro regions Outer Adelaide Brisbane North Melbourne East Melbourne South Perth Outer North Perth Outer South NSW Cent. Coast Sydney Outer N Sydney Outer SW Sydney Outer W Sydney South Total 4 Lifestyle regions Qld Far North Qld Gold Coast Qld Sunshine Coast NSW Rich-Tweed NSW Mid-Nth Coast NSW South-East Total

049 387 604 304 887 819 257 502 567 869 798 314 886

674 470 997 354 224 790 707 592 509 532 471 538 394

AUSTRALIA’S DIVERGING REGIONS

• 71

Tasmania NW Vic Central Highlands Vic Goulburn Vic Loddon Vic Mallee-Wimmera Vic West Vic Ovens-Hume Vic Gippsland WA Wheatbelt-Great Sthn Total 3

133 004 139 303 189 912 163 265 139 905 98 463 91 611 235 257 125 940 243 397

19.2 11.2 10.7 13.2 9.5 9.9 9.0 15.7 9.3 12.4

11 530 16 426 15 428 13 129 16 195 16 458 15 412 12 791 14 187 13 912

47 968 47 792 48 041 46 698 49 018 48 511 47 718 53 209 59 105 ——

Resource regions NT Lingiari WA Pilbara-Kimberley WA Gascoyne-Goldfields WA Peel-South West Queensland Fitzroy Queensland Pastoral Queensland North West Total

89 416 71 282 119 955 203 620 182 534 37 887 35 950 740 644

25.6 10.3 9.3 10.4 10.1 6.1 9.8 11.5

16 345 17 222 15 232 14 709 16 312 17 736 16 302 15 844

54 842 73 055 63 276 57 883 66 012 52 070 66 628 ——

SOURCE

NE/ALGA (2001: A.52-115).29

Table 4.4 provides summary data from the 2001 edition of the State of the Regions report. This table contains a wealth of data, which are analysed in the following sections of this chapter. For the moment, however, it is important to note that significant differences exist both between and within each regional category. Analysis of aggregate information for each main regional category thus may disguise substantial variation at lower scales. This underlines the argument in the previous chapter and referred to at the outset of this chapter, that regional analysis is linked ultimately to socially constructed notions of what constitutes a region and regional difference. The regional categories utilised in the State of the Regions reports must be treated with care. The significant variation across and within the regional categories in Table 4.4 points to the need for an in depth analysis of Australian regional restructuring. An appreciation of this requirement is apparent in the ‘communities of opportunity/vulnerability’ research of Stimson, Baum, O’Connor and Mullins.30 Unlike the State of the Regions, this project has used a standard spatial unit, Statistical Local Areas (SLA), to measure and assess Australian spatial differentiation.

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Employing a multi-variate model, the researchers assessed and ranked each of Australia’s non-metropolitan SLAs, with the objective of positioning these within a continuum of ‘opportunity/vulnerability’. The research by Stimson et al highlights a different set of outcomes compared with the State of the Regions reports, which tend to have an encyclopaedic and descriptive focus. According to Stimson et al: Fundamental to our hypothesis of what constitutes community opportunity and vulnerability is the notion that, at a macro societal level, processes of globalisation and economic restructuring have been generating marked and substantial shifts in the mix of industry sectors — a shift from the manufacturing and agricultural processes of the Fordist economy to the services and informational growth industries of the post-Fordist economy. Places of opportunity we see to be more likely to be positively adjusting to this change, while places of vulnerability are more likely not adjusting to this change.31 By analysing shifts in key variables, four ‘opportunity clusters’ (‘hot spots’) and three ‘vulnerability clusters’ (‘cold spots’) were identified by Stimson et al across the nation (Table 4.5). Table 4.5 Opportunity and vulnerability clusters Mining-based opportunity cluster Tourism-based opportunity cluster Service-based opportunity cluster

Extractive/ transformative-based opportunity cluster Welfare/retirement migration vulnerable cluster

WA: Kalgoorlie/Boulder, Port Hedland, Rosebourne; Qld: Mount Isa; NSW: Singleton. NSW: Snowy River;Vic: Alpine-East;WA: Broome; Qld: Cairns; Port Douglas/Mossman NSW: Bathurst-Orange, Armidale, Goulburn, Queanbeyan, Tamworth, Albury, Dubbo,Wagga Wagga; SA: Mt Gambier; Tas:W Tamar;Vic: Ararat, Baw Baw W Campaspe-Echuca, Portland, Horsham, La Trobe-Traralgon, Mildura, Mitchell N,Wangaratta-Central,Warrnambool,Wellington-Maffra, Wellington-Sale, Ballarat, Colac, Greater Bendigo, Greater Shepparton,Wodonga, Indigo-Beechworth, Macedon Ranges; NT: Alice Springs, Darwin; Qld: Kingaroy, Thuringowa,Toowoomba,Townsville NSW: Griffith-Leeton, Maitland, Muswellbrook;Vic: Mitchell-Sth;WA: Busselton, Harvey, Manjimup, Bunbury, Esperance; Qld: Hinchinbrook,Whitsunday, Mackay, Gladstone, Burdekin. NSW: Ballina, Bellingen, Byron Bay, Coffs Harbour, Eurobodalla, Great Lakes, Hastings, Kempsey, Lismore, Maclean, Nambucca; Qld: Livingstone, Hervey Bay

AUSTRALIA’S DIVERGING REGIONS

Extractive-based marginal cluster

Manufacturing-based vulnerable cluster

SOURCE

• 73

NSW: Bega Valley, Cowra, Forbes, Gunnedah, Moree Plains, Mudgee, Narrabri, Parkes,Tumut,Young,Taree; SA: Murray Bridge;Tas: Huon Valley, Meander Valley;Vic: Campaspe-Kyabram, Gannawarra, Moira-W, Moyne S, Sth Gippsland; Qld: Atherton, Bowen, Burnett, Mareeba, Johnstone. NSW: Broken Hill, Casino, Grafton, Inverell, Port Stephens; SA: Port Lincoln, Port Augusta, Port Pirie, Whyalla;WA: Geraldton, Albany;Tas: Burnie, Central Coast, Devonport,Waratah, Launceston;Vic: E Gippsland, La Trobe-Moe, La Trobe-Morwell; Qld: Gympie, Maryborough,Warwick, Bundaberg, Rockhampton

Stimson et al. (2001: 44 and 48).

Taken together, the State of the Regions reports and Stimson et al’s research on ‘hot spots’ and ‘cold spots’ provides a comprehensive assessment of Australian regional restructuring. The remainder of this chapter uses insights from these research projects and other sources to identify and assess key themes.

T H E R O L E S O F C A P I TA L C I T Y A N D N O N - M E T R O P O L I TA N R E G I O N S ACROSS AUSTRALIA Much recent political debate on regional issues has focused on perceived differences between the economic performance of the State capitals and that of non-metropolitan Australia. Prompted by electoral instability beyond the metropolitan cores, a range of commentators has asserted the existence of a widening income differential between ‘the cities’ and ‘the bush’.32 The proportion of Australians living in rural areas has been falling for the past century. In 1911, 43 per cent of the population lived in rural areas. This had fallen to 14 per cent by 1976, before stabilising in the past 25 years.33 Considerable debate surrounds the reasons for recent rural population trends. The demographic consultant Bernard Salt has pointed to a growth in coastal populations as the key driver of recent population trends, but some researchers have questioned Salt’s use of data and assumptions.34 Thinking of the nation’s uneven geography in the simple terms of an urban/rural dichotomy has little merit. This dichotomy fails to take into account the significant differences that exist both within metropolitan areas and within rural and regional Australia. Examining changes in the

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

inter-census period 1991 to 1996, regional economists at NATSEM (the National Centre for Social and Economic modelling) concluded: ‘there is a large and growing gap between the incomes of those Australians living in the capital cities and those living in the rest of Australia. However, regional Australia is not uniformly disadvantaged and not uniformly declining’.35 One of the main planks on which the researchers base this conclusion is the finding that growth in real average income per household varied considerably among different components of non-capital city Australia over 1991–96. As indicated in Table 4.6, whereas households in major urban areas (defined as regional cities with populations above 100 000) experienced negligible growth in real incomes over this period, rural households experienced relatively rapid real income growth. Table 4.6 Estimated real growth in household incomes, 1991 to 1996, by regional types Settlement Size Capital cities Major urban areas (non-capital cities with populations over 100 000) Regional towns (urban areas with a population of 1000 to 99 999) Rural towns (localities with a population of 200 to 999) Rural areas (localities with fewer than 199 persons) SOURCE

Per cent 1.99 0.26 1.14 0.99 3.35

Lloyd et al. (2000: p 275).

Y U P P I E B E LT S The ‘yuppie belts’ that surround the core of Australia’s capital city Central Business Districts are the first of five types of region we investigate. The State of the Regions reports highlight the importance of ‘core metropolitan areas’ for national wealth creation. Core metropolitan regions tend to have relatively low unemployment rates and high per capita incomes. In 2001, the four regions with the highest level of gross product per employee in the nation are ‘Global Sydney’ ($87 396), ‘Sydney Outer North’ ($81 520), ‘Inner Melbourne’ ($77 748) and ‘Sydney Inner West’ ($76 047). In all the capitals, residential areas adjacent to CBDs have experienced gentrification (Table 4.7). Viewed purely in demographic terms, these developments are far from being the most significant set of changes in Australia over recent years. In the decade 1986–96, the

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• 75

inner areas of the capitals accounted for only 2.3 per cent of Australia’s population growth.36 Between 1998 and 2001, the estimated populations of ‘Global Sydney’ and ‘Melbourne Inner’ grew by 24 100 and 22 000 respectively; much less than some ‘lifestyle’ regions such as the Gold Coast (51 600) and some outer suburban regions such as ‘Melbourne West’ (29 900). The importance of these developments however rests not with their numerical size, but their impact on the urban fabrics of Australia’s key cities. In Sydney, the term ‘professional over-class’ has been employed by the media to describe this emerging elite.37 Gentrification, which in the 1970s and 1980s referred to the process whereby the middle classes renovated older housing stock in inner urban areas, underwent changes in scale and dimension during the 1990s. In addition to this form of gentrification, developers mobilised large sums of money for the development of new apartment complexes, either from disused industrial (brownfield) or vacant (greenfield) sites. Construction of these complexes has boosted population densities, previously in decline from lower rates of household occupancy. Gentrification theorists have created the label ‘super-gentrification’ to describe this second, more extensive phase of gentrification, taking place in the 1990s.38 Table 4.7 Comparison of Australian inner urban regions, 2001 Global Adelaide Brisbane Melbourne Perth Sydney Central City Inner Central Average annualised 1.2 0.5 2.0 2.5 0.7 population growth 1998–2001 Wages/salaries, 7.8 3.9 5.9 10.6 7.8 per annum growth (%) Net property 8.7 8.3 8.3 8.7 9.1 income, per annum growth (%) Gross regional $87 396 $63 594 $59 599 $77 748 $59 050 product, per person employed ‘Global workers’/100 90 80 83 99 76 Growth in number 26.2 19.1 29.1 52.6 31.1 of building approvals per capita, 1998–2001 (%) High income 51.9 30.2 27.7 52.5 41.0 families (% of total) SOURCE

NE/ALGA (2001: A.63, A.74, A.96, A.97, A.107).

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

R E G I O N S W I T H O U T WO R K A counterpoint to the clustering of wealth and economic opportunity in Australia’s inner urban areas is the emergence of significant regions with low employment levels and high reliance on transfer payments. These characteristics are seen most readily in coastal areas (dubbed ‘lifestyle regions’ in State of the Regions reports) but are also evident in some older industrial regions (such as the La Trobe Valley, east of Melbourne). Relatively poor labour market outcomes in these areas can be the product both of (i) disappearing jobs in traditional (manufacturing and resource-processing) sectors, and (ii) sustained population growth not linked to labour market demand. These regions characteristically display high unemployment rates (see Table 4.8), although for demographic/economic reasons this measure might actually understate the extent of their labour force problems. Significant numbers of retirees reduce the size of the potential working population (increasing regional employment dependency ratios), whereas weak labour markets induce potential labour market participants (such as single parents) to opt out of the search for jobs (reducing the labour force participation rate). Thus, a region such as Richmond–Tweed, on the North Coast of NSW, not only has a relatively high unemployment rate (21.3 per cent), but also has a low labour force to population ratio (42.8 per cent).39 These themes are drawn together in Table 4.8, which measures the reliance on transfer payments by different Australian regions. Across the nation, 16.9 per cent of net disposable income (that is, total households’ incomes net of taxation) was derived from transfer payments in 1996. Dependency on transfer payments, however, varies significantly on a regional basis. In general, there is a lesser reliance on transfer payments in the capital cities, and a higher reliance in rural and regional towns. The ratio of transfer payment dependency is particularly high in Tasmania, where 35.7 per cent of adults in 1996 benefited from Department of Social Security (now Centrelink) payments.40

AUSTRALIA’S DIVERGING REGIONS

Table 4.8 Proportion of net disposable income derived from transfer payments, 1996 NSW Vic Qld WA SA Tas Capital city areas Inner 11.7 15.1 13.8 16.0 19.6 14.8 Middle 13.1 16.6 14.1 14.9 18.3 19.9 Outer 14.3 14.9 19.9 13.4 22.8 27.7 Within 75km of 21.0 15.4 20.8 23.4 20.6 20.4 capital city Major non21.3 22.0 17.6 — — 22.9 capital city Towns Pop >40 000 18.6 25.5 21.4 — — — Pop 23.2 22.7 21.5 14.8 24.6 27.4 10 000 – 39 999 Pop 2000 – 9999 24.4 23.6 16.6 14.9 22.6 26.3 Pop < 2000 26.4 21.8 16.9 11.0 22.9 22.7 Non-urban 21.3 18.2 20.2 13.4 18.7 25.1 Total 16.5 16.9 17.7 15.0 20.3 22.6

• 77

Aust 14.0 14.8 15.5 19.5 19.9

21.7 21.7 21.2 20.6 19.5 16.9

The ACT and NT are not listed separately in this table, although they are included in the calculations for the Australian total.

NOTE

Department of Family and Community Services (1999) Social Indicators for Regional Australia: Attachment to the Department of Family and Community Services Submission to the House of Representatives Standing Committee on Primary Industries and Regional Services Inquiry into Regional Infrastructure and the Development of Australia’s Regional Areas, DFACS, Canberra, p 48.

SOURCE

C A F É S A N D R E S O RT S : T H E TO U R I S M R E G I O N S Along with retirement migration on Australia’s east coast, a few regions have generated significant economic growth through becoming hubs within the booming domestic and international tourism industry of the past two decades. Thus, in a relatively short space of time Cairns in Far North Queensland was transformed from a remote corner of Australia dependent on a few agricultural commodities (mainly sugar), to a strategic node of Asia-Pacific tourism. Japanese hotel investment and the related surge in Japanese tourists during the late 1980s and early 1990s repositioned Cairns within international tourist networks, creating new geographies of opportunity and dependency.41 Characteristically, tourism has generated highly localised effects as a regional economic driver. Whereas until recently Australia’s east coast was dominated by domestic ‘caravan park’ and ‘motel’ tourism, this is giving way to hierarchies of industry involvement.

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

The beachfront area of Hastings Street, Noosa, is very different in shape, form and function from the Sunshine Coast’s suburbs and hinterland. Byron Bay has evolved into a premier international tourist site, whereas neighbouring towns of Brunswick Heads and Ballina have few linkages to international tourism. For affluent residents of Sydney and Melbourne, decisions to holiday in Noosa, Byron Bay or the Gold Coast are made relative to holiday choices such as Bali, Tahiti or Koh Samui, rather than neighbouring domestic rivals. Major tourism investments such as the Coolum Resort on the Sunshine Coast, the location for the 2002 Commonwealth Heads of Government Meeting, recognise the interconnections between domestic and international tourism, and the roles of business facilities and conferences for the tourist industry. Many of the east coast locations that have benefited from tourism over the past decade have done so because of their ability to service an increasingly sophisticated and time-conscious tourist clientele that demands airport access, high-order services, good coffee, and environmental amenity. For the Gold Coast and Sunshine Coast in particular, these developments present contradictions for urban form and growth. At the 1996 census, the three major urban areas with the lowest average household incomes were the Sunshine Coast, Launceston, and the Gold Coast.42 In the Gold Coast, 38.9 per cent of households had an average weekly income below $500, compared to 35.6 per cent for the nation as a whole. There is significant intra-urban differentiation in socioeconomic wellbeing within the Gold Coast, with fringe inland areas such as Mudgeeraba and Worongary having far greater affluence than some coastal areas, such as Coolangatta. The combination of tourist economy growth and lifestyle migration in regions such as the Gold Coast and Sunshine Coast has generated particular urban forms, with new consequences for growth and inequality: Queensland’s Sunshine Coast is an unexceptional example of those instant urban regions of the late twentieth century. As part of the northern edge of south-east Queensland’s triangle of proto-urbanisation – the other two being the Gold Coast and the Brisbane River Valley – it represents much of what is thought of as ‘new’ in urban life. It has no industrial base, little State bureaucratic function, and a built form which runs in linear fashion along the coast. Its typical focal points include shopping malls

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and theme parks, and while the waterfront strip has clusters of moderately tall ‘high-rise’ apartment blocks, the standard domestic design is the suburban housing estate.43

S U P E R M A R K E T S A N D Q UA R R I E S Writing in 1980, former Australian Financial Review editor Max Walsh previewed Australia’s economic future in a chapter titled ‘Back to the Quarry’.44 Walsh argued presciently that reduced tariffs and heightened international competition would accelerate employment loss in manufacturing, leaving Australia increasingly reliant on its traditional, primary sector exports. Evidently Walsh’s narrative was incomplete: he failed to recognise the growth of the services economy as a source of employment, and the boom in tourism beginning in the mid-1980s. Yet, Walsh’s analysis correctly argued that Australia’s key mining and agricultural resources would remain vital for the economy. In some analysts’ rush to enthuse about the growth of Australia’s post-industrial or services-led economy, the ongoing contribution of primary industries is sometimes overlooked. These sectors are examined in depth in Chapter 7, so there is little point in extensive analysis here. From the perspective of Australian regional change, their significance lies in the fact that they provide a basis for significant growth in areas with relatively few alternatives. The mining sector has brought substantial economic activity to many of the most remote parts of Australia. Successful aquaculture industries, such as the tuna farming operations of Port Lincoln, South Australia, have generated enormous growth in an otherwise isolated region. Increasingly however, the key to primary industries’ regional contributions lies with their abilities to generate localised linkages with upstream and downstream activities. As recounted in Chapter 7, declining mining employment in Kalgoorlie has been offset partially by growth in mining services employment. Singleton, in the NSW Upper Hunter coal belt, has generated substantial local employment through becoming a regional hub for mining sector ancillary sevices. These cases contrast starkly with some other regions with significant mining operations but with few local linkages. In the Northern Territory for example, the mining sector is far and away the largest contributor to gross Territory product (in 2001, it contributed $2.6 billion of output), but less than 10 per cent of this amount was ‘grounded’ in the Territory in the form of wages and salaries.45

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A similar set of themes relate to agriculture where, because of farm consolidation and capitalisation, the regional multipliers of farming may tend to weaken. At the same time however, the emergence of some new agricultural industries (particularly specialist horticultural sectors) may demand greater labour inputs than traditional, broadacre farming. The expansion of olive plantations in western Victoria and southern Queensland is a case in point where a displacement of grains/livestock sectors by these activities has generated increased labour demand. The dramatic growth of viticulture across Australia during the 1990s and early 2000s also represents the growth of an industry with extensive local demand for labour and purchases. In the Murray-Darling Basin, these developments have been linked closely to the restructuring of water pricing, with the effect that agriculturists have been encouraged to shift into activities with higher financial returns per unit of water. The town of Griffith, in the Murrumbidgee Irrigation Area (MIA), represents a case study of these processes of agricultural restructuring. During the late 1990s Griffith experienced rapid population growth encouraged by shifts towards more labour-intensive agricultural activities and the development of downstream linkages in food and wine processing.

THE VICTIMS OF RESTRUCTURING: PROBLEM SITES I N T R A D I T I O N A L M A N U FAC T U R I N G Declining employment in certain areas of manufacturing and agriculture have resonated regionally. Since the early 1980s, regions such as Whyalla, the La Trobe Valley, the Illawarra and the Hunter have had to cope with substantial job losses in industries previously considered ‘taken-for-granted’ employment drivers. Over time, the initial shocks of losing traditional jobs have given way to new strategies of diversification, sometimes with significantly positive results. For example, BHP’s 1999 announcement to close its steelmaking operations in Newcastle occurred at the same time as the Hunter Valley was experiencing booming wine production. Moreover, although the Hunter Valley traditionally has been dependent upon the steel industry, sectors such as textiles and poultry have also been important economic drivers. Although these sectors too have been under employment stress, their existence nonetheless provides an element of diversity within the region’s manufacturing base.

AUSTRALIA’S DIVERGING REGIONS

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CHALLENGES FOR POLICY Greater regional diversity presents challenges for the economic development and welfare policies of both State and Federal Governments. Australian Governments, and especially conservative governments, have not focused on explicit policies for the development of regions and localities. Section 54 of the Constitution restricts the Federal Government’s ability to provide funding that favours one State over another (thereby limiting policies that seek to promote regions within States) while income support policies have focused on meeting the needs of individuals, rather than the places where they live, work and engage in community life.46 Their review of communities of opportunity and vulnerability amongst Australia’s regional cities led Stimson, Baum and O’Connor (2001) to note that Australian policy frameworks have always favoured ‘people’ policies over ‘place’ policies and that: The policy challenge presented by change in rural and regional Australia is to develop a better mix of people-based and placebased policy, as it is obvious the mix we have at present is not working.47 These comments highlight the tough questions facing governments: on the one hand they need to accommodate the further growth of already prosperous regions, and on the other, facilitate the growth of stagnant or declining regions. Singular, uniform policies are unlikely to achieve this end. Federal governments are confronted by this dilemma, as are the States. Community development and community capacity-building may offer a solution. The Howard Government has embraced the notion of community solutions to social problems for some time: on coming to power it renamed the Department of Social Security the Department of Family and Community Services, and community concepts were an important component of the McClure Report that reviewed welfare programs and philosophies across Australia.48 The Howard Government subsequently established the Stronger Communities program within DoFACS. In its review of community development and capacity-building Mission Australia observed the Federal Government supports community capacity-building through community economic development, community business partnerships, social entrepreneurs and by fostering micro-business.49

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What solutions can community approaches offer to places with high unemployment, low incomes, falling population, declining services and limited economies? Moreover, who is the community? Do communities only exist in farming areas or country towns where ‘the community’ may be easily identified, or do community solutions have some relevance to the capital cities and their sprawling subregions? It is best to start with what community approaches are not, and should not be. They are not an excuse to shift the cost and effort of social and economic development strategies from well-resourced central governments to poorly funded local governments or volunteer groups. Community development needs to be pursued in addition to conventional labour market and income-support policies. Community development embraces a range of approaches that look to build the capacity of the community, and the individuals that live within it, to work for their own good. Community development has a philosophy that asserts, ‘The more people are involved socially and economically in their communities, the stronger the community becomes — resulting in greater benefits to individual members’.50 Community development may include the establishment of social enterprises, the development of leadership programs, the foundation of Intermediate Labour Market Organisations (ILMOs) that attempt to bridge the gap between formal job training and unemployment for the long-term disadvantaged. It can include enhancing the life skills and employability of the poorest members of society, the provision of community infrastructure such as transport, the redevelopment of run-down housing estates and the provision of Internet training. A raft of programs exist at the Federal and State levels, with the New Enterprise Incentive Scheme, for example, assisting the formation of micro-businesses. Mission Australia commended this program, noting that not only did it add to the stock of small businesses in a variety of regions, but that 69 per cent of participants moved from unemployment to employment.51 There is evidence of other community development philosophies and programs that work. Victoria, South Australia and Western Australia run programs that seek to strengthen the economic and social resources of country regions and towns by identifying and training ‘community leaders’. A review of the Western Australian program found it to be very successful, with participants reporting a range of positive outcomes both for themselves and the places where they live.52

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Community development is not a panacea for the ills of Australia’s regions. Local Employment Initiatives (LEIs) were embraced in an earlier era and they displayed much of the local or community development focus that distinguishes the current crop of initiatives.53 In large measure they were perceived to be less than effective because they were too small to have an impact on unemployment rates, and because they failed to address many of the real hurdles — such as shortages of economic infrastructure — that impeded the growth of regions and localities.

5

LOCAL ECONOMIC DEVELOPMENT IN RESOURCE-BASED ECONOMIES

Many non-capital regions of Australia are heavily dependent on agricultural and mining activities for jobs, incomes and economic growth. Australia’s economic history as an outpost of European settlement in the Asia-Pacific area is intertwined with the establishment of primary industries. The national psyche is imbued with the narratives of rural development; be they the 1850s gold rush, the development of the merino sheep, or the construction of the Snowy Mountains Hydro-Electric Scheme. However, the centrality of rural themes and images within Australia’s national identity sits uneasily with the turbulent performance of many rural industries over recent years and, importantly for the concerns of this book, the capacity of these sectors to anchor regional wealth-creation. Primary industries remain the backbone of many regional economies across Australia. In some cases the development of new mines or new agricultural industries has breathed new life into otherwise moribund regional economies. The town of Port Lincoln, South Australia, for example, boasts the highest percentage of millionaires per capita in the Southern hemisphere, and this is related directly to the growth of the high-value southern bluefin tuna and abalone extractive industries since the early 1980s. However, farm or mining sector restructuring has adversely affected many rural regions. This is apparent both in the problems of wheat/sheep belt towns, and traditional mining centres such as Broken Hill, Mount Isa and Kalgoorlie. Moreover, the intense demands of global competitiveness have restructured the ways these industries are situated within regional economies. Contemporary primary industry investments are characterised by complex spatial flows. Local towns may be bypassed for

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purchases and labour in favour of ‘international best practice’ solutions that draw resources from far afield. This is illustrated most dramatically with the advent of fly-in fly-out (FIFO) mining — where labour is recruited and flown in from far afield — but these tendencies are also apparent in a number of new developing agricultural industries. For regional policy practitioners these issues pose fundamental questions. In many regions of Australia there are few wealth-creation alternatives aside from agriculture and mining. Consequently it is often the case that regional policy initiatives necessarily become intertwined with endeavours to restructure existing primary industries and to search for new ones. Kalgoorlie, for example, has attempted to offset declining mine employment through initiatives designed to encourage the development of the mining services sector (equipment repairs, geological services etc). In broadacre wheat–sheep regions, regional policy practitioners have attempted to augment traditional markets with new grains-based industries. This chapter explores the regional policy issues surrounding such initiatives. To set this scene, the chapter begins by assessing these sectors from a national perspective.

THE CHANGING ROLE OF PRIMARY I N D U S T R Y I N T H E N AT I O N A L E C O N O M Y In contemporary Australia it is trite to say that the Australian economy no longer ‘rides on the sheep’s back’. On the one hand, the rise of a more diverse and complex national economy has weakened the national significance of primary industries. The services sector has grown and there has emerged a generally more diverse primary industry export basket. On the other hand, however, although they may be diminished when measured against national economic indicators, primary industries continue to play important roles regionally and, more to the point, can continue to offer key income and employment growth prospects. Although some commentators at times may rush to embrace the notion that Australia possesses a ‘post-industrial’ economy, where rural manufacturing industries have been eclipsed by services and high-technology industries, these sectors still command an important place within the Australian economy. Clearly the contribution of primary industries to national income is much diminished since its halcyon days of the 1950s. According to data presented at the 1996 Outlook conference, between 1970 and 1995 the volume of Australian agricultural production increased by 43 per cent, but its real value was only 55 per cent of that in 1970.1

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In 1955 primary industries contributed 18.2 per cent of Australia’s GDP, with agriculture (15.9 per cent) accounting for the vast bulk of this activity.2 By 2000–01 these sectors accounted for just 7.2 per cent of GDP.3 Yet these statistics conceal considerable temporal and sectoral variation in the fortunes of industries. In the case of agriculture, a dramatic fall in the sector’s contribution to national GDP from the 1950s to the 1970s was arrested in the 1980s and 1990s. Between 1955 and 1975 agriculture’s contribution to GDP had fallen precipitately from 15.9 per cent to just 3.4 per cent. Yet in the following twenty-six years it fell only marginally, from 3.4 per cent to 2.8 per cent. The National Farmers’ Federation estimates that agricultural employment fell by 100 000 between the 1950s and the mid-1990s but the rate of decline has abated since the late 1970s. Over the 1980s Australia was the only country in the OECD to experience an increase in agricultural employment.4 In the 1990s, agricultural employment fell steeply, largely in response to drought, before recovering. Between 1991 and 1996 employment in agriculture in non-metropolitan Australia fell relatively modestly, by 1.5 per cent.5 Sectoral diversification has been the key factor in arresting agriculture’s decline. If the national economy can be said to no longer ‘ride on the sheep’s back’, the same can not be said of agriculture itself. The dependence of Australian agriculture on wool, wheat and beef has given way to newer sectors (wine, nurseries, cotton, specialist fruit and vegetable growing). Documenting the extent of these changes however is hampered by problems of historical consistency in ABS data. A reliable statistical series is available only from the mid-1990s. Table 5.1 demonstrates that in the five years to 2000 the experiences of different farm sub-sectors varied markedly. The number of farm enterprises in Australia increased marginally in this period, but farm numbers fell in five of the nation’s six largest farming sectors. The grain-growing sector is the sole exception to this pattern. Its sizeable increase, however, is largely a delayed response to the drought of the early 1990s. From a regional policy perspective these issues are important because many newly emergent sectors have high on-farm labour demands and possess strong downstream linkages with processing industries. The wine grapes industry (which has experienced explosive growth throughout regional Australia since the early 1990s) is archetypal of these tendencies. Diversification of Australian agriculture has also been associated with increased specialisation. In general, rural producers have attempted to replace bulk commodity production with strategies designed to add value by producing to

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end-users’ requirements. The need to meet exacting quality specifications has been a dominant theme throughout contemporary agricultural restructuring. This is apparent both in traditional agricultural activities — for example wheat, where traditional ‘pool’ production has been challenged by sales devices that target endusers’ requirements6— and emergent industries (for example, wine). Diversification and specialisation in agriculture has also had important ramifications for the embedding of agricultural industries within regions, an issue discussed later in this chapter. Table 5.1 Number of establishments with agricultural activity, 1995–2000 31 March 1995 Plant nurseries 1 Cut flower and flower seeds Vegetable growing 4 Grape growing 4 Apple and pear growing 1 Stone fruit growing 1 Kiwi fruit growing Fruit growing n.e.c. 5 Grain growing 10 Grain-sheep/beef cattle 18 Sheep-beef/cattle farming 11 Sheep farming 16 Beef cattle farming 36 Dairy cattle farming 14 Poultry farming (meat) Poultry farming (eggs) Pig farming 1 Horse farming 1 Deer farming Livestock farming n.e.c. 2 Sugar cane growing 5 Cotton growing Crop & plants n.e.c. 2 Total Agriculture 143 SOURCE

929 872 724 406 299 410 49 214 905 246 999 234 092 175 721 526 531 647 399 640 090 824 568 500

30 June 2000 2 1 5 6 1 1 5 16 18 9 14 35 13

1 2 1 5 1 144

496 134 313 522 229 257 20 794 463 232 253 302 236 820 845 508 145 021 196 158 029 974 614 560

Percentage change 29.4 30.0 12.5 48.0 –5.4 –10.9 –59.2 11.1 60.0 0.0 –22.9 –12.1 –3.4 –2.5 17.2 –3.4 –25.2 22.7 –50.9 –56.1 –1.2 18.2 –37.1 0.7

ABS 7113.0.

Only includes establishments with Estimated Value of Agricultural Operations (EVAO) greater than $5000 annually.

NOTE

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The national contribution of mining to GDP contrasts with that of agriculture. Since the 1950s the mining sector has increased in importance to the national economy: from 2.3 per cent of GDP in 1955 to 4.4 per cent in 2000–01. Indeed, in Australian economic history the mining sector took off at about the same period (the late 1960s) as agriculture’s demise, premising Australia’s moniker as ‘the lucky country’: just as the opportunities for one sector seemed in peril, another rose. Australia’s mining sector is broadly based, with significant production volumes of coal, gold, iron ore, aluminium, petroleum, natural gas, lead, silver and palladium. In 2000–01, mineral exports were approximately $45 billion, accounting for roughly 40 per cent of total export earnings. Like agriculture, the pressures of global competition have impacted harshly on this sector over the past decade. In the coal industry for example, a considerable number of smaller underground mines have been closed (notably in NSW’s Hunter Valley and Southern Tablelands) at the same time as new, large-scale open-cut mines have been opened (in the Upper Hunter Valley and Queensland’s Bowen Basin).

P R I M A RY I N D U S T R I E S A N D A U S T R A L I A ’ S R E G I O N S Although national accounts data indicate primary industries contribute less than 5 per cent of Australian GDP, these sectors play vital roles in many regions. In 1996 it was estimated that the 140 700 farm businesses in Australia supported 220 000 farm households representing 630 000 people. This equates to 13 per cent of the nation’s rural and regional population.7 Measured in terms of employment dependence, agriculture contributed 9.9 per cent of non-metropolitan jobs in Australia.8 The dependence of regions on agriculture varies greatly across Australia. As seen in Table 5.2, the relative importance of agriculture for statistical sub-divisions (SSDs) in non-metropolitan NSW ranges from over 30 per cent of employment in Murray-Darling and Macquarie-Barwon, to less than 3 per cent in the regional centres of Queanbeyan, Tweed Heads and Albury.9 The table suggests that for a number of regions west of the Great Dividing Range, agriculture comprises more than 25 per cent of employment. On the other hand, in coastal areas agriculture tends to account for less than 10 per cent of employment. These differences are accentuated when agricultural employment is expressed as a percentage of total populations (the final column of Table 5.2). Because employment-to-population ratios tend to be lower in coastal SSDs (a result of more unemployed and non-working age persons), the economic importance of agriculture in these regions tends to be lesser still.

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Persons employed in agriculture (A)

Total number of employed persons (B)

Total population (C)

Table 5.2 Regional dependencies on agricultural employment, non-metropolitan statistical subdivisions, NSW, 1996

Murray–Darling

1 619

4 305

10 211

37.61

42.16 15.86

Macquarie–Barwon

2 434

7 716

19 929

31.54

38.72 12.21

Central Murray

3 835

12 888

30 180

29.76

42.70 12.71

North Central Plains

3 469

12 731

29 618

27.25

42.98 11.71

Upper Murray (excl Albury)

2 127

8 109

19 960

26.23

40.63 10.66

A/B %

B/C %

A/C %

Lower Murrumbidgee

4 658

18 665

42 000

24.96

44.44 11.09

Lachlan

6 246

25 187

64 452

24.80

39.08

9.69

Upper Darling

924

4 961

11 919

18.63

41.62

7.75

Northern Slopes

5 331

32 250

81 138

16.53

39.75

6.57

Sthn Tablelands (excl Queanbeyan)

4 359

26 477

62 398

16.46

42.43

6.99

Northern Tablelands

3 936

24 472

64 465

16.08

37.96

6.11

Central Macquarie

5 130

33 045

84 554

15.52

39.08

6.07

Central Murrumbidgee

5 356

43 232

103 799

12.39

41.65

5.16

Hunter balance

4 082

34 739

90 719

11.75

38.29

4.50

Central Tablelands (excl Bathurst Orange)

1 491

13 738

33 922

10.85

40.50

4.40

866

8 685

25 085

9.97

34.62

3.45

Richmond-Tweed SD bal

5 246

56 897

161 605

9.22

35.21

3.25

Snowy

1 221

16 453

30 288

7.42

54.32

4.03

Clarence

2 935

44 487

135 766

6.60

32.77

2.16

Lower South Coast

1 219

19 269

59 292

6.33

32.50

2.06

Hastings

2 318

40 832

127 219

5.68

32.10

1.82

Far West

Bathurst-Orange

1 284

30 089

70 197

4.27

42.86

1.83

Illawarra Bal

1 485

39 268

113 508

3.78

34.59

1.31

Albury

619

20 778

48 630

2.98

42.73

1.27

Tweed Heads

283

12 378

41 030

2.29

30.17

0.69

Queanbeyan

306

17 545

36 324

1.74

48.30

0.84

SOURCE

CDATA96.

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The varying dependence of regional economies on agriculture as a source of employment underscores the simplicity of conflating the fortunes of the agricultural sector with the performance of regional economies. All too often (especially in the metropolitan media), discussion of ‘regional Australia’ is tied to the notion that the health of the farm sector drives the health of regional economies in rural Australia. Obviously there is an economic relationship between the performance of farms and the regions in which they are situated, but this relationship is not always as strong or direct as sometimes imagined. A model to analyse these issues is provided in the ‘uncoupling thesis’ advanced in the early 1990s by University of New England researchers Richard Stayner and Ian Reeve. This model suggests the economic linkage between agriculture and regional economic performance is generally weak. According to these researchers: It is true that the long-term decline in the terms of trade for agriculture has contributed to declining population and economic activity in many rural towns. Closer analysis reveals, however, that there are many other important factors resulting from changes in population and economic activity in rural towns. It is an oversimplification to couple the fortunes of agriculture with the fortunes of the towns that are located in agricultural areas.10 Stayner and Reeve measured statistical relationships between real changes in agricultural production and various sociodemographic variables for 109 NSW non-metropolitan LGAs. In finding that there was no statistical relationship between real changes in agricultural production and population growth, retail sales or employment, the researchers concluded that there is ‘very substantive evidence that the economic performance of agriculture in rural regions of NSW is relatively uncoupled from key indicators of economic and demographic change in those regions’.11 There are obvious limitations to Stayner and Reeve’s approach. Their model provides only a static and mechanistic portrayal of these relationships at only one geographical scale (local government). Their approach does not per se demonstrate causal linkages one way or another. For example, it could be the case that increased agricultural production may boost regional economic performance, but other factors (say, a downturn in the tourism industry) could more

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than outweigh this effect. At the same time, however, Stayner and Reeve’s research is important in hinting at the inter-play of two important dynamics in the Australian rural economy: the considerable economic diversity of many regional economies in Australia (diluting their dependency on the farm sector), and the considerable complexity in the geographies of farm expenditure patterns (diluting farmers’ economic relationships with their local regions). The data in Table 5.2 emphasises the validity of the first point. The following section discusses the latter.

MEASURING THE ECONOMIC FLOWS OF PRIMARY INDUSTRIES: I N P U T – O U T P U T A N A LY S I S The regional economic interactions of primary industries are, theoretically at least, measured most comprehensively through Input–Output (IO) models.12 This approach involves the preparation of transaction tables that represent the ways inputs (purchases) and outputs (expenditures) of any industrial sector are distributed among other sectors. However, caution must be exercised with the application of IO models. Their preparation is expensive, complex and dependent upon many assumptions being made about economic activity. Like any economic model their utility is dependent upon the veracity of these assumptions and, because of absent or contested data, conclusions generated from IO models are often subject to challenge. Moreover, because they measure an economy at a single point in time they are static; their assumptions may not hold once conditions change. And as Frank Stilwell has observed, IO modelling is a tool rather than a theory: What input–output analysis is not is a theory of regional economic growth: it tells us nothing about the origins of the growth stimuli and why they are more pronounced in some regions than in others.13 Nevertheless, at national and regional scales IO models can provide relevant tools to generate insights into the economic linkages associated with primary industries. For example, using commissioned IO analysis in 1993 the National Farmers’ Federation argued that although agriculture itself contributed less than 5 per cent of GDP: ‘when indirect employment is taken into account, agriculture may be

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responsible for as much as 27 per cent of total employment in the Australian economy’.14 IO applications at regional scales are also used frequently (particularly in Impact Assessments) to predict the size of indirect benefits accruing from particular projects. In Australia, considerable problems of data availability hinder the robust use of IO analysis. The ABS publishes national IO tables biannually and, at the time of writing, the most recent IO tables were those for 1996–97 (published by the ABS in March 2001).15 These national tables disaggregate the national economy into 106 separate economic sectors, and provide a basis to examine linkages and dependencies from one sector of the economy to another. Because of the level of disaggregation employed by the ABS the national tables are especially useful for considering the economic importance of primary industries. The ABS national tables disaggregate agriculture into ten sub-sectors, while mining is disaggregated into five. This enables close examination of the backward and forward linkages of key sectoral components of these industries. This potential is apparent in Figure 5.1, which illustrates diagrammatically the ABS estimation of input and output flows for the sheep industry in 1986–87 and 1996–97. The ABS estimates that in 1996–97 total on-farm turnover from sheep grazing (‘sheep production’) was $3584.5 million. As indicated in the box in the centre of Figure 5.1, this enabled payments of $235.1 million for labour (‘compensation to employees’), $94.3 million in net taxes, and $1688.3 million in the purchase of intermediate inputs. Subtracting these amounts from total production indicates that there was a return to enterprises engaged in these activities (‘gross operating surplus and mixed income’) of $1621.3 million. Backward linkages in the sheep industry (‘intermediate inputs’) are represented by the boxes at the top of Figure 5.1. For brevity, only the eight largest sectors (out of 106) are shown. The extent to which the sheep industry’s intermediate product demand for products contribute to national economic activity depends upon input–output arrangements in these sectors and, in particular, their import dependence. According to ABS estimates, the import dependence of the input sectors illustrated in Figure 5.1 varies from 44.2 per cent for basic chemicals (that is, 44.2 per cent of all basic chemicals output in Australia derives from imports) and 35 per cent for pharmaceuticals; to just 3 per cent for legal and accountancy services and zero for wholesale trade and road transport.16

LOCAL ECONOMIC DEVELOPMENT IN RESOURCE-BASED ECONOMIES

Figure 5.1 Input–Output analysis for the Australian sheep industry, 1996–97 SOURCE

ABS, Cat. no. 5209.0.

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The boxes at the bottom of Figure 5.1 represent the forward linkages from this industry. The data suggest that in 1996–97, the sheep industry contributed $1 610.8 million in direct exports (mainly live sheep or raw wool) plus inputs of $729.7 million to the meat and meat products sector (abattoirs etc) and $901.5 million to the textile fibres and yarns sector (for the processing of wool). The ABS estimated that in 1996–97 the Australian meat and meat products sector generated $10 401.3 million in production and paid $1548.2 million in wages and salaries. This industry relies clearly upon the onfarm production of livestock, including sheep. During the same year, the textile fibres sector was estimated to have generated $2136.1 million in production and paid $510.5 million in wages and salaries. Purchases of raw wool account for 42.2 per cent of the intermediate inputs in this industry. The national IO tables suggest that although primary industries contribute just 7 per cent to Australian GDP, this is a false measure of their national significance. These sectors have extensive backward and forward linkages. In part, this helps explain the considerable policy attention accorded these industries by successive governments over many years. In the case of agriculture, policy initiatives since the early 1990s have aimed to improve supply-chain co-ordination and to build new export markets. This has involved inter-agency efforts to develop holistic ‘seed-to-supermarket’ strategies connecting the interests of all players within supply chains (farmers, the transport sector, processors, wholesalers and retailers, export agencies, and agencies concerned with monitoring food quality, health and safety).17 Explicitly, this acknowledges that the importance of primary industries lies not with themselves alone, but their broader role in the economy.

HOW DO PRIMARY INDUSTRIES INTERACT WITH REGIONAL ECONOMIES? To assess the regional economic role of primary industries it is vital to appreciate the ways these activities are embedded spatially within their local regions. This includes consideration of issues such as whether farm or mining enterprises make use of local as opposed to ‘imported’ labour; if input purchases are made from local enterprises or from suppliers in other regions, or if forward value-adding is undertaken within the region or somewhere else. In the language of

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IO modelling, what matters in these instances is the size of the regional coefficient: the extent to which economic flows remain within the region.18 Furthermore, expenditures that occur within regions will then produce induced (or in the language of IO modelling ‘Type II’ effects) as the recipients of economic flows in turn make spending decisions. Unfortunately, analysis of these issues is hindered by the fact that Australia does not possess a comprehensive set of transaction tables at the State or regional scale that enable IO modelling. The ABS does not publish IO tables at State or regional scales. Other tiers of government have not addressed these data gaps in any coordinated fashion. Among the States and Territories, only Queensland has systematically prepared and published State-based IO transaction tables. The Queensland Government Statistician’s Office has published guidelines on the use of IO analysis by government agencies and, in 2001, Queensland adapted the 1996–97 ABS national IO tables for the State’s economy.19 Of the others, the Western Australian and Northern Territory Governments have funded the preparation of State/Territory-based IO models, however these have not formed part of an historical series and are not publicly available. For New South Wales, Roy Powell and colleagues at the Centre for Agricultural and Regional Economics (CARE), a private consulting firm, have been leading proponents of regional IO analysis. The absence of a co-ordinated system for preparing and making publicly accessible State-based IO transaction tables presents a major shortcoming for Australian regional analysis. This is particularly important for primary industries because the existence of such a framework would assist greatly in the examination, assessment and public debate of these industries, especially when it comes to analysing major new investments. As it is, although IO analysis is used widely by private practitioners, frequently at the regional level, this research is not always published. Without publication, the veracity of assumptions that underlie findings cannot be assessed. Consequently, analysis of these issues requires the examination of separate statistical collections and studies. The next two sections examine issues relating to the regional purchasing (inputs) and downstream linkages (outputs) respectively of Australian agriculture, followed by an examination of these same themes with respect to the mining sector.

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REGIONAL PURCHASING BY FARM BUSINESSES In the absence of comprehensive regional IO tabulations, a number of survey-based studies have attempted to measure the size and significance of farmers’ local purchasing. The most significant recent study involved a set of supplementary questions on regional purchasing administered to broadacre farmers as part of the 1998–99 ABARE farm survey. 20 Broadacre farmers’ expenditures have major impacts on local economies, especially in smaller towns. By dividing average farm expenditures by the resident populations of towns and regional centres, researchers estimate that farm expenditures are the equivalent of $12 000 per resident in small towns (with populations less than 1000). This survey also concluded that town size and road networks significantly influenced the incidence of regional purchasing.21 ABARE’s data evidently apply only to broadacre farmers. Two separate surveys of the dairy and wine grapes industries provide complementary data from other agricultural industries. Insights into regional purchasing patterns in the dairy industry were provided in a survey of 109 Bega Valley dairy farmers in 1999.22 The aim of this study was to assess possible socioeconomic impacts arising from dairy sector deregulation. The study found that 75.2 per cent of farm business expenditures by Bega Valley dairy farmers were incurred in the major regional centre of Bega. These expenditures injected an estimated $43.0 million into this town during 1999, the equivalent of $288 600 per dairy farmer. Expressed in relation to the town’s population, these expenditures were the equivalent of $10 383 per Bega resident. In the wine grapes industry, a representative survey of 24 grape growers in the Griffith–Leeton region of the NSW Riverina for the 2000 vintage indicated that local expenditures were $198.72 per tonne of production. Extrapolation of these results suggests that MIA wine grape growers made local expenditures of at least $27.3 million. Given that the farm-gate value of MIA wine grapes was $60.5 million in 2000, this indicates that local expenditures constitute the equivalent of almost 50 cents in every dollar of wine grapes sold in the MIA.23 These studies highlight that business purchases by farmers make important contributions to local towns. For regional policy practitioners, however, perhaps a more pertinent question is

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whether the size of these economic flows is changing over time. If farmers are reducing their dependence on local regions for their business purchases, this bodes ill for these economies. In this regard, two elements of change can be postulated. First, anecdotal and indirect evidence suggests that farmers are redirecting their purchases within regions, from smaller to larger centres. This is a component of the so-called ‘sponge centres’ effect whereby, because of improved mobility and economic change, larger regional centres have taken trade from nearby competitors. Policy responses to these trends are much disputed. On the one hand, some researchers and practitioners advocate capacity-building initiatives in small towns to retain their social fabric such as Main Street programs, while others have argued that small town marginalisation is inevitable and, in terms of economic productivity and competitiveness, difficult to defend. 24 Second, in some cases local regions may be bypassed completely as farmers purchase supplies directly from capital cities or even, in this era of e-commerce, direct from overseas. The absence of longitudinal analyses of farmers’ spending patterns makes it difficult to gauge the extent to which these practices may occur. The surveys cited above suggest substantial proportions of farm business expenditures continue to be made at local levels. However for some expenditure categories, particularly large capital purchases, there may be increasing levels of regional expenditure leakage. Changing farm size would seem to be a critical factor for changing patterns of farm purchases. Because of their abilities to exploit economies of scale in purchasing, larger farm enterprises intuitively may be expected to have higher propensities to make significant outof-region purchases. Over recent years there have been considerable changes to average farm sizes within Australia although, because of changes to ABS definitions of what constitutes a ‘farming enterprise’, these are not easily measured.25 Table 5.3 illustrates changes for all farms from 1996 to 2000. A general pattern of increased scale production is apparent from these data. These trends are revealed also when focusing on the traditional mainstay of farming in Australia’s inland, the grains and livestock sector. Between 1995 and 2000, the distribution of grains/livestock farms became increasingly ‘topheavy’. In 1995, farms with turnover greater than $500 000 accounted for 3.41 per cent of farms in these sub-sectors; by 2000 they accounted for 7.22 per cent (Table 5.4).

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Table 5.3 Number and percentage of total farm businesses by size of turnover, Australia, 1996–2000

$ 22 500 – $ 49 999 $ 50 000 – $199 999 $200 000 – $499 999 $500 000 and over All

1996 No. 23 362 56 177 26 665 9 310 115 514

1998 % 20.2 48.6 23.1 8.1

No. 22 463 45 036 25 125 11 642 104 267

2000 % 21.5 43.2 24.1 11.2

No. 19 171 46 526 25 796 12 323 103 815

% 18.4 44.8 24.8 11.9

ABS 7113.0. Only includes establishments with Estimated Value of Agricultural Operations (EVAO) greater than $22 500 annually. SOURCE NOTE

Table 5.4 Distribution by turnover of grains and livestock farms, Australia, 1995–2000

1995 1996 1997 1998 1999 2000

Less than $50 000 43.74 41.53 40.43 40.22 42.81 40.13

$50 000$199 999 39.40 37.01 34.87 35.33 32.79 35.42

$200 000$499 999 13.46 16.22 17.94 17.72 17.21 17.23

$500 000 and over 3.41 5.24 6.77 6.73 7.19 7.22

Total % 100.00 100.00 100.00 100.00 100.00 100.00

ABS 7113.0. Farm enterprises in the sheep, sheep-grains-beef cattle, grains, sheep-beef, and beef sub-sectors. SOURCE NOTE

In some agricultural industries the trends are clearer than in others. In dairying for example there has been an unambiguous trends towards fewer and larger farm enterprises.26 A regional perspective on this issue is illustrated by Andrew Davidson’s study of dairy restructuring in Dungog Shire, in the NSW Upper Hunter. Between 1990 and 1995, the number of dairy farms with herds of less than 70 cows fell from 21 to 6, whereas the number of farms with herds of more than 100 cows increased from 24 to 29.27 This restructuring is significant because it is estimated that one adult can effectively manage about 80 cows. Hence, the shift to larger dairy herds implies the use of more than one farm worker, possibly through wage labour. The restructuring of farming can also exert an impact upon the incidence of regional purchasing. As farming is inserted more tightly within vertically co-ordinated production chains, it is often the case

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that end users and large corporations dictate the type of inputs used in on-farm operations. Contract farming in the horticulture sector for example, has been associated generally with a trend towards a more exhaustive detailing of input and management specifications within legal instruments.28 At times, this may lead to regional agrisupply businesses being bypassed for direct purchases from large processing firms. In the Australian processing tomato industry for example, between 1995 and 2000 the seeds subsidiary of H.J. Heinz & Co. increased its market penetration from 25 per cent to 72 per cent and, because growers purchase Heinz seeds from the company itself, local seeds suppliers lost considerable business.29

CHANGING REGIONAL INTERACTIONS: MINING Our knowledge of the regional economic embedding of mining is far superior to that of agriculture. Mining activities have been restructured dramatically in recent years. Within the sector there has been a set of paradigmatic changes with respect to mine management and labour practices. The contemporary mining sector now relies heavily on capital-intensive mining processes benchmarked to supposed ‘world best practices’, accompanied by the contracting-out of vast swathes of mining operations. In general, these processes have weakened the interactions between mining operations and the regions in which they are located. A brief example of the coalmining cluster in Singleton Shire, in the NSW Upper Hunter illustrates the types of interactions that can exist between primary industries and regional economies. The Singleton region is one of the most productive coal mining areas of the world, producing approximately 65 million tonnes of coal from 24 mines. In terms of backward linkages, although the specialist machinery used in the mines is purchased from outside the region, Singleton Shire has benefited from job opportunities in equipment servicing, repairs and parts supply. The Mount Thorley and Maison Dieu industrial estates in Singleton accommodate over 100 businesses linked to coalmining. In terms of forward linkages, the availability of coal has led to the local development of the electricity generating industry. NSW’s two largest electricity generators, Bayswater and Liddell, are located near Singleton. Approximately 20 per cent of the region’s coal production is purchased for use by these generators.

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The forward and backward linkages of the coal industry in Singleton Shire clearly generate considerable economic benefits for the regional economy. The size of ‘Type II’ induced effects from these expenditures is influenced, however, by the extent to which income earners (local businesses and wage and salary earners) spend monies within the region. In the case of Singleton, two issues here are noteworthy. First, the coal industry has a high propensity to employ highly paid professionals in fields such as engineering, geophysics and equipment operation. Many of these employees, in turn, tend to be relatively mobile and have high savings ratios. Often they are employed as sub-contractors, without permanent links to the region. These factors tend to blunt the size of local spending from wages and salaries. Second, anecdotal evidence suggests that a number of the employees and sub-contractors from coalmines in Singleton Shire are commuters who live in coastal and lakeside areas of the Hunter (Singleton Shire is approximately one hour’s drive from Lake Macquarie). This also tends to reduce regional economic flows to Singleton emanating from the coal industry. The point is, the coal sector in Singleton has important forward and backward linkages but the pressures of ‘global best practice’, especially in relation to replacing labour with capital and replacing permanent employees with contractors, diminishes these flows. The experiences of mines in northern Australia provide considerable evidence of these processes in action. Because of the often-controversial nature of mining in northern Australia, these issues have attracted research. In northern Australia, the benchmark research examining the regional interactions of large-scale mining operations was the study of the Ranger Uranium Mine by Ciaran O’Faircheallaigh.30 Through access to Ranger’s financial accounts, O’Faircheallaigh was able to document employment and purchasing practices by the company. These data led him to conclude that the multiplier effects of Ranger’s activities created approximately 0.7 additional jobs in the Northern Territory for every one at the mine site. This was a significant finding in terms of wider debates on mining at the time, because the Northern Territory Government had claimed previously that the Territory’s benefit from such projects was ‘four to five jobs for every [direct] one in mining’. Furthermore, O’Faircheallaigh suggested that Ranger’s local purchasing was also small. Local (Northern Territory) purchasing expenditures were equivalent to between 18 and 35 cents for every dollar of uranium sales from Ranger.31

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Later research has suggested that O’Faircheallaigh’s findings for Ranger are at the upper limits of potential regional economic benefits from northern Australian mining ventures. Research on mines at Narbalek, Tennant Creek, Gove and Groote Eylandt confirm that the employment multiplier of mining ‘is certainly not above 1.75’.32 For many mines, it is much lower. The Mount Todd gold mine near Katherine was estimated to generate an employment multiplier of just 1.17.33 The efforts of independent academics such as O’Faircheallaigh, utilising access to corporate records, makes an important contribution to debates over the regional economic impacts of mining. At times, regional development authorities and ‘boosterists’ construct discourses about mining that may artificially inflate the sector’s regional effects. Poorly calibrated IO models may also serve to exaggerate the likely impacts of mine development. These tendencies were apparent in the 1993 development of the McArthur River lead/zinc mine near Borroloola in the Gulf of Carpentaria, where a relatively sizeable employment multiplier was used to estimate the mine’s impact on the Territory economy. The EIS authors suggested that the mine’s operational phase (involving 240 mine site workers) would produce for the Northern Territory a further 226 indirect jobs, suggesting an employment multiplier of 1.94. Not only was this estimate greater than that suggested by comparable research, the fact was that, as a state-of-theart fly-in fly-out (FIFO) mining venture with minimal value-adding or transport linkages in the Territory, this mine could be expected to generate substantially lower multiplier impacts than other northern Australian mines. A review of the EIS, involving financial analysis and extensive surveying of local businesses, re-calibrated the EIS multiplier to a maximum of 1.4 throughout the whole Northern Territory, and 1.2 for the local Borroloola region.34 Care needs to be taken also in concluding how direct and indirect employment demand will affect local job markets. Many regions in which resource developments occur are characterised by high levels of unemployment. There is an obvious temptation to link potential job prospects arising from mining with the need to generate job opportunities for unemployed local residents. Increasingly however, the mining industry demands highly specialised labour. This means that local residents may be bypassed for employment. In northern and remote areas in particular, employment opportunities in resource (and construction) industries are associated with in-migration of

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short-term residents (often contract employees) with high saving ratios. A study of the construction of the massive Tindal RAAF base in the Northern Territory during the mid-1980s illustrated that many of the employment benefits were accrued by newly arrived residents who ‘moved on’ following the project’s completion.35 Two dominant trends in the contemporary mining industry spotlight the tendencies towards relatively weak regional economic interactivity. The first is the shift to fly-in fly-out (FIFO) mining. A recent survey of FIFO in Western Australia indicates that this practice occurs in 44 of WA’s 105 operating mines, representing 15–20 per cent of the State’s mining workforce.36 Under FIFO, the working hours of employees are heavily controlled, and the non-working hours de-regionalised. FIFO mines achieve cost economies through their ability to provide accommodation and catering efficiently, and to adopt staff rostering systems whereby employees and contractors work long but intense shifts over successive days before being flown home for short breaks. Accompanying FIFO are geographically distant networks for the provision of catering and other supplies. Contracts for the provision of catering or accommodation services within FIFO mines require sophisticated logistics. A relatively small number of specialist international catering companies have developed to undertake these functions. In the case of FIFO mines in northern Australia, these companies usually base their operations in Darwin, Perth or Brisbane. Foodstuffs are delivered to mine sites via either refrigerated trucking or by air. Catering staff are flown in and work shifts like those of the mineworkers. These practices frequently mean there are few opportunities for local regions to receive significant economic benefits from FIFO. At best, regional development organisations may be able to help capture small contracts for local businesses (such as landscaping, minor repairs or laundry). In some instances this has been facilitated through ‘adjacency principle’ clauses in development consent agreements, requiring mine operators to seek to have local businesses tender for contracts, where possible. The Western Metals’ lead/zinc mines at Cadjebut/Pillara, in the remote Kimberley near Fitzroy Crossing, illustrate the regional development contradictions posed by FIFO mining. It has been estimated that approximately 18 per cent of capital expenditures and 35 per cent of operational expenditures from these mines occur in the Kimberley. In 2000, Western Metals engaged approximately 450 employees and contractors, only four of whom lived in the nearby

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town of Fitzroy Crossing. The remainder were flown in for their shifts from either Perth or Broome. In 1998–99 the mines made $142 million of operational expenditure, of which only $13.5 million was spent on the purchase of goods and services in the Kimberley.37 The second trend in the mining industry encouraging relatively weak regional economic interaction is outsourcing. Over recent years there has been dramatic growth in the extent to which the mining industry has outsourced its demand for various services. Between 1968–69 and 1994–95 the percentage of mining sector operational expenditures made from commission work, contracting and subcontracting increased from 5 per cent to 17 per cent. Whereas once mining companies could be described as entities that operated mining ventures, it is increasingly the case today that their primary role is to co-ordinate project activity that is contracted out to specialist providers. In a modern Australian mine, it may be the case that geological services, transport, labour management, catering, trucking, explosives, native title and legal services are all outsourced to specialist providers. These trends have important implications for regional development because, as Kevin O’Connor and Lorna Kershaw observe, there are significant differences between the geographies of the ‘mining services’ industry and the wider mining sector. Whereas mining employment is concentrated heavily outside the capital cities (in 1991, 82 per cent of employment in the mining sector was located in non-metropolitan centres), the mining services industry conversely is highly centralised within the capitals. In 1993, 77 per cent of mining services offices were located in metropolitan centres. Consequently: The mix of job opportunities in some parts of non-metropolitan areas, traditionally very dependent on work in the mining industry, may tend to become more narrowly circumscribed, as many of the jobs, especially those involving complex tasks, will be provided by firms hiring labour in capital city locations.38

M OV I N G F O RWA R D : W H AT C A N R E G I O N S D O ? Clearly the restructuring in agricultural and mining industries can pose major dilemmas for regional practitioners. In many parts of the nation, especially inland, these primary industries continue to be major regional economic contributors and, the reality may be, there

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are few significant alternatives. The following themes provide a basis for regional strategy development with respect to primary industries.

P R O D U C T D I F F E R E N T I AT I O N A shift towards product differentiation has been a key theme in recent global restructuring of primary industries. For both the agricultural and mining sectors, this has involved the fragmentation of markets so that outputs are required to meet an increasingly exacting set of specifications by end users. At a global level, these tendencies have helped generate extensive intra-industry trade so that, to take the beef industry as an example, a nation such as the US has become both a significant importer and exporter of beef products. The US imports certain grades of beef (notably, hamburger mince) and exports other grades. These tendencies impose a new logic within world trade. It is increasingly possible to ‘sell coal to Newcastle’ so long as the specifications are different from those of local products. These trends hold major implications for primary industry regions. Traditionally, Australia’s primary industries have earned much of their export income from the sale of bulk commodities. During the past decade however the export prices of bulk commodities have been depressed through increased global production and, in the case of agriculture, subsidisation by competing nations. Bulk commodity sectors have thus faced problems of low returns and market vulnerability. Clearly, export market vulnerability is lessened where products are less readily substituted by those from a competitor. The grains industry, probably the example par excellence of a traditional bulk commodity sector, highlights the importance of product differentiation and market fragmentation. Over the past decade end users (notably food processing companies) have demanded considerable changes in the ways they purchase grains. This has involved contracting specific varieties and aligning payment rates more closely to key specifications (for example, protein levels). These changes have been accompanied by the removal of the Australian Wheat Board’s monopoly on domestic marketing, greater flexibility in export selling options, and widespread use of the futures markets by industry participants. Taken together, these developments construct significant opportunities for grains growers to move out of the production and sale of bulk grains, and into specific market niches where increased returns are available.

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For regional development practitioners, these kinds of opportunities can be translated into gains at the regional level via strategies of rural cooperation and marketing. Over the past decade a number of regionalbased grains co-operatives have been established in the Eastern Australian wheat belt. In most cases these have involved grain growers choosing to pool their output within co-operative vehicles with the intention of generating viable quantities of specialist output, and thus generating higher returns.

REGIONAL IDENTITY For some primary products, it is also possible to add value through strategies that seek to embed regional identity within particular commodities. Obviously some products are more amenable to the attachment of regional identity than others. In agriculture, wine provides the best example of a differentiated product with highly recognisable regional attributes. Over the past decade however the concept of regional attachment has widened progressively to cover a greater breadth of food products. The example of Ilabo lamb (Ilabo is in the Southern Tablelands of NSW) provides a model of how regional identity can be attached to a food product with traditionally minimal regional branding. The question of scale is central to regional identity strategies. Because of the generally small size of local governments within nonmetropolitan Australia, it is frequently the case that collaboration is required for the establishment of regional identity. In Central West NSW for instance, three local government areas in the vicinity of Orange co-operated to build a regional food and wine identity. More ambitious still, in Western Victoria the three local governments of Greater Bendigo, Loddon and Gannawarra have developed a regional marketing strategy under the umbrella identity of ‘The New Mediterranean’. VA L U E A D D I N G Value adding is often promoted as a means of generating regional income. In general, there are sound economic grounds for promoting the value adding of primary commodities. In agriculture, whereas trade in bulk commodities has grown only slowly over recent years, global trade in processed foods has been rapid (in the 1990s, it grew at 14.5 per cent in real terms per annum).39 Value adding can also reduce production vulnerability, by lessening regional reliance on bulk, undifferentiated products. Furthermore, it is not the case that

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value-adding strategies need necessarily involve only large companies. Analysis of the Australian food processing sector indicates that much production is in the hands of small and medium-sized enterprises, often run as family businesses. Nevertheless, the extent to which value can be added to primary products within their production regions varies considerably between different commodities and regional environments.

6

SUNRISE INDUSTRIES: ENGINES OF REGIONAL GROWTH?

Terms like the ‘new economy’, the ‘knowledge economy’, the ‘information economy’, the ‘digital revolution’, ‘emerging industries’, ‘high tech’ and ‘sunrise industries’ are all used by the media, government and business leaders to identify a new stage in the economic development of Australia. This stage promises new types of employment in new types of industry, to replace the jobs and incomes lost by the old economy. The terms identify different, but overlapping, aspects of economic change in Australia. A major characteristic of the new industries and jobs is that they are heavily based on the development, transmission and application of new knowledge — about products, services, markets, technologies and management. Knowledge, learning and innovation are central to the concept of the ‘knowledge economy’. However, some writers apply the term to all industries that use knowledge, others confine it to those which use ‘new knowledge in order to create more new knowledge’,1 while some use the term to describe the whole economy. The Commonwealth Department of Industry, Tourism and Resources, for example, defines a knowledge-based economy as ‘an economy in which the production, distribution, and use of knowledge is the main driver of growth, wealth creation and employment across all industries’.2 They consider that in a truly knowledge-based economy all sectors are knowledge-intensive, not just those associated with high technology industries. The management of this knowledge has increased the importance of information services in the economy, giving rise to the term ‘information economy’. The development and management of information has in turn been greatly assisted by the application of computing technologies — the ‘digital revolution’.

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Because many of these industries are new they are called ‘emerging’ or ‘sunrise’. However, not all sunrise industries are high technology, and not all are new. Tourism, for example, is a sunrise industry because of its rapid growth in recent years, but it is neither high technology nor new. The growth of new industries, and the decline of old ones, is uneven in its regional impact. Some regions gain jobs and others miss out or even lose employment. In the United States writers like Kotkin describe how the digital revolution is reshaping the economic and social geography of that country.3 Is something similar happening in Australia? What are the sunrise industries of the Australian economy? Where are these industries located, and why? Will new industries simply add to the dominance of Sydney and Melbourne, and further disadvantage regional and rural Australia? Can regional developers influence where new industries grow? This chapter examines these questions. First, however, we examine the old manufacturing economy, and the extent to which it still has an important role in regional development.

THE ‘OLD’ MANUFACTURING INDUSTRIES A common view in Australia is that manufacturing is dying. This can be an empirical observation, based on the loss of employment in manufacturing since the 1970s. It can also be a theoretical observation, based on the belief that manufacturing is part of the ‘old’ economy and that it is not significant in a post-industrial world in which services are the engine of growth. Both these views are incorrect. It is true that employment in manufacturing has declined, from 1.278 million in 1978 to 1.141 million in 2000. It is also true that the share of manufacturing in national GDP has declined, from 18.6 per cent in 1978 to 13.0 per cent in 2000. Yet over the same period the value of manufacturing output in Australia (in constant prices) increased from $51.0 billion to $75.9 billion.4 Furthermore, the real growth of manufacturing is underestimated by these figures, because some work that in the 1970s was carried out within manufacturing establishments is now undertaken by firms in the service sector, in a range of activities from cleaning to maintenance, accounting, R&D, and legal services.5 The view that manufacturing is no longer important in postindustrial economies is not borne out by the recent experience of developed countries. Australia in fact has a lower share of GDP

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produced by the manufacturing sector than most developed countries, as well as a lower rate of manufacturing growth in the 1990s, and some see this as a source of weakness rather than strength.6 O’Connor argues that manufacturing ‘still lies at the heart of the value-adding process that generates income and wealth’,7 while National Economics contends that ‘advanced manufacturing processes are the vehicle in which new technologies, skills and experience are introduced into an economy, which are then dispersed over other manufacturing and service industries to lift economy-wide productivity’.8 Fingleton, a former editor of Forbes magazine, argues that in the US modern manufacturing generates more jobs, higher wages and more exports than post-industrial services.9 Manufacturing is also a major source of the growth of the service industries of the post-industrial economy.10 O’Connor writes that: The post-industrial perspective could justify the closure of factories and the reduction of manufacturing as services were expected to create jobs. In some areas such as tourism and personal services that might be so. In parts of finance too, new products have emerged that add value directly as a service. However, most service sector activity is in some way part of the process of making things. It may begin the process (with market research and industrial design), be involved with the messy stages of assembly (process engineers, material scientists, structural engineering), help again in marketing (advertising) and distribution (logistics) and have a say in the effect of the product (environmental management), or negotiate regulations about its sale or use (legal firms). This understanding of the modern way of creating value has a very special implication for the development of regional and national economies. Rather than imagining that manufacturing does not matter any more and that services will fill the gap created by its demise, this perspective recognises that only where manufacturing has been nurtured will the service jobs emerge.11 In the view of many experts, therefore, manufacturing still matters, and is still an important component of many regional economies. Since the 1970s manufacturing in Australia has undergone a major process of restructuring. This has been caused by a number of factors, mainly the combination of low productivity (in turn the result of dependence in the 1950s and 1960s on a small and pro-

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tected domestic market), reduced tariff protection and increased international competition after 1974. Other factors include the availability of better investment opportunities in minerals, energy, office construction and tourism, and the growth of global supply chains, which make it possible for some stages of production to be located outside Australia. The response of manufacturing firms has been to rationalise and consolidate production in fewer plants, invest in new technology to raise productivity, shift capital to more profitable activities, or shift production to other countries.12 The effects of this restructuring on Australia’s regional economies depend partly on the level of industrialisation they had achieved by the early 1970s. The post-World War II growth of manufacturing was concentrated in Sydney, Melbourne and Adelaide, and these cities therefore experienced the largest absolute and proportional losses in employment.13 Manufacturing restructuring also affected the three steel cities of Newcastle, Wollongong and Whyalla, two of which were also shipbuilding centres, and a number of smaller regional cities and towns scattered across Australia, all of which have experienced increasing levels of unemployment and rising proportions of disadvantaged households.14 Brisbane and Perth, on the other hand, had failed to develop the industries that were now losing jobs, and with their strongly growing State economies were able to increase manufacturing employment. In fact regional economies dominated by export industries, like Western Australia, were boosted by the reduction in tariff protection because it lowered the costs of these industries.15 Despite this restructuring there are only limited signs of a shift in the composition of manufacturing towards more skill-intensive and higher value products. Apart from a decline in the share of output from textiles, clothing and footwear, and a smaller rise in output share from the metal products, and the food, beverage and tobacco industries, the shares of each subdivision of manufacturing remained fairly stable through the 1980s and 1990s.16 The share of business sector value-added contributed by high technology industries in 1996 (0.9 per cent) was one-third the OECD average, and the share from medium-high technology industries (3.2 per cent) was half the OECD average.17 This failure to transform the composition of production means that Australian manufacturing continues to be concentrated in low- and medium-technology industries, many of which are mature or declining. As a consequence, Australia imports a higher

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percentage of high and medium technology-intensive manufactured products than the OECD average, such as office and computing equipment, chemicals, communications equipment, motor vehicles and machinery, and is missing out on the higher incomes and skills generated by the newer industries. These industries manufacture the higher value, knowledge-based products that are the fastest growing in world production and trade. Australian manufacturing also lags behind other developed countries in investment in R&D and in business expenditure on innovation. On the other hand, National Economics believes that the major manufacturing production regions in Australia are being transformed. The Newcastle (NSW) region is developing service-based industries such as tourism, but manufacturing remains central to the region’s future, in areas such as aluminium, metals and engineering, shipbuilding, energy technologies, and a reconstructed steel industry. Wollongong (NSW) is seeking to diversify from steel into engineering and advanced manufacturing, while Gladstone (Qld) is pursuing new energy and mineral processing industries. North and western Adelaide is seeking to establish a base in advanced manufacturing, Fremantle–Kwinana (WA) is developing fabrication and maintenance facilities to service the State’s resource projects, while Ipswich (Qld) is targeting the aerospace industry. Meanwhile, Melbourne appears to be consolidating its position as the dominant manufacturing city in Australia, with 17.3 per cent of its workforce employed in this sector in 1996, compared with Adelaide (15.6 per cent), Sydney (12.8 per cent), Brisbane (12.0 per cent) and Perth (10.9 per cent).18 Melbourne’s advantages over Sydney as a location for manufacturing include lower costs for industrial land and workers compensation premiums, a possibly better transport infrastructure, strong research and development institutions, and the pro-business policies of the Kennett Government from 1992 to 1999. The city’s main disadvantage is its reputation for union militancy.19

MAKING C ARS The automotive industry provides a case study of an ‘old’ manufacturing industry that has been transformed. The first Australian motor vehicle was built in 1897.20 The industry developed in the early 1900s making bodies and assembling cars from imported parts, and in 1918 Holden Motor Body Builders was established in Adelaide.

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After the end of World War II the Federal Government invited firms to manufacture a complete motor vehicle in Australia, and the first to produce a local car was General Motors-Holden, formed through the takeover of Holden by the US firm General Motors, in 1948. They were followed by Ford, Chrysler, Volkswagen and British Leyland, operating under government policies that protected them from imports. Volkswagen ceased production in 1968 and British Leyland in 1974, but these companies were replaced by Toyota and Nissan who established manufacturing plants in Melbourne. Mitsubishi bought the Chrysler factory in Adelaide in 1980. The industry was heavily protected from international competition, had high cost levels and low productivity by world standards, and by the 1980s exports had almost disappeared. Despite this protection, imports increased their share of the domestic market from 8 per cent in 1965 to 23 per cent in 1975, and changes in the structure of the global automotive industry put increasing pressure on Australia to restructure its local industry. Under a series of Federal Government plans from 1979 onwards tariff protection was steadily reduced, import quotas abolished, the local content scheme abandoned, and incentives provided to invest, innovate and export. The governments of Victoria and South Australia also provided incentives for manufacturers to invest in new production capacity. These policies exposed the industry to greater import competition (although the decline in protection was cushioned by the fall in the value of the Australian dollar which made imported vehicles more expensive), but also assisted it to adjust to this competition. The result has been a major transformation of the industry which has gone from five manufacturers producing 13 models at eight plants in 1985 to four manufacturers producing five models (and derivatives of these models) at four plants. Despite import competition, total vehicle sales in 2002 were expected to be nearly double the level of the previous decade, while exports now account for more than 30 per cent of production compared to less than 10 per cent a decade ago. Productivity and quality have both improved significantly, R&D expenditure as a proportion of sales is double the average for the manufacturing sector as a whole, and the industry has a growing international reputation for its tooling and design services. However, this successful restructuring has been achieved at the cost of a considerable loss of jobs, with total employment in the motor vehicle and parts industry falling from 77 485 in

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1976–77 to 54 487 in 1999–2000. There are still considerable problems in the components industry, and concerns over its ability to meet the needs of the vehicle manufacturers.21 Restructuring of the automotive industry has led to a greater geographical concentration of production. Since 1980 General Motors has closed its plants in Sydney and Brisbane, while Ford closed its Sydney plant in 1994. The four producers now manufacture complete vehicles in Melbourne and Adelaide, and have additional engine, stamping or casting plants in Melbourne, Geelong (Vic) and Adelaide. There are also more than 200 firms producing automotive components (down from a peak of about 500), many in Melbourne and Adelaide but some in Sydney, Geelong, Ballarat (Vic), Wodonga (Vic), Taree (NSW), Launceston (Tas) and Toowoomba (Qld). The vehicle producers source nearly three-quarters of their component supplies from these firms. Table 6.4 shows the extent of concentration of vehicle and component manufacture in Victoria (Melbourne and Geelong) and South Australia (Adelaide) in 1999–2000. This story of the automotive industry illustrates several themes. These include the pressures on Australian manufacturing, both external and internal, the extent of restructuring, and the outcomes in terms of increased production, productivity and exports, although at the cost of a significant loss of employment. It shows how an old industry has become a potential emerging or sunrise industry based on the application of knowledge, innovation and new technology.22 It also illustrates the important role of national industry policy in assisting the process of successful adjustment. While there is little that local or regional development agencies can do to encourage investment by the major producers in large industries like the automotive industry, they can seek to maximise the multiplier effects to their region of a major manufacturer by assisting local firms to gain supply contracts for goods and services. State governments have more scope, and can attempt to influence the investment decisions of firms to maximise the benefits to their state.23 This example also illustrates the way restructuring produces increased geographical concentration in an industry, as manufacturers consolidate their operations at the most efficient locations. Finally, it shows that Australian manufacturing is not disappearing and still matters, particularly to the economies of cities like Melbourne, Adelaide and Geelong.

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SUNRISE INDUSTRIES Sunrise industries are those that have either experienced rapid growth in recent years, or are considered to have growth potential. There is no definitive list of these industries for Australia, and the one below is compiled from several sources.24 These are mostly relatively new industries, but some are old ones that have entered a new phase of expansion, such as tourism, the food industries or the automotive industry. A U S T R A L I A ’ S P OT E N T I A L S U N R I S E I N D U S T R I E S

Tourism Food industries Viticulture Aquaculture Mining services Environmental industries Finance

Research and development Pharmaceuticals Health care Lifestyle goods and services Biotechnology Nanotechnology/ microtechnology Business and professional services

Education and training Information and communication technologies and services Advanced manufacturing (including automotives and parts) They are all heavy users of knowledge and of information and communication technologies. They are of interest in regional development because of their growth potential, and because their capacity to export goods or services outside their region makes them drivers of regional growth. IBIS World, an economic and business research service, compiles an annual list of the 50 fastest growing industries, and this is summarised in the box below. Some of these may be fast growing only temporarily, but the list does show that high growth is not confined to high technology or new economy industries. T H E D I S T R I B U T I O N O F T H E 5 0 FA S T E S T G R OW I N G I N D U S T R I E S , 1997–2001

Agriculture, agricultural processing and services to agriculture (7 industries) Fishing (1 industry)

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Mining, mineral processing and energy (7 industries) Manufacturing (7 industries, 2 in the supposedly dying clothing industry); Wholesale and retail trade (4 industries) Transport (1 industry) Communication services and media (4 industries) Finance and insurance (10 industries) Property and business services (5 industries) Cultural and recreational services (4 industries) SOURCE

IBIS World (2002) 50 Fastest Growing Industries, IBIS World Pty Ltd, Sydney.

TO U R I S M Tourism became a boom industry in the 1980s, with international visitor arrivals accelerating rapidly, particularly as the Japanese and then other Asians discovered Australia as a tourist destination.25 In 2000–01 the tourist sector accounted for 4.7 per cent of gross domestic product and employed an estimated 551 000 people, or 6 per cent of the national workforce. International visitors spent $17.1 billion on goods and services in Australia, representing 11.2 per cent of Australia’s export earnings. Tourism has been the nation’s largest export industry since the late 1980s. Domestic tourists spent three times this amount, and combined the two groups make a significant contribution to the economies of the capital cities and a number of regional areas.26 If the indirect economic effects of tourism (the income and employment generated by the expenditure of those who directly gain their income from tourism) are included, the Bureau of Tourism Research estimates that in 1997–98 the industry contributed just over 8.5 per cent of national GDP, and generated 853 500 jobs, or 680 700 equivalent full-time jobs.27 Since many of the things that attract tourists relate to the natural environment or to cultural heritage and are located outside the capital cities, tourism is seen as one of a limited number of potential growth industries in much of regional Australia.28 Table 6.1 presents data on expenditure by domestic and international visitors in 1998 for all regions in which the combined expenditure exceeded $200 million. The data for international and domestic expenditure are not strictly comparable, but provided they are treated as estimates they can be used to present a picture of the

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regional distribution of tourism in Australia. A more significant complication is that international visitors include not only those on holiday, but also those visiting friends and relatives (VFR), business visitors, students, and people visiting for medical treatment and other reasons.29 The expenditure data therefore relate to visitors rather than to tourists as strictly defined, but the boundaries between the different categories of visitor are blurred, and from the viewpoint of regional development a visitor is a visitor, regardless of purpose.30 There are several patterns in the tourist expenditure data shown in Table 6.1. The expenditure per visit for both types of visitor is higher in the capital cities and resort-style destinations, and low in many rural regions. Sydney is the dominant visitor destination, especially for international visitors, which is not surprising given its international profile, its attractions,31 and its place as Australia’s main gateway for air transport. International visitor expenditure is heavily concentrated in the capital cities, and in the four regional areas of the Gold Coast, the Sunshine Coast, Tropical North Queensland and Central Australia.32 These latter destinations are all heavily marketed, high-profile tourist destinations. Domestic visitors are also concentrated in the capital cities and coastal regions, but they are dispersed over a much wider number of regions than are international visitors. They are the most dispersed in Queensland and the most concentrated (in the capital city) in South Australia and Victoria. Domestic visitors are therefore of much greater significance for tourism in most non-metropolitan regions than international visitors. Table 6.1 Estimates of expenditure by domestic overnight visitors and international visitors, 199833

2 2 1 1

977 557 708 452 994 687

Expenditure per visit ($)

($m) 5 559 3 908 2 305 1 899 1 664 1 263

361 417 542 361 445 622

International visitors Expenditure per visit ($)

Sydney, NSW Melbourne,Vic Gold Coast, Qld Brisbane, Qld Perth,WA Tropical North, Qld

Domestic Visitors

Total expenditure ($m)

1. 2. 3. 4. 5. 6.

Total expenditure

Total expenditure ($m)

Region

2 582 1 351 597 447 670 576

1 202 1 374 697 710 1 376 818

SUNRISE INDUSTRIES: ENGINES OF REGIONAL GROWTH?

7. Adelaide, SA 8. Sunshine Coast, Qld 9. Canberra, ACT 10. South Coast, NSW 11. Hunter, NSW 12. Mid-North Coast, NSW 13. Central West, NSW 14. Northern Rivers, NSW 15. Darwin, NT 16. New England/ North West and Outback, NSW 17. Geelong and Peninsula,Vic 18. Holiday Coast, 34 NSW 19. Alice Springs, Macdonnell and Petermann, NT35 20. Northern, Qld 21.Western,Vic 22. South West,WA 23. Greater Hobart, Tas 24. Illawarra, NSW36 25. Hervey Bay/ Maryborough, Qld 26. Murray, NSW 25. Kimberley,WA 27. Snowy Mountains and Capital Country, NSW 28. Central Coast, NSW 30. Fitzroy, Qld 31. Darling Downs, Qld 32. High Country, Vic37

• 117

1 226 1 145

1 032 1 056

434 439

194 89

696 494

737 719

622 689

332 266

115 30

552 464

639 590

575 573

238 271

64 17

833 202

516

502

230

14

398

443

408

218

35

208

430 415

380 397

726 206

50 18

319 367

402

371

147

31

708

396

381

322

15

194

381

251

728

130

286

365 361 354 346

319 350 338 298

398 206 264 382

46 11 16 48

357 111 242 619

318

254

195

64

1 304

309 305 293 287

245 297 278 355

229 220 666 280

39 8 15 8

247 322 244 213

286

279

193

7

276

273 253

245 239

253 202

28 14

250 511

230

221

203

9

400

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

Tourism has a number of attractions for regional economic developers, although it needs to be recognised that not all regions have tourism potential. It is the most decentralised of the sunrise industries, builds on the natural environment and cultural heritage attractions of many regional areas, is labour intensive, and can create jobs not only directly serving tourists but also in a range of related service, construction and manufacturing industries. It helps to diversify local economies and support the existing infrastructure, and can pay for the development of new infrastructure that in turn may help the establishment of other industries. Cairns provides an outstanding example. Originally a service centre for mining, timber, agriculture and fishing, the growth of national and international tourism has enabled Cairns to become a major centre for air transportation. In turn this has made possible the export of high quality tropical horticultural produce, a role as a base for flyin fly-out mining operations, a location for conventions, and a potential role in education and training for overseas students. Like several other tourist and retirement regions, Cairns is now using its infrastructure and lifestyle attractions to develop knowledge-based industries, and the city’s economy is no longer dependent on the health of the agricultural and mining industries of the region. The relationship between city and hinterland may in fact have been reversed; Cairns is now a growing market for horticultural products from its hinterland, while the hinterland is trying to attract more tourists to visit during their stay in Cairns.38 However, the conjunction of events that created Cairns as a tourist destination, including the role of Japanese investment in financing the infrastructure and the role of the Cairns Port Authority and Qantas in developing Cairns airport as an international hub, is unlikely to be repeated elsewhere in Australia.39 It is important not to overstate the flow-on effects of tourism on other economic sectors in regional and rural Australia. Because much of what tourists consume or purchase is produced outside the tourist region, income flows out to the places that manufacture or produce these items. To use Cairns as an example again, it has been estimated that each $100 million dollars of tourist expenditure in the region increases Gross Regional Product by only $82.5 million dollars. The same expenditure increases employment by 3100 jobs, of which 1400 are in the recreation, accommodation and personal services sector, 700 in the wholesale and retail trade sector, 500 in transport, 300 in manufacturing and 200 in the finance sector.40

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Table 6.2 Estimated tourism employment created by $100 million of tourist expenditure, by industry for selected regions, 199841 Industry Perth, WA Accommodation, cafes 330 and restaurants Wholesale and 205 retail trade Cultural and recreational 107 services, personal and other services Education and health 80 and community services Transport and storage 98 Manufacturing 63 Other 10 893 Total employment42 Percentage of jobs in accom- 60 modation etc/wholesale /retail trade sectors Total tourism 25 300 employment44 Tourism employment 4.3 as a percentage of regional employment

Number of Jobs Katherine, South Geelong, NT Coast, Vic NSW

South East, SA

423

342

333

428

202

182

286

235

144

83

105

67

10

14

38

8

106 67 10 962 65

28 48 7 704 74

38 124 28 952 65

17 76 9 43 840 79

750

6 200

4 000

1 500

9.3

14.1

5.4

5.6

Other estimates of the employment generated by tourism come from studies by the Bureau of Tourism Research. These estimate only the direct employment effects of visitor spending, and exclude the flow-on effects included in the Cairns data. They are therefore not comparable. The Bureau’s estimates are presented in Table 6.2, which shows that regions vary in their dependence on tourism-related employment, in their ability to generate employment from the same level of tourist expenditure, and in the distribution of these jobs between sectors of the economy. Cities like Perth and Geelong, which produce more of the goods and services consumed by tourists, are able to capture more employment from tourist expenditure than non-metropolitan regions like the South-East of South Australia or the South Coast of NSW, where jobs are concentrated in the accommodation and retail trade sectors. They also have a wider variety of

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visitors, including those visiting for education and conferences. The South Coast region has the smallest ratio of jobs generated to expenditure. This results from the leakage of expenditure on goods produced outside the region, and the popularity of private rental accommodation, which generates little or no direct employment. Katherine (NT), on the other hand, has a high level of expenditure on transport, and expenditure on organised tours and cruises of the Katherine Gorge raises the number of jobs generated in the entertainment sector.

R E G I O N A L TO U R I S M P O L I C Y From these and other studies we can draw some policy guidelines for the development of tourism in regional Australia, defined as all regions outside the major cities. Regional income and employment can be generated from tourism by increasing the number of visitors, by increasing the expenditure per visit, and/or by reducing the leakage of tourist income outside the region. Except for a few regions with high profile attractions like the Great Barrier Reef or Uluru, most regions should concentrate on the domestic market to increase their visitor numbers. This may also be the best way to encourage international tourists. Another study by the Bureau of Tourism Research examines the factors that influence international visitors to visit rural regions in Australia, and finds that the most common reason is to visit friends or relatives (over 30 per cent of responses), followed by recommendations from friends or relatives, a desire to experience the Outback, the visit is part of a pre-paid tour, and to experience nature-based outdoor activities.45 This suggests that promoting the attractions of rural Australia to resident Australians may be one of the most effective ways of increasing international tourist visitors to these regions, as the residents will in turn influence the VFR group of tourists who are the most likely international tourists to visit rural areas.46 Equally important is ensuring that tourists are satisfied with their visit and will recommend the region to others. Surveys of domestic and international visitors show that the main areas of dissatisfaction are transport and the accessibility of the region, attractions, signage, the range and quality of accommodation, shopping facilities and merchandise.47 The Internet has also become a major way tourists plan their travel, and regions must be able to provide a high quality web-based service.48 Increasing the number of tourists beyond the infrastructural,

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social and environmental capacity of the region is likely to be selfdefeating. The quality and the reputation of the area may suffer and those tourists attracted may stay for shorter periods, so reducing total expenditure. While most tourist destinations in Australia can absorb more visitors, a sensible strategy for all regions is to try to increase expenditure per visit. This involves increasing the range of activities for visitors, and promoting or developing local shopping and entertainment services.49 Another strategy is to attempt to reduce the leakage of tourist spending by developing local suppliers of goods and services, but this is difficult in small and isolated economies. However, the promotion of local produce, including food, wine and locally manufactured products, is a growing trend, and one with potential long-term benefits. This strategy involves linking tourism to other sectors of the regional economy, a task particularly suited to a local or regional economic development agency.50 It is also vital to manage the impact of tourism to ensure that the environment that attracts visitors to regional areas is protected. Regions pursuing tourism as a development strategy need to be well aware of some of the problems associated with the industry. Much of the employment generated is casual, unstable, seasonal and low paid. The major non-capital city tourist regions of Australia have high rates of unemployment, often blamed on the migration of unemployed people from other regions but also likely to be related to the nature of the tourist economy. And because the bulk of employment created by tourism is for females, the ability of the industry to provide alternative jobs for men losing employment in agriculture, forestry or mining is limited. Large-scale tourist development also raises land and house prices, pushes up the cost of living, brings a significant transient workforce, and increases crime, prostitution and other social problems. It requires considerable capital from outside the region, and is likely to lead to an industry dependent on outside companies and skills and not controlled by local people. Much of the income generated by tourist spending flows out of the region to pay for imported goods and services, as repayment of borrowed capital, as profit for external owners, and through the repatriation of savings by temporary workers. Large-scale tourist development also threatens the quality of the environment.51 Regions therefore need to carefully decide on the type and scale of tourism they prefer, and on the market they can compete in. There is a growing variety of forms of tourism for them

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to consider, including special interest tourism, rural tourism, wine tourism, adventure travel, ecotourism, cultural and heritage tourism, indigenous tourism, trails, shopping tourism, urban tourism and event tourism.52 However, one of the keys to success in using tourism to develop a region’s economy is not to treat it as a separate industry, but to integrate it with other sectors of the regional economy so as to maximise the economic benefits. Another is to build on the concept of the region and its identity, explored in Chapter 3, by using the cultural heritage, history, landscape, foods and other produce of the region to provide visitors with a distinctive experience. This is not always easy in Australia, where regional identities are not sharply defined, but it is an emerging strategy in many regions.53

PRODUCER SERVICES Services are differentiated from manufacturing in that they do not produce a commodity, or the material content of the commodity produced (such as a report, a meal or a design) is a small part of its value.54 These services consist of wholesale and retail trade, accommodation, cafes and restaurants, transport and storage, communications, finance and insurance, property and business services, government administration and defence, education, health and community services, cultural and recreational services, and personal and other services. They account for 67 per cent of national economic output and employ 74 per cent of the workforce. However, services differ in their rates of growth and in their claim to be sunrise industries. For example, between 1989–90 and 1997–98 communication services grew in output at an average annual rate of 9.2 per cent, and property and business services at 4.6 per cent, while retail trade grew at 2.9 per cent and education at only 1.7 per cent. Consumer services provided to the final consumer (individuals and households) have generally grown more slowly than producer services provided to other businesses. The latter include services like accounting, legal services, design, technical services, R&D, marketing, advertising, financial services, business management services and public relations.55 Producer services are important in regional development not only because they are growing rapidly, but also because they can export their services to other regions and so earn income for their own region. In this way they can act as drivers of regional economic growth in the same way as agriculture or manufacturing. They also provide many relatively well-paid jobs for professional people. Consumer services, on

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the other hand, and with a few significant exceptions, are sold locally and so follow growth rather than create it. Furthermore, the location of producer services is highly concentrated, and their growth benefits a relatively small group of regions. While consumer services are located where consumers live or work, and therefore roughly follow the distribution of the population, producer services are concentrated in the major cities. Table 6.3 compares the distribution of all jobs with that of jobs in three sectors that provide producer services. The table shows that these jobs are much more concentrated in Sydney and Melbourne than the overall distribution of employment. Brisbane and Hobart have roughly their share of employment in these producer services, Adelaide has less than its share in two of them, and Perth has more than its share in two of them. The rest of Australia has considerably less than its share of these growing industries. The reasons for this pattern of concentration are well known.56 The major customers for producer services, and especially the large national and international firms and the finance sector, are concentrated in Sydney and Melbourne, the dominant business centres of the nation. Their role as customers has increased with the growth of outsourcing of functions previously undertaken internally. Along with customers, the higher level and less routine producer services also need the ability to access and exchange information; they benefit from clustering together in places which are information-rich, and which are well connected to national and global flows of information and the people that carry it. Sydney and Melbourne have the best-developed communications infrastructure, and are the first to get new communications technologies. They are the centres of national and international transport and communication networks. And while a lot of information can be accessed electronically, much depends on personal contacts, or is generated as businesses and other institutions work together to solve problems and innovate. Personal networking is still an important strategy for gaining business, and ‘face-to-face contact remains a critical ingredient in the construction of business trust and alliances’.57 The advantages of proximity and agglomeration are therefore still a powerful concentrating force. These advantages are reinforced by the growth of the project team approach in service provision, in which an integrated package of services is developed by a group of collaborating firms. Furthermore, as Sydney and Melbourne have the largest number of specialist producer service firms, and the only critical mass in the country in some of them, this naturally attracts others.

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Table 6.3 The metropolitan distribution of producer services, 1996 City

Sydney Melbourne Brisbane Adelaide Perth Hobart Rest of Australia SOURCE

Share (%) of national employment in: All jobs Services Finance and to business property 22.1 26.9 33.3 19.0 23.8 25.2 8.7 9.0 8.2 5.6 6.0 4.7 7.6 8.8 6.1 1.0 0.9 1.2 36.0 24.6 21.3

Media and publishing 36.1 19.9 8.1 4.3 9.2 0.6 21.8

O’Connor, Stimson and Daly 2001 Australia’s Changing Economic Geography, p 119.

Sydney has captured more producer services than Melbourne (Table 6.3). Sydney’s advantages are that it is the headquarters of 49 per cent of the nation’s top 500 companies, and it has become the financial centre of the country with over three-quarters of the head offices of all banks. These are all major customers for producer service firms. It is the principal international airport and therefore the gateway to Australia for half the nation’s overseas visitors. It has the strongest Asian connections of any Australian city, and has 63 per cent of the Asia-Pacific regional headquarters based in Australia. It has been perceived, possibly wrongly, as less conservative and more dynamic than Melbourne and a more attractive living environment for those who can afford it. For the type of people involved in the more creative producer services, Sydney is seductive.58 Of the other capital cities Adelaide, like Hobart, has suffered from the restructuring of its manufacturing base. It lacks a global role, has slow population growth, and has lost producer services as it has become more of a branch economy of Melbourne and Sydney. Brisbane, however, demonstrates that sustained population and economic growth is not sufficient to attract producer services, many of which are supplied from Sydney. On the other hand, producer services in Perth have benefited from the growth of Western Australia’s mining industry, and from the outsourcing of services in that industry. Outsourcing through commissioning, contracting and subcontracting by mining companies in Australia accounts for over a quarter of total company expenditure, and in 1996–97 more than 60 per cent of this work was undertaken in Western Australia, much of it by firms and mining professionals located in Perth. A number of these

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firms are now exporters of mining services to other countries, and Western Australia is now claimed to have a world class mining services sector.59 The account above seems to provide little scope for some of the smaller capital cities and the regional centres to attract producer services. While some of these cities, like Wagga Wagga (NSW) or Shepparton (Vic), have been successful in developing a regional service role, this has been more as providers of administrative, retail, education and health services than of business and financial services. Kalgoorlie (WA) illustrates another problem for regional cities. It has historically been a breeding ground for new mining service companies, but some of these firms relocated to Perth as their markets grew.60 Consequently these cities are exporting business to firms in the major capital cities, and missing out on the professional employment that this business represents. Birrell and O’Connor have reviewed the role of regional Australia in employment in business, finance and insurance services, and argue that regional cities have great difficulty competing with the advantages of the metropolitan centres, and have difficulty attracting and retaining skilled staff. They conclude that: …governments will have to do more than ensure that the relevant telecommunications infrastructure is in place in regional centres if business service firms are to flourish in these places. Major investments in education and research and development, along with incentives for the creation and expansion of firms will be necessary. Education and training needs to be boosted so that talented young local people (the kind of people most likely to want to work in a regional setting) are encouraged.61 As agglomeration is vital in creating the critical mass that supports competitive producer services it is unlikely that such efforts, if they are undertaken, can succeed in more than a small number of regional centres. The smaller capital cities like Adelaide, and possibly some of the regional cities, have a better chance of attracting those producer services that are the least dependent on face-to-face contact with customers and other service firms. Such services include basic and applied research, software development, programming and industrial design. In Europe and the US some of these activities are dispersing

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

to smaller centres which provide a quality of life that attracts and retains skilled workers. Kotkin terms places like Boulder, Colorado and Jackson Hole, Wyoming, ‘Valhallas’: ‘…rural areas, usually with significant urbanlike amenities and appealing scenery, where knowledge workers can enjoy a pastoral paradise yet remain plugged into the burgeoning information economy.’62 However, the United States has a much larger economy, stronger pressures to decentralise from the major cities, a greater variety of medium-sized towns in which to locate, a greater dispersal of research institutions, a greater variety of attractive inland environments, greater differences in wages between regions and localities, stronger local government, and better transport and communications infrastructure than Australia. In Australia there is little evidence of the decentralisation of producer services; industrial design services, for example, appear to have their strongest cluster in Sydney.63 Nevertheless, in 2002 the CSIRO was developing a proposal to enable experts in regional cities like Bathurst (NSW) and Benalla (Vic) to work in multidisciplinary teams to provide a range of specialist services nationally and internationally, through the application of sophisticated information technology.64

C ALL CENTRES AND B ACK OFFICES Perhaps the best opportunities for the smaller capital cities and regional cities to attract activities that export services to other regions is in office functions undertaken through telecommunications. These range from call centres (or customer contact centres) which deal directly with customers in businesses like insurance, banking, financial services, telecommunications, airline travel, consumer goods support, government services and telemarketing, to ‘back’ and ‘middle’ office facilities which provide finance, accounting, human resources, payroll, purchasing and supply services for the rest of the company and for other companies. Call centres have grown rapidly in Australia in the last few years, from 550 centres in 1998 to 3900 centres in 2001. In 2002 some 69 per cent of all customer contact with companies was through call centres, and the industry employed about 225 000 people.65 In the United Kingdom about one quarter of call centres are located in the South East, in and around London, while the rest are widely distributed, with strong concentrations in Scotland and Northern England.66 In Australia, on the other hand, call centres are concentrated in New South Wales (i.e. Sydney), with 48 per cent of

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market share, and Victoria (i.e. Melbourne), with 25 per cent. Regional Australia has only 9 per cent of market share, although there has been strong growth in Tasmania. Industry analysts argue that while regional call centres can be up to 10–15 per cent cheaper to operate than metropolitan ones, this advantage may be outweighed by a lack of sufficient qualified staff (the labour market area needs a population of at least 20 000 to provide 200 potential call centre staff), unreliable electricity supply, and poor quality telecommunications infrastructure.67 Furthermore, wage differentials within Australia are not nearly as great as in many other developed countries, and companies can lower their costs by locating in the outer suburbs of the major cities rather than moving to non-metropolitan areas. This means that the smaller regional towns and cities are unlikely to attract and retain call centres. The role of call centres in customer contact and marketing is expected to continue to grow rapidly. Call centres are attractive for regional developers because they can create significant numbers of jobs, and train staff in transferable skills. Their limitations are their generally low pay, lack of a career structure (although this is changing in some firms), and high staff turnover (estimated at 17 per cent a year in 2002). They do not appear to provide a base from which to attract other industries, and they are likely to move on if other locations become more cost-effective. The future of employment in call centres is also threatened by technological change, such as voice recognition software which will reduce the need for staff, and by competition from developing countries like India.68 Back and middle office functions, on the other hand, provide a greater variety of jobs, and may help to attract producer service firms to supply specialist knowledge. An example is the BHP Billiton Shared Services Centre in Adelaide, employing some 500 staff, which services the company’s Asia-Pacific operations. The advantages of an Adelaide location for BHP Billiton are believed to be lower costs for office accommodation, the availability and quality of potential staff, lower labour turnover, and the quality of life, which assists in attracting and retaining employees. These advantages are difficult for smaller regional centres to match. There are other service industries that these centres may have better prospects of developing. These all involve the principle that the disadvantages of a non-metropolitan location can be overcome if the customer moves to the service. This is the case with tourism,

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

examined earlier in this chapter. Similar industries include education, health and conventions. In North America and Europe universities are the economic base of many small and medium-sized towns and cities, but in Australia, where student mobility is limited, university enrolments are much more centralised. Even so, the contribution of the universities in Armidale, Townsville and Wollongong to the economies of these cities shows the potential of education as a driver of regional development.

A DVA N C E D M A N U FAC T U R I N G The history of industrial innovation provides examples of new industries springing up in unexpected places. Storper and Walker argue that new industries, like the aircraft industry in the United States in the early 20th century, have a degree of locational freedom in that they are not tied to existing pools of labour or existing suppliers of materials. Similarly, a number of new high technology regions have emerged in places with no previous industrial experience, such as Silicon Valley, which grew out of an agricultural region to the south of San Francisco, or the M4 region outside London.69 Could something similar happen in Australia? What new manufacturing industries are emerging in Australia, where are they emerging, and what strategies can regions use to attract or develop these industries? These are the questions examined in this section. Table 6.4 presents data on the location of employment and value added in industries which have high to medium-high R&D intensity, as classified by the OECD.70 In most cases the data show that New South Wales and Victoria have the majority of the employment and value added in these industries, but in some several other states also have a significant share. As we have already seen, South Australia has a large share of motor vehicle and parts manufacture, and the table shows that it also has a significant share of the small photographic and scientific equipment industry. Western Australia has a large share of basic chemical manufacture, while Queensland does relatively best in industrial machinery and equipment. It is not possible to obtain data by city, but Table 6.5 shows that in the industry subdivisions that contain these industries production is overwhelmingly concentrated in the capital cities, with the exception of Queensland. Advanced manufacturing industries are therefore largely metropolitan city based, but are more dispersed across the capital cities than producer services.

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Table 6.4 Employment and industry value-added of selected industries, by State, 1999–2000 Industry

NSW and ACT Basic chemical manufacture Employment (no) 3124 Industry Value Added ($m) 426 Medicinal and pharmaceutical product Employment (no) 5638 Industry Value Added ($m) 728

Vic

Qld

SA

WA

Tas

4715 659

1474 131

785 92

2165 348

np np

4599 643

1173 71

592 48

481 np

np np

Motor vehicle and part Employment (no) Industry Value Added ($m)

6534 378

27551 2292

Aircraft Employment (no) Industry Value Added ($m)

5323 516

4541 239

852 54

372 16

np np

Photographic and scientific equipment Employment (no) Industry Value Added ($m)

3986 269

3605 369

1313 56

2468 134

547 23

72 2

Electronic equipment Employment (no) Industry Value Added ($m)

10110 764

4982 413

1553 80

1626 109

1367 75

34 1

Electrical equipment and appliance Employment (no) Industry Value Added ($m)

13124 847

7830 512

3237 181

4968 365

1432 75

np np

Industrial machinery and equipment Employment (no) Industry Value Added ($m)

15198 920

15483 855

8331 510

4097 203

4437 776 280 53

NP

4320 13324 203 887

2015 650 79 37 2 0.2

= not published Australian Bureau of Statistics, Manufacturing Industry, 1999–2000 (Catalogue 8221).

SOURCE

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Table 6.5 Percentage of State employment in the capital city statistical division, selected manufacturing industries, by State, 1996–97 Industry Petroleum, coal, chemical and associated product Machinery and equipment Other manufacturing NP

NSW & ACT 89.9

Vic

Qld

SA

WA

Tas

91.7

75.2

90.2

83.4

36.9

79.3 82.6

86.4 89.7

60.3 64.9

95.2 87.6

91.0 90.2

96.4 np

= not published Australian Bureau of Statistics, Manufacturing Industry, 1996–97 (Catalogue 8221).

SOURCE

There are very few studies that examine the location of these industries. The best information is for biotechnology, an industry in which Australia is thought to have a competitive advantage internationally.71 Several States claim to be the leader in this emerging area, but the truth depends on how the industry is defined. According to a Federal Government report, in 2001 about 40 per cent of all biotechnology companies were located in New South Wales, 32 per cent in Victoria, 11 per cent in Queensland, 8 per cent in South Australia and 7 per cent in Western Australia. However, many of these companies are not classified as ‘core’ biotechnology companies, defined as those that depend on ‘exploiting intellectual property embedded in molecular, cellular and tissue biology’. The core companies, which represent the research and development heart of the industry, are concentrated in Victoria (38 per cent), followed by New South Wales (30 per cent), Queensland (11 per cent), Western Australia (9 per cent) and South Australia (8 per cent). Nearly half the core companies are involved in human health, and the rest are distributed across agriculture, food production and processing, and environment and resources. Victoria’s strength is particularly in health biotechnology, and is based on a concentration of high quality research institutes (such as the Walter and Eliza Hall Institute of Medical Research and specialist units of the CSIRO), Monash and Melbourne universities, and teaching hospitals. Western Australia’s biotechnology firms, on the other hand, have their origins in the application of biotechnology to mining, and in investment by mining companies.72 In the related medicinal and pharmaceutical industry, Table 6.4 shows that New South Wales leads in product manufacture, but much of this is by multinational corporations making products developed overseas. The two largest Australian-owned firms that manufacture products

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developed locally are CSL Limited, based in Melbourne, and Faulding, which has manufacturing facilities in Adelaide. A locational characteristic of both the biotechnology and pharmaceutical industries is the role of clusters of firms and supporting institutions such as universities, hospitals and research institutes. Like producer services, these knowledge-based industries depend on the exchange of information through partnerships and collaboration, and they therefore benefit from proximity and agglomeration. The role of clustering consequently means that these industries do not have the locational freedom suggested earlier. Their location in Australia will depend on the quality of a region’s basic and applied research, the availability of venture capital, a supply of skilled and creative people, and appropriate infrastructure. Is there a role for regional developers in these and other sunrise manufacturing industries?

R E G I O N A L B U S I N E S S S T R AT E G I E S There is a range of strategies available to regional developers to attempt to attract, nurture, expand and retain advanced manufacturing firms. These strategies can also be applied to lower technology industries and to the service sector, so this discussion is relevant to a wide range of economic activities. The section focuses on those strategies that are appropriately implemented at the local or regional level. However, they all depend on national and State levels of government also having effective industry policies. The ways in which local and regional agencies can promote regional economic development depend on an understanding of the role of the local or regional level in assisting a firm’s establishment, survival and expansion. For example, business services that need to be physically accessible, or that require local knowledge, are best provided at the local level. This particularly applies to small business advisory services, even when these services then link clients to programs provided through the Internet. Business support strategies that involve businesses working together, whether to learn from each other or to solve common problems, also depend on proximity and the trust developed through personal relationships, and are best undertaken at the local level. Programs for management or staff training, for export enhancement or for improving the use of information technology are also most effectively delivered at the local level. The OECD advises that:

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Given the variety of location-specific factors which affect entrepreneurship and the opportunities for encouraging entrepreneurship through local measures, policies which fail to take account of regional and local differences are less likely to be successful. Local initiatives have advantages such as being better able to tailor activities to needs, to concentrate resources where most required and to mobilise a wide range of actors relevant to entrepreneurship. Many important programmes to support entrepreneurship are best designed and implemented by local authorities.73

B U S I N E S S I N C U B ATO R S A business incubator is a facility designed to assist new and growing small businesses become established and profitable by providing premises, advice, services and other support.74 In the early incubators the emphasis was on simple premises and shared services to reduce costs, but over time more emphasis has been placed on the services that make incubation a business enterprise development process. The US National Business Incubation Association, for example, defines business incubation as: …a dynamic process of business enterprise development. Incubators nurture young firms, helping them to survive and grow during the start-up period when they are most vulnerable. Incubators provide hands-on management assistance, access to financing and orchestrated exposure to critical business or technical support services. They also offer entrepreneurial firms shared office services, access to equipment, flexible leases and expandable space — all under one roof.75 A United Kingdom definition adds that incubators ‘provide three main ingredients for growing successful businesses — an entrepreneurial and learning environment, ready access to mentors and investors, visibility in the market place’.76 An incubator may be a ‘stand alone’ facility ‘which does not function as a separate business unit within a larger entity’; ‘embedded’, an incubator which ‘operates as a business unit within a larger entity, such as a technology park, regional development organisation or a business enterprise centre’; or ‘networked’, operating ‘in formal cooperation with other incubators, either under common ownership, management or through common provision of services or sharing of

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information’. The concept of the incubator can therefore include technology or science parks, business and innovation centres and others, depending on the types of industries targeted. Some incubators have a strong emphasis on technology and innovation, but incubator tenants cover the complete range of industries from horticulture and construction to manufacturing and services.77 In Australia incubators are mostly funded by the public sector, but in the US many are operated by the private sector in return for equity in the new enterprise. Some US private sector incubators specialise in fostering partnerships between new enterprises and established firms, and these are claimed to be more successful than other models because of this preferential access to a network of companies.78 Do they work? An evaluation of Commonwealth Governmentfunded incubators concluded that they had succeeded in graduating new businesses and in creating employment, and that the cost per job was lower than in some other Government programs. An evaluation of European experience estimated that incubators graduated an average of 6.6 new firms per incubator each year, with a net direct and indirect addition to employment of 7 jobs per firm, again at a cost per job considerably less than other public programs. Around 17 per cent of firms in the European study stated that they would have succeeded without support from an incubator, suggesting that ‘deadweight’ (when the outcome would have been the same without assistance, and the assistance therefore unnecessary) was relatively low, and that incubators had a significant impact on start-up success. The European experience also suggests that networked incubators, particularly those operated as part of a regional strategy to develop clusters of technology based industries, have better access to partners, advisers and contacts than stand alone units. However, this may be difficult to achieve in small regional economies in Australia. Nolan suggests that ‘virtual’ incubators may be a way of providing business services in such areas, using telecommunications to increase the range and quality of assistance available to a new business.79 There is therefore no one model of best practice for business incubators. They need to adapt to local economic and institutional differences, which is part of the reason why they may be best managed at the regional or local level. Critical to their success, however, according to another Australian review, is whether the incubator management adopts a pro-active role in the development of each business, and is involved in business planning, skills learning, technology transfer and capital

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acquisition. Yet another recommendation is that graduate firms need continued monitoring and support so that they survive the first year or two out of the hatchery.80

B U S I N E S S R E T E N T I O N A N D E X PA N S I O N PROGRAMS Studies showing that from 40 to 80 per cent of new jobs in a region come from existing businesses point to the importance of nurturing this base, rather than putting most of the effort into attempting to attract new enterprises. The aim of an ‘existing industry development’ or ‘business retention and expansion’ (BR&E) program is to identify threats to the survival and constraints to the expansion of existing firms, and then to assist them to overcome these threats and constraints. This type of program is also best undertaken at the local or regional level, because of the importance of accessibility and local knowledge in its effectiveness. It can be conducted by community groups or by agencies such as Business Enterprise Centres, regional development organisations or local government. A BR&E program starts with interviews with existing key businesses (those on which the regional economy most depends) as well as newly established businesses which may represent the future of the regional economy. Unlike an incubator strategy, a BR&E program is not confined to small enterprises, as many key regional firms will be large. The interviews can be undertaken by a professional business development officer, or by trained volunteer community leaders. A professional officer may visit key firms every six months to keep in touch with the local economy, whereas a BR&E undertaken by community groups may be a ‘one-off ’ event. It is essential to visit firms, rather than depend on them to come to the community or agency with their problems. However, most agencies don’t have the resources to be pro-active and contact businesses, and this is where community volunteers can be a cost-effective solution. With the information gained from the interviews the community group or agency can look for ways to assist businesses to solve their problems, link them to other agencies which can help, or lobby governments to address any issues that are the result of government action or inaction. The problems identified could include skilled labour supply, infrastructure, transport, telecommunications, housing, marketing, government regulations, planning restrictions, assistance for export development and finance.

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A BR&E program can not only help to retain or expand local firms, but also provide an understanding of the strengths and weaknesses of the local/regional economy that can be used in designing an economic development strategy. It can also promote a perception of a pro-business climate in the region, which in turn can assist business recruitment. However, the effectiveness of these programs is reduced by the proliferation of agencies and lack of co-ordination between them, the fact that many are reactive rather than pro-active (in turn the result of insufficient and short-term funding), and poor linkages with higher level agencies. Ideally, a BR&E program should involve a continuing process of consultation with businesses, and the regular incorporation of the results of these consultations into the strategic planning for the region. Where the program is undertaken by professional officers they should be able to meet regularly with each other and the relevant State and Commonwealth officers, to pool information on the problems faced by businesses and to develop common solutions for common problems.81 An important issue in both incubator and BR&E programs is which industries to focus on if limited resources make it impossible to help all. Regional developers are often advised to concentrate on enterprises that can export outside the region and so earn income that will add to the local economy. Such industries also have the advantage that they do not depend solely on the local market, and are therefore less of a threat to existing firms. Malizia and Feser, however, advise that regional developers should also focus on reducing imports, which represent a leakage of income and an export of potential employment to other regions. This involves assisting import competing industries that can survive without subsidies, although to be viable some of these will need to export to gain economies of scale. Malizia and Feser recommend that developers analyse the structure of their regional economy so that they can identify those industries (export or import competing) which, if lost, would constitute the greatest economic cost to the community, and those which, if gained, represent the greatest potential economic benefit to the community. They also caution that new business development programs, such as incubators, will only add a small number of jobs to the local economy, that a very small number of new businesses are responsible for most of the new job creation, and that these firms are very difficult to identify at a stage when they might benefit from assistance.82 To maximise the benefits to the local economy develop-

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ers might therefore choose to integrate incubators into a cluster strategy for the region.

CLUSTERS We noted earlier the existence of clusters of firms in biotechnology, and the role of agglomeration in producer services. Agglomeration and clustering are fundamental processes underlying a popular approach in regional development, that of assisting the growth of industrial clusters. In Australia recent reports have recommended support for clusterbuilding in industries from information technology and biotechnology to furnishing and the fishing industry in Far North Queensland. Support for clusters was also one of the recommendations from the 1999 Regional Australia Summit. So what are industrial clusters? Marceau defines clusters as ‘networks of production of strongly interdependent firms, knowledge-producing agents and customers linked to each other in a value-adding production chain’.83 They are groups of firms and institutions concentrated in a single geographical location, although with linkages to firms and institutions in other places, focused on a particular group of products (such as pharmaceuticals, medical instruments or furniture). The firms cross sectors, are linked vertically and horizontally in both competitive and collaborative relationships, have a common goal of business growth, and are supported by a localised enterprise service structure which forms part of the cluster.84 Porter, the most prominent advocate of clusters, writes: More than single industries, clusters encompass an array of linked industries and other entities important to competition. They include, for example, suppliers of specialized inputs such as components, machinery, and services as well as providers of specialized infrastructure. Clusters also often extend downstream to channels or customers and laterally to manufacturers of complementary products or companies related by skills, technologies, or common inputs. Many clusters include governmental and other institutions (e.g., universities, think tanks, vocational training providers, standards-setting agencies, trade associations) that provide specialized training, education, information, research, and technical support. Many clusters include trade associations and other collective bodies involving cluster members. Finally, foreign firms can be and are part of clusters, but only if they make permanent investments in a significant local presence.85

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The significance of clustering is that it improves the competitiveness of firms. The main reasons are: 1.

Clustering increases each firm’s access to information and reduces the cost of obtaining it. Particularly amongst small and medium-sized firms the transfer and adoption of knowledge depends on proximity to the firms and R&D centres (such as universities) that have this knowledge, and on the density of the individual and firm networks through which it is transmitted. This is especially the case with tacit knowledge, which is not formalised and written down but informal and personal, and can only be transmitted through faceto-face contact. Where you are located therefore matters, as we have seen in relation to producer services and biotechnology in Australia.

2.

Firm productivity and innovation is supported by specialised local suppliers of inputs of goods and services, in areas such as engineering, legal services, marketing or exporting, as well as by the availability of specialised skilled labour and finance, and the shared provision of specialised training and infrastructure.

3.

The costs of transactions between firms (including the costs of negotiation and contract enforcement) are reduced by proximity. They can also be reduced when they are based on trust, which in turn is created through personal relationships developed through proximity and regular contact.

4.

In some of the most successful clusters regulatory regimes and cultural attitudes encourage entrepreneurship and risk-taking.86

Clusters can therefore affect competition in three broad ways: … first, by increasing the productivity of companies based in the area; second, by driving the direction and pace of innovation, which underpins future productivity growth; and third, by stimulating the formation of new businesses, which expands and strengthens the cluster itself.87 These advantages of clustering, which flow from localised business resources and relationships, result in the locational paradox described by Porter: Globalization and the ease of transportation and communication have led to a surge of out-sourcing in which companies have relocated many facilities to low-cost locations. However, these same forces have created the location paradox. Anything that can be

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efficiently sourced from a distance has essentially been nullified as a competitive advantage in advanced economies. Information and relationships that can be accessed and maintained through fax or e-mail are available to anyone. Although global sourcing mitigates disadvantages, it does not create advantages. Moreover, distant sourcing normally is a second-best solution compared to accessing a competitive local cluster in terms of productivity and innovation. Paradoxically, the most enduring competitive advantages in a global economy seem to be local.88 Consequently, as noted in Chapter 3, the region has been rediscovered as a source of competitive advantage and as the site for industrial policy. In Australia the only internationally recognised clusters are in the wine industry. However, one researcher has identified 70 cluster initiatives, including several manufacturing clusters in Adelaide, a food-processing cluster in Shepparton (Vic), a horse-breeding cluster in Scone (NSW) and a surfwear cluster at Torquay (Vic). In biotechnology there are claimed to be several clusters in Melbourne, Adelaide has a Bioscience Precinct at Thebarton, and Sydney has a concentration of pharmaceutical companies around North Ryde and an emerging biotechnology cluster around Westmead Hospital. However, having a group of firms in the same industry located in the same area does not constitute a cluster unless there is active collaboration between them. For example, the North Ryde pharmaceutical firms appear to have limited collaboration with each other or with local research institutes such as Macquarie University, and so do not constitute a cluster.89 These Australian examples are not the large clusters described by Porter for Europe or the US, such as the engineering cluster around Munich or the leather fashion cluster around Florence. Australian clusters are small and poorly developed. The reasons for this include: •

the small size of the economy and the lack of critical mass in many industries;

•

an incomplete industrial structure which means that many firms are unable to find local partners with whom to collaborate;

•

foreign ownership, which means that a lot of R&D takes place outside Australia;90

•

limited interest and financial support from State and Federal governments;

•

the dominance of resource-based exports, which tend to generate fewer linkages than manufacturing or advanced services;

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•

• 139

limited awareness by industry of the benefits of collaboration, and reliance instead on governments for assistance;

•

lack of strong civic and business leadership, especially in regional areas;

•

the lack of industrial specialisation in most regional towns and cities makes it difficult to identify distinctive opportunities for cluster building;

•

insufficient local integration between industries, R&D institutes such as universities, and training institutions such as TAFE.91

These are all constraints which have to be taken into account in attempts to develop clusters in Australia. The most common approach to cluster building is described by Rosenfeld as a comprehensive, capacity-building strategy. This is intended to build capacity and improve firm performance through public incentives and private sector leadership. Operationally, the strategy supports industry leaders and their organisations, and provides incentives to encourage activities that strengthen such organisations and benefit the entire cluster. Some of the actions that could be taken are set out below. S O M E C L U S T E R - B U I L D I N G AC T I O N S

Hold industry summits. Form business associations. Assist the formation of supply chain associations. Facilitate inter-firm learning. Offer incentives to firms willing to innovate and to develop inter-firm relationships. Assist with joint marketing, purchasing, training, new technology, or quality standards. Help skilled former employees start businesses related to the region’s key industries. Recruit companies that fill gaps in cluster development. Provide appropriate education and training. Build links with universities and other research and training institutions. Channel funding for R&D or training through associations of firms. Encourage employers to collaborate on school-to-work programs. Build social capital. SOURCES Rosenfeld, SA (1995) Industrial-Strength Strategies: Regional Business Clusters and Public Policy, Aspen Institute,Washington; Rosenfeld, SA (1996), Overachievers: Business Clusters that Work: Prospects for Regional Development, Regional Technology Strategies, Chapel Hill.

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There are some particular strategies that may need to be used in Australia, especially in rural and regional Australia. One is to identify clusters by the intensity of the interactions between firms, not by the size of the cluster, as otherwise many potential clusters in regional areas will be ignored. Another is that in smaller or more remote regions the connections fostered between businesses may take on different forms, such as broader business associations or networks not confined to firms with a shared market objective. The common interest of these firms could be in better telecommunications or transport, cheaper insurance or joint purchasing, but over time they may come to focus on a shared product and become a cluster. Governments could also subsidise or assist the provision of industry services to rural industrial clusters if the private sector is unable to provide a service. ‘Virtual clusters’, linking firms in collaborative relationships across regions through information technologies, could be an Australian solution to an acutely Australian problem.92 There is also the question of which industries to choose? There is general agreement that any group of firms can potentially form a cluster, and not just those that are involved in high technology. The advantages of clustering can also be gained by quite small groups of firms, not just by large, city-based clusters. Cluster strategies can therefore be applied, maybe with the modifications outlined above, in rural and regional Australia as well as in the major cities. However, Maskell and others argue strongly that small, open and high income countries like Australia should not try to compete in those high-technology industries that require large investments and large markets, or where the domestic market is small, or where innovation depends on a high level of scientific research. They point to the advantages for these countries of applying high technology to low and medium technology industries, through clusters based on regional specialisation and localised learning.93 This viewpoint seems to be supported by Goodwin and Johnston, who argue that Australia should put more emphasis on enhancing its ability to absorb or take-up new technologies and apply them to improving local productive capability.94 Others disagree, and argue that Australia must be more than an efficient consumer of technology, that future living standards depend upon becoming more competitive in high-technology industries, and that Australia must capture more of the benefits of new technology through equity and intellectual property ownership.95 These are difficult issues, but clearly regions need to realistically consider their

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competitive strengths before investing in a cluster program. They should also heed Porter’s advice that: ‘There should be some seeds of a cluster that have passed a market test before cluster development efforts are justified’.96 There is an emerging consensus on the principles that need to be applied in building clusters.97 Some of these are set out below. SOME CLUSTER-BUILDING PRINCIPLES

Cluster building should be led by the private sector, with government support and participation but not control and direction. Public or quasi-public agencies can play a useful role as neutral brokers between firms. Clusters differ, and there is no one model for their development. Efforts should focus on developing local firms rather than attracting outside investment, although the cluster approach can be used to identify missing components and investment then sought to fill these gaps. Clusters are of most benefit to small and medium-sized firms, because large firms tend to internalise their production and service functions and to provide from their own resources the skills and information they need — and therefore have less need for proximity to complementary firms in order to operate efficiently. Local competition is needed to spur innovation and productivity growth. Dominance by one firm may not help a cluster achieve its potential. Technology parks are not the starting point in building clusters. Collaboration between firms must be developed before co-location may be seen by them as useful.98 Building successful clusters takes time. ‘Building capacity, changing culture and establishing trust are all long-term endeavors, and their economic outcomes cannot be measured after only one or two years.’99 SOURCES Rosenfeld, S.A. 1995 Industrial-Strength Strategies: Regional Business Clusters and Public Policy, Aspen Institute, Washington; Rosenfeld, S.A. 1996, Overachievers: Business Clusters that Work: Prospects for Regional Development, Regional Technology Strategies, Chapel Hill.

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Does cluster-building work? There appear to be very few evaluations that would be relevant to Australian conditions, but an exception is Blandy’s report on the program operated by South Australian Business Vision 2010, which gives a positive answer. Cooke, in a major study of much larger knowledge-based clusters in Europe and the US, also gives a positive answer, and concludes that public sector organisations can help to build clusters, but only through collaborative rather than top–down initiatives.100 Cluster strategies largely belong to the ‘creating competitive capability’ type of industry policy. Although there is also an element of ‘picking winners’, Porter argues that this should only come after likely winners have been identified by the market. In the absence of suitable clusters, or of support for such a strategy, regional developers could adopt a policy of local capacity-building that will assist all types of business. This could involve actions to improve local education and training, develop transport and telecommunications infrastructure, lower costs and charges imposed on business or improve the services provided through these charges, foster a pro-business attitude in government agencies, increase local R&D, improve business services, assist small business formation and growth, and enhance the overall quality of life. However, Porter warns that general capacity is no longer sufficient for competitiveness, which depends on specialised labour, infrastructure and R&D, which brings us back to clusters.

CONCLUSION A recurring theme in this chapter has been that industries and sectors cannot be dealt with in isolation from each other. Whether in tourism or manufacturing, industries are interdependent. The linkages between them can be used to increase competitiveness and to maximise the income and employment generated within a region from its exports. Along with the industries themselves, regional developers are the best placed to promote this interdependence because, unlike State and Federal government departments, their responsibilities are not divided up between industry sectors. They also have the local knowledge and the local contacts to be able to see the regional economy as a whole. While their powers and resources are limited compared to higher levels of government, they have an important role to play in developing capability in an economy where place has become a major source of firm competitiveness.

7

THE PRACTICE OF LOCAL AND REGIONAL ECONOMIC DEVELOPMENT IN AUSTRALIA In some ways the practice of economic development — that is, the implementation of the theories discussed in the previous chapters — represents unexplored territory. It is a subject that has been given relatively little attention both by academics and policy makers, especially in Australia. Too often we assume that new theories and new approaches to development arise, are adopted by relevant agencies and then applied in a seamless fashion, with both the spirit and the letter of the new perspective honoured. Such assumptions take much for granted: the way local or regional development is organised between the three tiers of government — its structure — exerts a substantial influence on the practice of local or regional development. Economic development ‘on the ground’ is affected by the resources available, the political pressures on the organisation, the way it is funded, the other activities and initiatives being pursued, competition from other organisations and the level of support received from the community. The skills and abilities of practitioners working on the ground are pivotal, as is the nature of local industry. At its most basic, is local or regional economic development simply what local and regional economic development agencies do? If that is the case, how do they choose which activities to become involved in, and which to ignore? How important are the models of ‘best practice’ in economic development discussed in Chapter 2, and what influence do the theories discussed in Chapters 5 and 6 exert on the behaviours and actions of economic development practitioners? Are all activities equally effective and valid uses of practitioner time? If not, why do they engage in these apparent diversions? Moreover, what are the implications of the way local and regional economic

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development is implemented for the formation of better policy and practice aimed at fostering growth in Australia’s cities, towns and regions?

THE ROLE OF ECONOMIC DEVELOPMENT AGENCIES In his book Planning Local Economic Development, Ed Blakely argued that economic development bodies had only four roles available to them: entrepreneur/developer; co-ordinator; facilitator; and, stimulator. Blakely noted that the functions and objectives adopted by an agency were very much influenced by their institutional mandate. It is, for example, difficult for a Business Enterprise Centre charged with providing advice to small business to become involved in infrastructure issues. To this insight we would add our observation that the level of resources available, and the presence of other agencies working on related issues, will influence the role and functions an agency assumes.

ENTREPRENEUR/DEVELOPER Under Blakely’s schema development agencies that assume the role of entrepreneur/developer intervene directly in the local economy and operate businesses. The British Urban Development Corporations that operated up to the mid-1990s are a notable example.1 These national government-appointed statutory bodies were engaged in the business of redeveloping derelict or under-used land and used market forces — as well as subsidies — to directly stimulate the regional economy. In Australia, the Multi Function Polis was an entrepreneur/ developer organisation. Many local governments — especially outside the capitals — also perform this role as, taken as a whole, the roles they perform, and the businesses they operate (nursing homes, museums, airports and so on) stimulate their communities. C O - O R D I N ATO R Agencies that adopt the role of co-ordinator seek to harmonise development efforts through strategic and operational planning. They see their role as being to ‘establish policy or propose strategies for an area’s development’.2 The South Central Regional Network in South Australia and the Mid-Murray Regional Development Organisation that straddled the NSW/Victoria border were established under the Keating Labor Government’s Regional Development Program. Both

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organisations chose to adopt the role of co-ordinator. They left program delivery to other agencies already active within their region and this was a consequence of decisions taken in developing their strategic plans.

FAC I L I TATO R In Blakely’s view agencies that operate as facilitators of economic development strive to improve the attitudinal environment of an area. This might involve attempting to change local perspectives on economic development or working to make the development approvals process more transparent and efficient. S T I M U L ATO R Economic development bodies that adopt the role of a stimulator take action that ‘induces firms to enter or remain in the community’.3 This might take the form of industrial recruitment, or it might be a more modest effort based around promotional activities, such as the preparation of brochures, information provision or the development of a web site.

THE PRACTICE OF LOC AL ECONOMIC DEVELOPMENT IN AUSTRALIA How well does the practice of local economic development in Australia conform to the models suggested by Blakely? What do Australia’s economic development bodies do, and what does it tell us about the reality of stimulating economic and job growth in this country? An appreciation of the structure or organisation of economic development in Australia is essential to understanding the practice of local and regional development.4 The framework is both complex and simple. It is simple in the sense that the three tiers of government are the dominant actors. It is complex in that new initiatives are spinning off continually, while previous policies and programs are either retained or fade away, with little public mention of their fate. The result is a fragmented and difficult-to-navigate landscape of organisations and policies, many with apparently similar operational objectives and overlapping territories. There is a veritable alphabet soup of participants: BECs, RDBs, ACCs, EDUs, MSPs, RDCs and NGOs, each with slightly different priorities, constituencies and territories, but each broadly working for economic development.

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Formal local or regional economic development policies and programs in Australia are focused on non-metropolitan regions.5 The NSW government, for example, supports 13 Regional Development Boards, with all but one — Western Sydney — outside the metropolitan area. Similarly, Western Australia has nine Regional Development Commissions (RDCs) encompassing that State’s territory, except for the capital. This non-metropolitan bias reflects the origins of many regional development programs that emerged in the 1990s out of decentralisation programs.6 With the exception of Victoria, where the Kennett Government introduced legislation making economic development a priority of municipalities, local governments outside the capitals are also more likely to employ economic development professionals and have explicit development programs. The absence of formal programs for local economic development should not be interpreted as suggesting that such activities are completely absent in capitals. Instead, State governments tend to be involved in an ad hoc fashion, and in some instances State legislation ensures that all large projects become the responsibility of State, rather than local, governments. In New South Wales, for example, all projects with a value of $20 million or more are automatically referred to State authorities.7 In 1996 a survey of local economic development organisations across Australia8 asked practitioners about their activities, funding arrangements and effectiveness. The survey was directed to organisations in all parts of Australia, with all States and Territories — and metropolitan as well as non-metropolitan regions — covered. It was sent to local governments, Regional Development Boards, Business Enterprise Centres, Development Commissions, Area Consultative Committees and other relevant organisations. The key issues to emerge from the survey were: instability amongst local and regional development agencies; the small size and limited funding for these agencies; the wide-ranging roles performed in the name of economic development; the absence of community and political support for many economic development bodies; and the perception of practitioners that their impact on the economy of their region or community was limited.

I N S TA B I L I T Y A M O N G S T E C O N O M I C D E V E L O P M E N T AG E N C I E S Stability is an important feature of any system intended to advance local or regional economic development because many programs take years, if not decades, to generate results. Moreover, both the

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institutional thickness and the associational economy perspectives discussed in Chapter 2 suggest that a more stable institutional environment will have more productive working relationships and be more likely to engender growth. The survey of economic development organisations asked respondents to provide information on the year of their establishment. Regional development programs have been prominent in most parts of Australia since the late 1980s9 and in 1996 some 131 of the 183 agencies who responded were established after 1990, while 73 had been founded in 1993 or later (Figure 7.1). The youthfulness of the economic development agencies operating in Australia in 1996 was remarkable and, in an institutional sense, reflects a ‘Third World’ demography marked by high ‘birth’ rates and high ‘death’ rates. In 1996 a number of economic development bodies had just been established: these included many Economic Development Units (EDUs) within Victorian local governments, the Federal Government’s Area Consultative Committees (ACCs) and its Regional Development Organisations (RDOs). The creation of new economic development agencies is paralleled by the death of existing bodies. Agencies are extinguished through a variety of mechanisms including administrative changes (such as the restructuring of local government in the State of Victoria), financial crises, lack of community support or interest, political disputes and changing priorities amongst governments. The year 1996 was somewhat atypical within Australia’s economic development scene because the Federal Government had recently launched the Regional Development Program and restructured its labour market programs, thereby creating ACCs.10 The Victorian Government had also just completed reconfiguring local government. For these reasons, the data may overstate the youthfulness of economic development agencies, but there can be no doubting the general trend. The processes of agency birth and death have continued across Australia: RDOs disappeared in the latter part of the 1990s as the Howard Government terminated their funding; local government amalgamations in South Australia resulted in the extinction of some economic development bodies, as well as the birth of new agencies; and, the fortunes of community-based groups waxed and waned with individual groups disappearing even as new groups emerged. Indeed, strategy documents focused on small town revival have emphasised the creation of new groups at the community level.11

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Figure 7.1 Regional development bodies, year of establishment, Australia (N=183)

SOURCE

1996 Economic Development Questionnaire.

SIZE AND FUNDING Most local economic development agencies in Australia are small concerns with relatively few staff. Agencies that responded to the 1996 survey had limited human resources, with two staff being the average and three the most common response. Budgets were also small, with the median budget standing at just $230 000 a year. There was, however, considerable variation with the smallest budget of just $2000 and the largest some $7.7 million (all figures refer to 1996 dollars). Western Australia’s nine RDCs were the best-funded bodies in Australia, with budgets ranging from $1 million to $9 million. By contrast, Regional Development Boards in South Australia received just $150 000 from the State Government and $50 000 from local governments.12 In Tasmania the situation was even more hard-pressed, with Local Employment Initiatives (LEIs) — the primary vehicle for local economic development — receiving just $50 000 of State funds. Up to 1996 the Queensland Government did not provide funding to development agencies.13 Across Australia economic development agencies frequently attempted to overcome the deficiencies within their budgets by taking on additional responsibilities and tasks, for which they received funding from a State or Commonwealth program. In the mid-1990s,

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for example, many agencies were heavily involved in labour market training programs. These ‘soft’ funding sources, however, are often relatively inflexible, insecure and make only a very limited contribution to the budget the agency can devote to its priorities.14

THE ROLES AND FUNCTIONS OF ECONOMIC D E V E L O P M E N T AG E N C I E S The activities and functions performed by economic development agencies are fundamental in determining their effectiveness in furthering the growth of their region. Respondents to the 1996 survey were asked to define their ‘core business’, that is, the activity or set of activities that constitutes the central task, or tasks, of their organisation. In aggregate, the responses of the economic development practitioners exhibit both convergence and diversity (Table 7.1). The diversity is evident in the breadth of activities identified as being at the ‘core’ of agency operations. By the measure presented here, local and regional development agencies in Australia identify themselves as being primarily lobbyists, co-ordinators of government programs, fund seekers, community development agents and vessels for strategic planning (see page 150). Table 7.1 What is your core business? Activity Business Development Regional Economic Development Local Government Self-Employment/Business Creation Business Attraction Labour Market Programs Infrastructure Co-ordination/liaison Industry Development Strategic Planning Region Promotion Information Provision Tourism Programs Form Filling/Administration Accessing Funds for Development Advice to Community Lobbying Missing/Not Stated Total SOURCE

Frequency 47 42 22 13 7 6 6 6 5 5 5 3 2 2 2 1 1 8 183

1996 Economic Development Questionnaire.

Per cent 25.7 23.0 12.0 7.1 3.8 3.3 3.3 3.3 2.7 2.7 2.7 1.6 1.1 1.1 1.1 0.5 0.5 4.3 100.0

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T Y P E S O F E C O N O M I C D E V E L O P M E N T AG E N C Y

Across Australia many different models of economic development agency have emerged. Examples include: IRIS – THE ILLAWARRA REGIONAL INFORMATION SERVICE

The Illawarra Regional Information Service operates as an incorporated body and receives financial support from the University of Wollongong, as well as a mix of government departments. IRIS is one of a handful of agencies that focus on the provision of information. It conducts business surveys and advises firms entering the region on potential markets, sources and sites. It receives a significant percentage of its funding from subscriptions and the sale of services. DAWSON VALLEY DEVELOPMENT ASSOCIATION

The Dawson Valley Development Association is based in nonmetropolitan Queensland. It does not employ staff and relies on the voluntary efforts of members to achieve its goals. The Association’s President is one of the local motel owners. The Association’s most significant achievement has been successfully lobbying the state government to build a dam for irrigation. THE SOUTHERN SUCCESS BUSINESS ENTERPRISE CENTRE

The Southern Success BEC is typical of this type of organisation: it has a small staff (three full time business advisers and two support staff) who provide business planning assistance to new and existing small and medium enterprises. The Southern Success BEC is somewhat unusual in that it also delivers a large Federal Government program for assisting disabled persons into the labour force. In the year 2000, it had a contract with the Australian Taxation Office to conduct seminars on the new tax system. THE WHEATBELT DEVELOPMENT COMMISSION

The Wheatbelt Development Commission is one of the nine Commissions funded by the Western Australian Government. It is based in Northam and has an extensive territory covering agricultural lands to the west and north of Perth. The Commissions are managed by Boards comprising prominent local persons, including local government representatives. The CEO is a senior public servant and has the status of a Head of Department within the Western Australian public service. The achievements of the Wheatbelt Development Commission include the establishment of an industry park and investment in telecommmunications.

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The responses to the question on ‘core business’ cover a wide range of activities but there is also a strong degree of commonality. This convergence is consistent with contemporary economic development theory which argues that the most productive strategies and policy interventions are those that build upon the resources of a region or locality. Variation is expected at the level of individual agencies but in aggregate economic development should be focused on the needs of businesses already within the region. Business development is, by a considerable margin, the largest single category of ‘core business’ and in conjunction with ‘self-employment/business creation’ accounted for a third of all responses. This is a remarkable coming together, especially given the disparate nature of the local economic development agencies that responded to the questionnaire. It is worth noting also that the second most frequent response ‘regional economic development’ also embraced actions of this nature. Knowing the core businesses of economic development agencies is important but there are many tasks undertaken by agencies that fall outside ‘core’ activities. Economic development agencies in Australia engage in a span of activities, either in response to the challenge of promoting development within their locality, or as a consequence of funding arrangements. The 1996 questionnaire asked economic development practitioners to select from a list those development activities they pursued in either greater or lesser depth (Table 7.2). The survey results present a wealth of data but two points stand out. First, it is clear that most agencies play an expansive role, working on a large number of often quite disparate tasks. Face-to-face interviews suggest that as part of normal business economic development, agencies expect to be involved simultaneously with 15 to 40 development actions. Significantly, this substantial workload and wide array of tasks is undertaken by small staffs working with limited budgets. Second, agencies engage in business development and assistance strategies that extend well beyond the boundaries of the agency’s ‘core business’. Some of these activities could be considered incompatible with contemporary approaches to effective local economic development. For example, many agencies offered land or subsidies to companies considering relocating to their region even though it is acknowledged that industrial recruitment has a low success rate.15 Almost half the agencies that responded to the 1996 survey sought out enterprises that could be enticed to the region, and almost 40 per cent provided labour market incentives for incoming firms.

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Aspects of the behaviour of many economic development agencies across Australia appear incompatible with contemporary management theory that emphasises concentrating on ‘core business’ and achieving defined performance targets. The wide-ranging role of local and regional development agencies must come at a cost, especially as internal resources are limited, and the expectations on development agencies are substantial. We must ask, therefore, why do agencies undertake these additional tasks? What leads them to go beyond their core business and pursue economic development strategies that carry high risks and high potential costs?

THE EFFECTIVENESS OF ECONOMIC D E V E L O P M E N T AG E N C I E S Why do local and regional economic development agencies in Australia take on more tasks, and a wider range of functions, than would appear compatible with optimum efficiency? What motivates them to behave in this way, and what pressures — internal or external — are critical in shaping their corporate planning? The answers to these questions seem to lie with how the impact of economic development agencies is judged, and by whom. How agencies are funded exerts a critical influence. The 1996 survey asked the CEOs of local economic development agencies, How do you rate the impact of your agency on local or regional development? They were asked to respond on a scale of 7 (major impact) to 1 (no impact) (see Fig 7.2). Their responses were somewhat surprising because they reported that at best their agencies had a modest impact. On the seven-point scale the median response was just 4.8, indicating that most felt they exerted a small positive influence on the growth of their region. This was also the modal response. While seven agencies felt that they had a major impact on their region’s development, three answered they had no impact and seven indicated they had very little impact. The relatively low scores may simply reflect the nature of the question. Economic development agencies may be well managed and efficient at achieving their strategic targets, but still have little impact on the broader regional economy. This interpretation is consistent with the views of one North American political scientist who has argued that most economic development programs are too small to exert a measurable impact on state or national growth.16

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Table 7.2 Which development activities does the agency engage in? Agencies engaged in Activity this activity No. Per cent Marketing Marketing the region 132 72.1 Firm recruitment Identifying prospective business in other regions Find land to attract new businesses to region Subsidise land or buildings to attract businesses Provide land or buildings to attract businesses Offer reduced rates to new businesses Assist with relocation costs Supply or train labour for new businesses Other financial assistance to new firms Assistance to retain jobs in the region

82 105 25 29 32 16 69 37 84

44.8 57.4 13.6 15.8 17.4 8.7 37.7 20.2 45.9

Business development Facilitating investment by streamlining approvals Facilitating growth through co-ordination Co-ordinating public sector agencies Local employment creation programs Small business development Venture capital Mentoring Training programs for specific businesses Business management advice Technology transfer Business incubators

76 137 134 117 133 13 103 88 120 15 65

41.5 74.8 73.2 63.9 72.6 7.1 56.3 48.1 65.5 8.2 35.5

Information Marketing information Export assistance through Ausindustry/Austrade Other export assistance Organising business forums

120 89 57 144

65.6 48.6 31.1 78.8

26 50 92

14.2 27.3 50.3

110 108 74 94

60.1 59.0 40.4 51.4

Rural assistance Farm adjustment Farm business development Assisting the development of new rural industries Tourism and other Developing tourism facilities Tourism promotion Urban business district development Aesthetic improvements to townscape SOURCE

1996 Economic Development Questionnaire.

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Figure 7.2 Practitioner assessment of their agency’s impact on their region

SOURCE

1996 Economic Development Questionnaire.

Why did the CEOs of development agencies consider their impact on their region to be so limited? It was not because they could not distinguish between effective and non-effective activities. Another question in the same survey found the CEOs had a clear understanding of what is, and what is not, effective action in their region (Table 7.3). Individual localities face unique problems that require solutions tailored to their specific needs and context but the majority of practitioners nominated the further development of businesses already within their region as their most productive theatre of operations. The survey respondents also had clearly developed views on what were their least effective activities. Generally these were activities beyond the control of the agency and included securing grants, information dissemination and labour market programs. Some light was shed on why practitioners consider their regional impact to be limited when they were asked to nominate those factors that represented the greatest hurdle or challenge for their agencies. Up to five responses were recorded for each respondent and the results are presented in Table 7.4. The data unequivocally indicate that resource constraints represent the greatest barrier for most agencies. In combination, staffing and funding limitations accounted for 218 (39 per cent) of the 553 responses. The volume of funding received by local economic development agencies and the conditions

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Table 7.3 Most and least effective activities Most effective Project Facilitation Business Development Region Promotion Labour Market Programs Tourism Programs Self-Employment Programs Infrastructure Industry Development Lobbying Information Provision Strategic Planning Co-ordination Regional Economic Development Business Attraction Administration Accessing Funds Networking

Total SOURCE

N 20 46 7 8 8 1 1 6 1 9 7 11 8 1 1 0 2

137

Least effective N Project Facilitation 1 Business Development 6 Region Promotion 7 Labour Market Programs 8 Tourism Programs 5 Self-Employment Programs 3 Infrastructure 2 Industry Development 3 Lobbying 3 Information Provision 14 Strategic Planning 4 Co-ordination 6 Regional Economic Development 7 Business Attraction 5 Administration 5 Accessing Funds 12 Networking 3 Market Research 3 Other 4 101

1996 Economic Development Questionnaire.

under which it was received were perceived to be the most significant barrier to effective development. With the possible exception of Western Australia’s RDCs, funding was the only issue of common concern to economic development agencies across Australia. Virtually all considered they had insufficient funds and most were concerned about the short-term nature of funding, the inflexibility of funding guidelines and the changing priorities of funders. The practitioners who responded to the survey were not simply concerned with the quantity of funding they received. Some 87 indicated that their core funding was insufficient (Table 7.4). A further 34 responded that they had difficulties with the duration of funding. Funding was often available for one, two or three years only, after which time the agency needed to find new sources of financial support or face closure. Fifteen respondents indicated they had problems with inflexible funding guidelines, nine noted that they had difficulties

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Table 7.4 What limits your effectiveness? All responses Staff Numbers Skills Turnover Subtotal Funding Lack of core funding Duration Inflexible guidelines Too little untied funding Too much time seeking Lack of other resources Changing priorities of funders Too reliant on local government Subtotal Management Too few senior people on board Too narrow interests on board Too wide interests on board Too little time for priorities Poor direction/strategic planning Too much administration Too little input from board Subtotal Role Not seen as legitimate Not seen as independent of government No influence on Comm/State No co-ordination with Comm/State Subtotal Political Context Problems of dealing with bureaucracy Lack of community support Parochialism/politics Government influence Competing agencies Subtotal Contextual Factors Land costs State of the economy Geography Lack of government support Poor understanding of RED Lack of regional image Subtotal Information Lack of information on region Lack of information on programs Subtotal Other Total SOURCE

28 21 2 51 87 34 15 6 9 9 5 2 167 2 4 1 5 18 5 5 40 10 3 10 20 43 10 30 20 2 30 92 2 6 36 11 13 5 73 7 9 16 57 553

1996 Economic Development Questionnaire.

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resulting from spending too much time seeking funds, while others had problems with being too reliant on local government funding, lacked other resources or had difficulties with the changing priorities of funding bodies. Development practitioners faced two types of problem with funding: first, they were concerned they had insufficient funds to achieve their agency’s goals; and second, they experienced difficulties with the way funds were provided. That is, the short-term nature of funding, the need to develop programs that exactly matched the priorities of funders, and the costs of seeking and administering funds generated a significant impost for local and regional economic development agencies. Additional information was collected on whether respondents believed a) that they had insufficient funding to carry out their core functions; b) that the effectiveness of their agency was reduced by the short-term duration of much of its funding; and, c) that the effectiveness of their agency was reduced by the lack of flexibility in funding guidelines. The respondents to the 1996 survey were, on balance, of the opinion that they had insufficient funds to undertake their core functions (modal score of five on the seven point scale). The practitioners were evenly divided on the question of whether funding was insufficiently flexible (modal score of four on the seven-point scale) but were emphatically of the view that the short-term nature of funding reduced effectiveness (modal score of 6 on the seven-point scale). Respondents to the survey nominated a number of non-financial factors that they felt limited their effectiveness. In aggregate, the political environment in which agencies function, the problems of dealing with complex layers of government and competition from similar agencies represented the second largest group of impediments to effective development practice. American and British research has considered the complex politics of local economic development in some depth, 17 and it was anticipated that politics would emerge as a significant impediment. However, the problem was more common and more serious than anticipated. Perhaps somewhat surprisingly, a lack of community support was mentioned on 30 occasions, while the politics of parochialism also loomed large. Some respondents reported they had been unable to gain the support of the local community and were not seen as its legitimate representative. This is a circumstance that flies in the face of the community development literature18 but it is a situation that is entirely explicable: the quasi-

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independent nature, and private sector focus, of many agencies ensures their relevance to the interests and demands of business, but carries no guarantee of community acceptance or leadership. Management problems were also important. Boards of Management oversee the operations of most agencies and in a small, but significant, number of cases they were considered an impediment to greater effectiveness.

U N D E R S TA N D I N G T H E B E H AV I O U R O F L O C A L A N D R E G I O N A L D E V E L O P M E N T AG E N C I E S In 1988 the American academic Harold Rubin published an article with the arresting title ‘Shoot anything that flies; claim anything that falls: Conversations with economic development practitioners’.19 Part of his argument was that economic development practitioners in the US have a limited capacity to affect the economic future of a city or region, but carry the burden of unrealistic expectations about what they can achieve. Skilful operators are therefore inclined to claim credit for whatever good fortune comes to their community. They also pursue any and every opportunity that comes their way. On the strength of the analysis presented above we would argue a different, but comparable, set of processes is at work within local and regional economic development in Australia. American economic development practitioners need to secure the favour of local politicians but Australia’s practitioners and agencies tend to be more distant from the political process. They are, however, inexorably pushed to defy Blakely’s schema and adopt several, rather than one, of the economic development roles he identified. The tasks performed and the strategies developed by economic development agencies in Australia are shaped by conflicting priorities. On the one hand they need to focus on the long-term development of businesses within their region. This strategy has a high probability of success, and low risk, but employment gains are likely to be modest — at least in the short term — and of little public, media or political interest. There is an opposing imperative that directs economic development agencies to attempt to secure the sort of community and political support that many report as lacking. Agencies therefore engage in a wider array of activities, and adopt practices with a lower probability of success, in order to be perceived to be working for their community.20 This imposes additional costs on the agency and dilutes their efforts in business development.

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Finances cut across both spheres as agencies with insufficient resources will take on additional roles — such as the delivery of new programs, or the administration of activities for other governments — in order to boost revenues. On the other hand, however, the short-term nature of funding, and the limits placed on expenditure by grant-awarding bodies, erodes the capacity of the agency to meet its core objectives because it is left performing too many tasks with too few resources. The overall outcome is a less effective system of local and regional economic development. In part, it means that economic development agencies continue to pursue industrial recruitment despite the high costs and low rewards associated with this behaviour. Why they do it and what it means for the broader economic scene is discussed in greater depth in the next section.

‘ C H A S I N G S M O K E S TA C K S ’ Governments across Australia attempt to secure economic expansion and job growth by offering grants and other incentives to firms. It is a fact of life within Australia’s economic development scene, as it is in other countries, such as the US. These activities are known under various labels including ‘industrial recruitment’, ‘selective assistance’, ‘smokestack chasing’, ‘business retention’ and ‘corporate welfare’. However, the practice remains the same regardless of the label — it is the payment of public funds to private companies in order to secure new investment or ensure the ongoing presence of existing production facilities. The Industry Commission estimated that State governments outlaid $2.5 billion on general and selective assistance to industry in 1994–95, and a further $3.2 billion in payroll tax exemptions was provided in that financial year. Local governments committed a further $220 million over the same period. 21 The Industry Commission’s estimate is likely to be under, rather than over the mark — a fact the Commission recognised — because some State governments do not report their dealings in full, and because some incentives, such as the award of government contracts, are difficult to cost accurately. Regardless of the true value of incentives to business, public investment in attracting firms is substantial. It is roughly equivalent to the Federal Government’s national expenditure on higher education and six times its expenditure on public housing. This commitment of scarce public sector resources on business attraction takes place despite the fact — as noted in Chapter 2 — that

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industrial recruitment is bad policy and has been recognised as such for some time. Why then, do governments continue to offer incentives intended to lure firms to their State or local government area? What are the benefits they seek to achieve? Are these benefits real, or are they an illusion? Are the costs of chasing businesses as high as some would suggest? In Chapter 2 we discussed how thinking about the most appropriate ways to generate economic and employment growth within a region has changed. Approaches based on the attraction of firms from outside the region have been supplanted by strategies that seek to boost the growth of firms starting up or already within the region. A number of authors have suggested there have been at least three waves within economic development theory and practice.22 The first wave was based around offering incentives to relocating firms; the second emphasised the retention and expansion of existing businesses and the third was ‘characterised by reinventing government to focus on market-based incentives, leveraging resources for development and building networks for development’.23 The idea of ‘waves’ in economic development theory is popular, but as Tietz has noted, the new ideas and practices have never entirely replaced the old. Instead, ‘the lure of industrial attraction, with its lottery-like huge jackpots and uncertain probabilities, continues to exert an enormous impact’.24 In the US, the new ideas have been attractive in those parts of the country with a declining manufacturing base, while the poorer southern and western states have continued to bid for jobs at a frenetic pace.25

THE COST OF FIRM RECRUITMENT The provision of incentives to attract firms into a particular region carries substantial costs both for the local community and the wider economy. The local costs are perhaps most easily calculated. In 1998 Time magazine in America undertook a special investigation of what it termed ‘corporate welfare’. It examined both the incentives to relocating businesses generally and individual instances of government largesse to corporations. It argued there were three fundamental failings with government handouts designed to secure business retention or attraction. First, their selective nature means that such government actions are inherently unfair. Incentives are only offered to large firms — often multinational corporations — while other businesses miss out on these ‘sweetheart’ deals. Second, ‘everyone else pays for economic incentives — either with higher taxes, fewer

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services or both’.26 Time used the example of the Mercedes-Benz plant in Alabama. In the early 1990s Mercedes-Benz received a US$253 million package to locate a plant at Vance in Alabama. Governments purchased the site on Mercedes-Benz’ behalf, cleared the land, built and equipped the plant, improved roads and built a training facility for new staff. Alabama is one of the poorer states and the funds directed to the Mercedes plant were not available for other purposes, such as social expenditures. This was reflected in the local high school where 540 students crowded into a school designed to accommodate 290, and where most classes took place in portable classrooms because of insufficient funds for permanent buildings. In Arkansas the small town of Evansville has been denied a government grant of $750 000 to secure a safe water supply because state development expenditures have been directed to a nearby potato chip factory. This plant, run by Frito-Lay a subsidiary of PepsiCo Inc., a corporation with $20.7 billion in sales in 1997, received $10 million in direct assistance as well as discounted loans of $105 million.27 Time’s third and final criticism of business incentive arrangements is perhaps the most telling because it suggests a fundamental failure in the whole ethos of firm recruitment. Time pointed out that more often than not business incentives simply don’t work. In America large corporations have been the biggest recipients of government selective assistance. However, these ‘Fortune 500’ companies have been shedding jobs for more than a decade and are expected to lay off more workers over the next decade. Significantly, companies and industries often sought assistance when they were in decline. Firms involved in the car-building and ship-building industries, for example, received substantial selective assistance despite significant excess capacity in both these industries nationally and globally. Time’s survey found that at best communities who won bidding wars gained the relocation to their town or city of jobs from another part of the US. In these instances the community might have secured the plant, but there was no national benefit. But of greater concern, corporations often reneged on their side of the bargain, providing fewer jobs or more poorly paid jobs than originally negotiated. There is evidence of similar problems in Australia. In its 1996 report the Industry Commission expressed its doubts as: ... the overall impact of the shift of resources as a result of selective industry or firm assistance will be to reduce the real income

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of the community as a whole. As well as representing a transfer from either taxpayers or consumers to business, there is likely to be a net loss in the efficiency of resource use as a result of this transfer.28 Australian firms appear no more likely than their North American counterparts to abide by the terms of their assistance packages. Media reports suggest that in South Australia over the last decade only one-third of budgeted assistance payments were made by the State Government because firms had not achieved their employment targets.29 Similarly, large multinationals involved in declining industries appear to be the biggest recipients of government favour. In August 2001 Mitsubishi announced it would build a new model sedan at its Lonsdale and Tonsley Park plants in South Australia. This announcement came after media reports in Japan suggested the corporation would close operations altogether. The Federal Government was reported as providing $20 million in assistance, on top of the assistance already offered by the South Australian Government.30

WHY FIRM RECRUITMENT PERSISTS Why does firm recruitment continue if its problems are so well known? Why don’t governments pursue other strategies? In some parts of the world the recruitment of firms is a lesser problem than in Australia or the US. The Treaty of Rome that established the European Union prohibits member nations and their regions from providing industry incentive packages that lure a business from one member nation to the next.31 Provincial governments in Canada have signed an agreement that effectively prohibits governments from offering incentives aimed at attracting firms from province to province.32 Of course, this doesn’t limit competition with the US or in attracting new investment. The American author Scott Loveridge offered eleven hypotheses on why industrial recruitment has persisted in the United States.33 Loveridge suggests that tradition might be one reason why governments continue with industrial recruitment. Having developed industrial recruitment policies, and having established expertise in the field, governments may find it difficult to wean themselves off this approach and onto more productive activities. The expected value of industrial recruitment may also be important. The chances of attracting a business are low — Loveridge estimated that in any year

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there were 200 to 300 significant business relocations in the US, and 15 000 competing communities — but the expected benefits were so high that participation in bidding competitions was inevitable. Loveridge noted that the political payoff of industrial recruitment was substantial and that ‘the “big fish” that got away may be preferable for gathering political support for economic development programs, to small entrepreneurship programs’, even though the latter have a much higher success rate. Politicians may award higher priority to spectacular, but inevitably unsuccessful, industrial recruitment campaigns over more mundane business building strategies because they are more likely to attract public and media attention. The impact of political factors should not be underestimated. One North American commentator noted that: Creating jobs is not the goal of these (economic development) programs. The goal of these programs is to generate job announcements.34 The high discount rate of economic development strategies was Loveridge’s fourth hypothesis attempting to explain the continuing popularity of industrial recruitment. That is, economic development programs need to have a relatively rapid turnaround because of changes in the political and policy landscape. Industry cluster processes and the development of research and development into downstream processing may take a decade or longer to produce economic growth, but governments are elected for three or four years. Industry recruitment operates on a much tighter time frame and is therefore synchronised with the political cycle. The weakness of communities and governments is a fifth possible explanation. Those who lack the ability or skills to engage in more substantial economic development activities can claim some commitment to economic development if they offer selective business assistance, even if they are unsuccessful in their efforts. To use Loveridge’s analogy ‘It is easier to cast your bait and wait for a strike than to build a pond, stock it with fingerlings, and then feed the fish until they mature’.35 Industrial recruitment has high costs if the community or government is successful, but failed bids impose limited or zero additional costs. Industrial recruitment can be used to diversify the suite of economic development activities pursued by a government or community. It may be one of a number of programs used to encourage

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growth, and while it may not be a priority, it may persist within the broader set of policy instruments. Loveridge’s seventh possible explanation for the continuing popularity of industrial recruitment notes that all communities and governments can aspire to recruit. Unlike many other strategies it is not contingent upon other external factors — such as a sufficient population to justify a major retail development — nor does it require highly skilled staff. In some instances, recruitment may be appropriate. Loveridge cites locations where major facilities are unused. If local firms cannot take advantage of that resource there could be real economic benefits in subsidising an external firm to enter the region. Loveridge’s ninth hypothesis was that industrial recruitment may make sense when alternative development strategies are likely to result in perverse outcomes. For example, the establishment of a business incubator in the country might result in job growth in an area of high unemployment, but the additional labour required may not match the skills of the existing population. The successful firms could then only grow by importing labour from outside the region, or moving elsewhere. Tenth, Loveridge argues that some communities are doomed to succeed and offering incentives can give the community the chance to have the type of development to which they aspire. Finally, Loveridge suggests that economists have underestimated the benefits of development. This is an interesting notion as the mainstream economic literature has been highly critical of industrial recruitment. The Industry Commission felt that State governments had wrongly used multiplier analysis in assessing the benefits to come out of their recruitment activities. This is a challenging intellectual exercise because the costs and benefits of economic growth operate at so many levels. Additional firms generate greater direct tax revenues for governments, but also strengthen demand for existing regional products, and boost retail turnover. Under Australian Federalism, the greater the population the greater the quantum of Federal funds flowing to both State and local governments. These second order effects may be overlooked in economic analysis but may be prominent in the minds of politicians. We should also recognise that in Australia the State governments are the most active industrial recruiters and often they are competing for ‘symbolic capital’. The Victorian Government spent $45 million to stage the Grand Prix in Melbourne36 and stealing the event away from Adelaide was more a matter of marking out a territory on the world stage than of

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hard-nosed economics. On other occasions we must suspect that States enter bids that they do not expect to win, simply to ensure that the successful State doesn’t profit too much.37 This strategic behaviour ignores the rationality of economics. In sum, economic analysis may underestimate the benefits accruing from industrial recruitment because it fails to account for the second order impacts, it ignores the value of the ‘symbolic capital’ gained, and is blind to the strategic priorities of governments. Loveridge has presented compelling ideas on why governments and communities persist with industrial recruitment. However, there is only one group of clear winners from these activities and they are the businesses who demand, and receive, taxpayer money.

W H AT S H O U L D G OV E R N M E N T S D O ? The position of industrial recruitment within economic development is not as clear-cut as some research suggests. There are strong reasons why communities and governments would pursue this strategy. As the example on Flathead County shows (p 166–7), industrial recruitment occasionally brings real benefits to disadvantaged communities. This US example, taken from an Internet discussion group, illustrates how substantial external investment can permeate through a local economy. We should always recognise that cities and regions compete on the global, rather than a national, stage. For example, in the mid1990s a new titanium dioxide plant was proposed by a multinational company. Three locations were considered, Burnie in Tasmania, Port Augusta in South Australia and a site in Malaysia. For Burnie, competing against the Malaysian site also meant competing with Port Augusta and few would suggest Australian cities and regions should opt out of international contests. Similarly, firms establishing an AsiaPacific headquarters may well consider Sydney, Melbourne or Brisbane, but would also examine the feasibility of placing that investment in Singapore, Hong Kong or Kuala Lumpur. Offshore competition means that industrial recruitment strategies will remain one of the economic development tools employed by practitioners and governments. It is possible that Australia’s State governments could be persuaded to foreswear competition (and possibly local governments too), perhaps by entering an agreement similar to the Canadian model. However, this is unlikely given the history of Australian Federalism and the limited success of attempts to achieve co-operation between the States.

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I N D U S T R I A L R E C R U I T M E N T I N F L AT H E A D C O U N T Y, M O N TA N A

Everyone: Several months ago I asked for comments from this group on a deal the local governments in Flathead County MT were considering to attract a firm to the area. I received a lot of good advice which I also applied to what we were doing. I thought I would report back on what happened. First a little background. Flathead County is in NW Montana, Kalispell being the largest local city. County population is about 72 000. Absolutely beautiful area with very low incomes. While most of the US was doing well, the per capita incomes in this area fell, in real terms, in the late 90s. The economy is based on extractive industries that have physical resources that can be used, primarily wood and electricity for aluminum smelting. And of course tourism. It has been estimated by a local economist that a “living wage” for one person is $9.50 hour. Of course many jobs are well under this and constitute a drag on the economy. We have the highest rate of subsidization in our local hospital and the bad debt rates of the phone companies are high. Over 10 per cent of the workforce has more than one job. Severe economic distress is everywhere you want to look. But we do have good communications, low electric rates and a labor surplus. A Boston company called Stream International comes to town and offers to create 500 jobs if the local governments will help them. Stream is a support center for computer and computer related companies. If you buy a HP printer have trouble and call the 1-800 help line you are probably calling somebody at Stream not HP. To make a long two-month negotiation process short the deal was: Stream would create 500 jobs within 3 years. Each job would pay wages and benefits equal to the last computed state annual private wage (presently $22 093) for a 2080 hour/year job. Each job would pay a wage of not less than $7.50/hr. Stream would make $3.8 million worth of improvements to a building that the local government would own. Stream would pay a triple net lease of $6.50/ft2. They would also pay not less than $140 000/year in property tax and rebate any state income tax credit back to the local governments.

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The local governments would purchase 50 000 ft2 of space in a local empty mall ($2.5 million). We would also rebate back to stream $275 000/year for the improvements they were making as long as Stream created the jobs they committed to at the proper wage level. The local electric company contributed $250 000 of training assistance. The EDA threw in $500 000 toward the purchase of the mall space and we are getting a $400 000 grant for training assistance from CDBG (HUD). The deal was closed on 8 March. Stream rented a temp space and started to hire and train people. They began operations in their temp space in early April. Presently they have hired over 300 people, 45 per cent of whom have been hired well above the $7.50/hr minimum. They will finish moving into their refurbished space next month. The effect on the local labor market has been dramatic. Our unemployment rate is over a per cent lower that it was a year ago and employers are complaining of a ‘tight’ labor market. The effect of wages and benefits has been significant. The days of advertising for a receptionist at $8.00/hr and having college graduates apply are over. Long term benefits/costs are hard to see. We went for this deal because we thought it would have the effect of turning around our very low and getting lower wage situation. It has had other benefits. We had other new economy firms get interested in this area because Stream is here. The telephone company is installing better data communication because Stream is here. I know that many on this forum are not in favor of government getting involved with incentives to create jobs in an area. But in our case I think the deal we made was equitable and the benefits worth the cost. What, then, should governments do? What is the appropriate course of action governments should follow in the new century? The available evidence suggests that both State and local governments need to offer assistance to attract firms, but they should be selective in how that assistance is offered and to whom. Glean Searle offered some valuable insights into this issue in his discussion of changes in the philosophy of planning in Sydney. In the mid-1980s the Greiner

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Government cut services and social welfare expenditures and sought to stimulate economic growth by attracting additional investment.38 It introduced a Strategic Economic Development Package to provide ‘incentives in the form of financial and other assistance necessary to attract major strategic investment projects to New South Wales which would not otherwise come to the state’.39 Searle noted that the program was successful, but mainly because of Sydney’s inherent advantages, rather than as a result of the incentives offered to incoming firms. Nevertheless, $15.5 million was given to Optus to locate headquarters in Sydney while ‘British Telecom immediately won an outsourcing contract, to manage the government’s telephone network, on the strength of a commitment to invest $2 billion in NSW.’40 In 1993 a regional (Asia-Pacific) headquarters program was introduced which focused on tax incentives. Soon Sydney was capturing two-thirds of regional headquarters setting up in Australia. In 1995 the Carr Labor Government took office in New South Wales and imposed a new set of priorities. Significantly, it sought to reduce subsidies to incoming companies, maintain taxes and charges at levels competitive with other States, retain NSW’s Triple A credit rating and direct greater expenditure to education and health.41 Economic growth was no less important to the Carr Labor Government than for its predecessor, but it realised that it lacked the resources to continue to provide the subsidies firms sought and also provide the quality of life the electorate demanded. In addition, selective assistance was pushing up general taxes and making the State a less attractive location for smaller enterprises. Sydney’s experiences through the 1990s suggest two things: first, incentives can be effective in attracting greater investment and in bringing about employment growth. However, the vast majority of Sydney’s economic growth through this period can be attributed to its natural advantages — its location, existing industries, population size et cetera. Second, inducement packages for individual firms are expensive and offering too much assistance may raise taxes and charges for existing businesses, thereby reducing their competitiveness or encouraging them to leave. Some industry attraction is therefore a policy positive, but being too liberal with incentives may jeopardise overall economic performance. Any incentives should therefore be offered selectively and in parallel with strategic planning.

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CONCLUSION Local and regional economic development in Australia is pursued by a myriad of relatively small organisations. Most practitioners, and most agencies, have a well-developed sense of what constitutes effective action. Most endeavour to pursue these more productive strategies but other concerns and other imperatives often intrude. In part the broad role of local and regional development agencies is a function of the high expectations placed on these bodies. Virtually no area of the economy, society and even the environment is beyond the responsibility of organisations charged with securing a brighter and more prosperous future. Economic development agencies are involved in such diverse projects as the regulation of ground water, the establishment of communications networks, the control of environmental weeds and the provision of cultural facilities, because each and every one of these activities can be seen to have an economic impact. This situation is regrettable because it means that the technical side of economic development — the establishment of industry clusters, the facilitation of export amongst regional enterprises, marketing the region, networking and the development of new industries — receives insufficient attention and resources. Most States, for example, have relatively few business incubators despite widespread recognition of their ability to stimulate local economies. Industrial recruitment persists as an activity of governments in Australia because it is seen as a ‘quick fix’ to the problems of local economies and because interstate rivalries drive State governments to bid against each other. The popularity of industrial recruitment also reflects the relative weakness of more substantive economic development policies and practices. In part governments have turned to chasing smokestacks because they could see no other solution. Mechanisms are needed that encourage governments to look at longterm solutions to regional and local economic decline. KEY LESSONS THE

PRACTICE OF ECONOMIC DEVELOPMENT IN

AUSTRALIA

In 1996 the average budget of economic development organisations in Australia was just $220 000, but there was considerable variation. Australia’s economic development agencies have a ‘Third World’ demography, with a high level of agency births and deaths. All three tiers of government support local and regional economic development organisations and this gives

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rise to an apparently crowded and chaotic institutional landscape. Competition between agencies is a concern for practitioners, as is limited support from the community. Most economic development practitioners have a well developed sense of what constitutes effective action in the realm of economic development. Business development lies at the core, but other positive actions include: •

Project facilitation

•

Co-ordination of programs and initiatives

•

Tourism programs

•

Labour market programs

•

The provision of information

Most agencies, however, stray beyond their core business in order to satisfy other demands placed beyond them. This broader role limits their effectiveness as do problems with funding. Insecurity of funding is one of the most pressing issues confronting economic development agencies in Australia. INDUSTRIAL

RECRUITMENT AND BUSINESS RETENTION

Large businesses are virtually the sole recipients of selective assistance from governments. Such assistance tends to be more common, and of greater value, in declining industries. Industrial recruitment and business retention have at least three major failings: a) others have to pay for the assistance provided to large corporations through higher taxes or fewer services; b) recipient companies often do not meet their obligations under assistance packages; and, c) the provision of assistance to individual firms has, at best, no positive impact on the national economy and quite possibly a deleterious influence. There are a number of reasons why governments are likely to continue with industrial recruitment programs and these reasons appear to be more potent under federal systems such as in Australia and the US. Other nations, and other systems of government, appear to have limited this competition within their territories. However, competition between cities and regions continues unabated internationally. The literature suggests that Australian governments will never escape from competitions to attract new investment, but they need to be selective in how much assistance is offered and which types of company are given assistance.

8

INDIGENOUS PEOPLE AND A U S T R A L I A’ S R E G I O N S

Indigenous people collectively are the poorest Australians. Aboriginal and Torres Strait Islander peoples are often described as existing in Third World conditions within a first world nation. Nevertheless Indigenous people often play critical roles in regional economies, especially outside the capitals. In an economic sense, Indigenous organisations (such as community associations, land councils or arts centres) can often be the major and most stable employers in small towns; Indigenous land and culture can be the anchor for regional tourist and environmental initiatives. Indigenous public funding through Community Development Employment Projects (CDEP: Indigenous ‘work for the dole’) can be a key contributor to local economies. In other ways too, Indigenous interests can shape regional development directions. Legal recognition of Indigenous rights of land, sea and resources requires regional development practitioners to incorporate Indigenous issues more fully within regional policies.

VISIBLE AND INVISIBLE: THE REGIONAL POLICY CHALLENGE The stark facts of material disadvantage experienced within Indigenous Australia create pressing issues for regional development practitioners. If regional development is to address the disadvantage of individuals and communities, there would seem to be pressing reasons for Indigenous inequality to be a prime focus for regional development strategies. Yet this has not necessarily been the case. To paraphrase the economic researcher Greg Crough,1 on different occasions Indigenous people have tended to be either ‘visible’ or

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‘invisible’ within regional development agendas. At times Indigenous issues or actions are given great weight (and not always in a positive way: supposedly detrimental economic impacts of native title claims, for example, are sometimes exaggerated for political purposes); while at other times Indigenous interests are rendered ‘invisible’ within regional economic debates. There are many reasons for the different ways Indigenous interests are incorporated within regional development. One key issue, however, is the institutional structures that govern the relationship between regional development and Indigenous affairs. In contemporary Australia there tends to be a separation of responsibilities between agencies responsible for regional development, and those responsible for Indigenous people and communities. The advent of specialist Indigenous agencies reflects different priorities within the Indigenous and non-Indigenous components of Australian society. Agencies such as the Aboriginal and Torres Strait Islander Commission (ATSIC), the Indigenous Land Corporation (ILC), and Aboriginal community corporations with municipal functions, tend to operate within different cultural and political contexts than nonIndigenous agencies. Indigenous agencies often embody holistic aspirations for self-determination, connecting economic goals with strategies of land access and ownership, cultural maintenance, and the provision of municipal and social services. Given the history of dispossession and assimilationist bureaucracy within Indigenous Australia, there are of course sound reasons why Indigenous people desire specialist, self-determining agencies for community management and service delivery. Seen in terms of regional development planning, however, the existence of specialist Indigenous bodies may sometimes encourage a climate in which regional development practitioners perceive issues concerning Indigenous people as some other agency’s concern. And in some cases, these separations ramify into perceptions that Indigenous interests may be antithetical to ‘regional development’. In one noteworthy instance, a regional development strategy for Katherine in the Northern Territory painted local Aboriginal opposition to the proposed Coronation Hill gold and palladium mine as ‘an impediment’ to regional development.2 Aboriginal perceptions on the importance of conserving Coronation Hill were invalidated as a legitimate regional concern (despite the fact that Aboriginal people at the time constituted over half of the Katherine region’s population). It was as

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if some community members were more equal than others when stating their aspirations for the future shape of their region. Of course Indigenous interests are not always marginalised in regional development strategies in such a brutal fashion. The past decade has seen enhanced appreciation by regional policy practitioners of the need to include Indigenous stakeholders within regional development fora. Obviously at times Indigenous and nonIndigenous people will have different perspectives on regional strategy and development. There should be no surprise in this — the task of building regional development inevitably depends upon the need to coalesce varying perspectives within communities. Yet regional development strategies that are not inclusive of Indigenous views — or do not recognise a diversity of views within the Indigenous community — or which (unintentionally or otherwise) construct Indigenous interests as ‘outside’ the realm of regional development, are clearly inappropriate. The need to negotiate the bureaucratic separations of Indigenous and non-Indigenous policy areas provides a central challenge for the incorporation of Indigenous interests within regional policy frameworks.

INDIGENOUS DEMOGRAPHICS AND REGIONAL DEVELOPMENT Indigenous people and communities are positioned to play an increasingly pivotal role within the development agendas of many parts of non-metropolitan Australia. The vast majority of Indigenous people live outside the capitals. Only 15 per cent of the Indigenous population live in the capital cities and 21 per cent live in remote towns, communities and outstations.3 The remaining 64 per cent of Indigenous Australians live in urban and rural centres in regional Australia. Australia’s Indigenous population is growing faster than its non-Indigenous population. On the one hand, the Indigenous population is more visible statistically. The 1996 Census results indicated a rate of growth in the Indigenous population considerably in excess of contemporary population forecasts. This almost certainly reflects improvements to census collection techniques that have reduced the under-count of the Indigenous population.4 Key recent changes to Indigenous demography include: some reductions in mortality rates, reduced fertility rates (although still higher than the non-Indigenous population), and rapid urbanisation.5 The Indigenous population is considerably younger than the

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non-Indigenous population. In the Kimberley (see Fig 8.1) for example, 50 per cent of the Indigenous population is less than 20 years of age.6 This is important not only because it suggests net growth in the relative population share of Indigenous people in many parts of regional Australia, but because it highlights issues of service provision. For example, increased numbers of young Indigenous people will place demands on the provision of secondary, vocational and tertiary education; sectors that are characterised by strong local multipliers and strategic regional significance. Figure 8.1 Locality map, Northern Australia Darwin #

Kakadu N.P. Katherine #

Kimberley Region

Northern Territory Queensland

Western Australia Brisbane #

South Australia

New South Wales

# Perth # Adelaide

#

Sydney

A. C .T.# Canberra Victoria

Melbourne#

T a s.

Hobart #

It is also the case that, especially in remote Australia, Indigenous populations are highly mobile. Population data gathered from sources such as the Census provide only a snapshot of populations by household for a given moment in time. Definitional constructs of ‘household’, ‘usual place of residence’ and ‘usual occupation’ can be

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highly problematic when applied to Indigenous communities. Resource allocation at both inter-regional and intra-regional levels tends to depend on (assumed to be) reliable population data and, if these data are awry, funding and service provision regimes may be highly suspect. Census data do not measure population mobility (except at an interval of ‘usual place of residence five years ago’) and hence greatly simplify the demographic characteristics of Indigenous populations. The lives of many Aboriginal people, especially in northern Australia, feature regular migration between major communities and outstations (an outstation is a generally small and isolated community inhabited by people with common ties to that land). The implementation of land rights legislation and the granting of Indigenous land over the past three decades has stimulated the outstation movement. Indigenous populations of major communities and outstations vary within an annual cycle in accordance with seasonal, ceremonial and other factors. Taboos concerning death and ‘sorry time’ also affect these movements. The ability of Census collectors to accurately enumerate Indigenous outstations is limited because of the isolation of these communities and their minimal physical infrastructure (many outstation dwellers sleep in temporary structures, posing major conceptual difficulties for defining permanent household numbers). In any case, snapshot population counts for a particular outstation on Census night might have little bearing or relevance to the average level of inhabitation in that settlement, because of considerable short-term population mobility. Knowledge of the scale and characteristics of Indigenous population mobility has been improved recently through Central Australian research.7 Using detailed longitudinal survey data from one remote Central Australian community, it was found that between 26 per cent to 35 per cent of the community’s population exhibited inter-community mobility (that is, they were not ‘core’ members of the community).8 This suggests snapshots of the population of a remote community may under- or over-estimate actual ‘core’ population levels by about one-third. And, more to the point, such snapshots fail to accurately describe the living conditions of approximately onethird of Indigenous people. Furthermore, there was considerable population mobility within this single community. Some 25 per cent of core residents moved between dwellings within this twelve-month period. These movements are often tied to kinship factors. This level

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of inter-community and intra-community mobility is not unusual: anecdotal evidence from service providers in remote Aboriginal regions suggests that community populations can fluctuate up to ‘four to five times’ their average size for brief periods. The authors of the study conclude that: Many Aboriginal people relate the concept of residency to an area rather than a specific community. Individual’s choice of living may be influenced by different factors — marital status, life cycle, social unrest in a certain locality, disagreements with relatives or other people in the community, the death of a relative, and the availability of water, bush tucker and services.9 Clearly these issues have major implications for service delivery and municipal management. Funding formulae tied strictly to snapshot population counts, and service delivery structures based on separate jurisdictional control for different communities, tend to oppose the ‘natural logic’ of Indigenous mobility. Over the past two decades the development of appropriate municipal planning models for Indigenous communities has preoccupied many Indigenous and mainstream agencies. The advent of ATSIC in 1989–90 was accompanied by extensive ‘regional planning’ exercises designed to construct relevant service delivery structures. In the Northern Territory, the longstanding Country Liberal Party (CLP) Government of 1978–2001 argued vociferously that Aboriginal communities were best managed through NT local government legislation (involving the separate funding and management of individual communities) rather than the rather more loosely structured Commonwealth Aboriginal Community Government legislation. In Western Australia a different structure has prevailed, with service delivery activities being managed through a Statewide Shires regime. The search for appropriate structures to manage Indigenous community service delivery has been hamstrung by continued bickering between the States, Northern Territory and Commonwealth on who has responsibilities for what. Despite Special Premiers’ Conference agreements in the early 1990s to streamline responsibilities for Indigenous service delivery, key elements of Indigenous community funding remain blurred. In Western Australia and the Northern Territory for instance, funding for internal Aboriginal community roads tends to be provided through ATSIC, whereas

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comparable activities in non-Indigenous towns are funded via local government mechanisms. These processes further encourage Indigenous affairs to be a political football. The inherent difficulties of Indigenous population enumeration, the provision of funding within highly mobile communities, and the ensuing unclear lines of responsibility between tiers of government, lead to arguments for holistic, regionally-based, service delivery. Over the past decades many Indigenous organisations have argued the case for regional funding autonomy, as a mechanism to instill flexibility within service delivery. The establishment of the Nunavet Territory in Canada has been viewed closely within Australia as a possible model. These arguments found a response in the Torres Strait with the creation of the Torres Strait Regional Authority, but on the mainland there has been no progress. Intensive debate around this subject in the last few years of the Keating Government was quashed in 1996 with the election of the Howard Government. Nevertheless, Indigenous leaders such as Noel Pearson remain strong advocates of regionalism within Indigenous service delivery, and it is likely that such calls will continue.

INDIGENOUS LEGAL RIGHTS AND REGIONAL DEVELOPMENT Incorporation of Indigenous issues within regional economic development policies and agendas is also important because of enhanced legal recognition of Indigenous rights over recent years. Passage of land rights legislation since the 1970s in the two Territories and all States except Western Australia has generated a secure land base for many Indigenous people. In addition to meeting cultural aspirations, communal ownership of traditional lands provides an economic asset that has generated qualitative transformations to Indigenous peoples’ relationships with many mainstream institutions. These roles were foreshadowed by Justice Woodward, Royal Commissioner to the development of Australia’s first land rights laws, who suggested land rights would have five purposes: 1.

The doing of simple justice to a people who have been deprived of their land without consent and without compensation;

2.

The promotion of social harmony and stability within the wider Australian community by removing, so far as possible, the legitimate causes of complaint of an important minority group within that community;

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The provision of land holdings as a first essential [step] for people who are economically depressed and who have at present no real opportunity of achieving a normal Australian standard of living;

4.

The preservation, where possible, of the spiritual link with his [sic] own land which gives each Aboriginal his sense of identity and which lies at the heart of his spiritual belief;

5.

The maintenance and, perhaps, improvement of Australia’s standing among the nations of the world by demonstrably fair treatment of an ethnic minority.10

Statutory recognition of Indigenous land through the various land rights laws of Australia is complemented and extended by the common law rights of Indigenous people established in the High Court’s Mabo decision (Mabo and Others v Queensland [No. 2] (1992) 175 CLR 1 F.C. 92/014). These common law rights, called ‘native title’ by the High Court, present new challenges for the consideration of regional development policy. Evidently this is a legally complex area subject to ongoing clarification by the courts and probable legislative review in future years by the Australian Parliament. The Keating Government responded to the Mabo decision through the enactment of the Native Title Act (Commonwealth) (1993). This legislation aimed to codify into statutory law key elements of common law established by the High Court. The legislation attempted to expedite the processes by which native title could be claimed and have validated, through the establishment of the quasi-judicial National Native Title Tribunal (NNTT); a body that could hear claims in more flexible ways than accorded through the courts. The history of native title to date, however, has been dominated by extensive and expensive recourse to the Federal and High Courts. A series of high-profile legal decisions have successively redefined the parameters of what constitutes native title. Key amongst these was the High Court’s Wik decision of 1996, which found that pastoral leasehold and native title could co-exist. This decision had vital importance nationally because under Mabo, native title was proven to exist only on land that had not been alienated (that is, converted from Crown status). In Wik, it was found that the leases under which pastoral operations had been granted, assumed ongoing residual rights for Indigenous people. The implications of Wik, thus, were that native title existed not only on the few areas of vacant and other special-use Crown lands across the nation; after Wik, native title could

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exist potentially across Australia’s pastoral rangelands and in other areas covered by Crown leasehold. Faced with this potential expansion in the national extent of native title, the Howard Government sought to amend the Native Title Act in 1997. The Howard Government’s Ten Point Plan proposed significant limitations to the scope of native title. These included the validation of State actions (such as the granting of mining permits) that may have been unlawful under the Native Title Act; native title being extinguished on Crown leases where those leases are said to confer ‘exclusive possession’; the abolition of native titleholders’ rights to negotiate on mining exploration; limitations placed on rights to negotiate on mining projects; and, in the case of native title rights on pastoral leases, the native title negotiating rights to be no greater than lessees’ rights.11 The passage of the Howard Government’s amended Native Title Act (following amendment in the Senate), in conjunction with a series of decisions in the Federal Court of Australia limiting the scope for native title claims, ushered in a more conservative native title environment during the late 1990s. Examples of this climate include the Federal Court’s rejection of the Yorta Yorta native claim in South-East Australia, and the successful appeal by the Western Australian Government against native title being granted in the Mirriuwung-Gaejjerong claim in the East Kimberley. By 2001 the native title process had descended into a litigiously complex set of claims, counter-claims and appeals that were detrimental to the expeditious resolution of these issues. These developments are no better illustrated than in the High Court’s decision in August 2002 in the long-running Mirriuwung-Gaejjerong claim. This decision asserted the Crown’s ownership of sub-surface minerals, but failed to resolve the key issue relating to claim, namely, whether native title was one right or a ‘bundle of rights’ that could be extinguished separately. The lack of a definitive decision by the High Court on this matter encourages further litigation and uncertainty. For its part, the Howard Government during its second term (1998–2001) displayed little desire to facilitate native title processes.

I N D I G E N O U S L A N D OW N E R S H I P A N D REGIONAL DEVELOPMENT Indigenous rights over land, expressed through statutory land rights claims or through native title, play a key role in the regional

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development processes of contemporary Australia. This is the case whether such rights take the form of creating new parcels of inalienable Indigenous freehold land, or whether (as in the case of certain classes of pastoral leasehold) they create conditions of coexistence. Under native title legislation, Governments have extensive legal obligations to notify native titleholders of changes in land use. Alienation of native title rights carries legal consequences. These issues were highlighted in the first case where a native title claim was proven to exist on the Australian mainland. In October 1996 the NNTT found that the Dunghutti people of Crescent Head, on the NSW North Coast, held valid native title rights over 12.4 hectares of Crown Land on the outskirts of the town, where a residential subdivision was planned. In a landmark decision, the Carr Labor Government recognised these rights and then paid $1.2 million compensation to native titleholders to allow the subdivision to go ahead. This compensation payment valued the Crescent Head land at 150 per cent of its freehold value, reflecting native titleholders’ ‘traditional attachment’ to their country. The Crescent Head precedent illustrates that vacant Crown Land is no longer a blank slate on which development projects can be drawn. The rights of native titleholders must be recognised and, if land is to be appropriated, this may come at a price. Indigenous landholdings are expanding through selective acquisition regardless of the legal recognition of native title rights over land, sea and resources. In 1995 the Keating Government established the Indigenous Land Corporation (ILC) as part of its response to the High Court’s decision in Mabo. The ILC has the statutory function of assisting the acquisition of land for Indigenous people unable to benefit from native title (i.e., Indigenous people dispossessed and therefore unable to prove an ongoing connection with their lands). The ILC is an unprecedented institution within Australia: its legislation mandates that the Commonwealth appropriates $121 million annually (indexed in 1994 prices) to be paid into a Land Fund, from which the ILC purchases land on behalf of Indigenous Australians. The ILC is empowered to draw only 34 per cent of Land Fund appropriations for its running costs and purchases, with the remainder invested to build a capital base. Commonwealth annual appropriations into the Land Fund will cease in 2004. By that time it is anticipated that the Land Fund will have a capital base of $1.106 billion.12 Ongoing investment of these

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monies is hoped to maintain a capital reserve for Indigenous land purchases into the future. ILC purchases are made in accordance with national and regional Indigenous land strategies. The ILC’s land acquisition guidelines assess potential land acquisitions in terms of their cultural and regional significance (i.e., strategic criteria); the role they can play for the economic and cultural lives of Indigenous people (i.e., specific criteria); and the implications of land acquisitions on wider regional development aspirations (i.e., regional criteria).13 The ILC is also required under legislation to consider land use management issues associated with its purchases. These activities were expanded in 1997, when ATSIC transferred its ‘Land Acquisition and Management’ Program to the ILC. The ILC has come to represent the nation’s primary agency not only for Indigenous land purchases, but for the management of Indigenous real estate. At December 1999, the ILC was funding 51 land management activities on Indigenous properties across Australia.14 The ILC’s National Indigenous Land Strategy came into effect on 1 May 1996. From that date until 31 December 1999 the ILC purchased 112 properties, with a combined size of 4.5 million hectares. These properties had a value of $103 million. Almost twothirds of the purchased properties were leasehold (mainly pastoral leasehold). Once purchased, the ILC divests property ownership to Aboriginal corporations representing the interests of local Aboriginal people. The Australian National Audit Office estimated that the divestment of properties purchased over the period 1996–99 created 32 600 Indigenous beneficiaries, equivalent to 11 per cent of Australia’s Indigenous population.15 Enshrined in legislation, appropriations to the Land Fund survived the budgetary cutbacks to Indigenous Affairs undertaken by the Howard Government. Land purchases by the ILC combined with the prospect of a significant capital base for further acquisitions means that enhanced Indigenous land ownership will be a prevailing feature of contemporary Australian regional development. Over time, as the immediate land needs of dispossessed Indigenous people are satisfied, it may be expected that the ILC’s acquisitions become increasingly entrepreneurial and strategic. As these developments are pursued, there will arise stronger links with broader regional development agendas. These processes pose long-term issues for regional development agencies.

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THE ABORIGINAL ECONOMY During the past two decades a regional development literature has emerged seeking to ‘write Aboriginal people into the economic development story’ of regional Australia. The economic role and position of Aboriginal people in regional Australia was first analysed systematically in a series of studies published by the Development Studies Centre of the Australian National University in the late 1970s and early 1980s.16 These studies and further research led to the first major book published on this topic, Fisk’s (1985) attempt to assess Aboriginal participation in the national economy.17 In the decade following the release of Fisk’s work, a number of Aboriginal organisations in northern Australia commissioned research aiming to specifically address questions relating to the regional impact of Aboriginal monetary expenditures. In Central Australia, Crough, Howitt and Pritchard quantified the Aboriginal contribution to the Central Australian economy. For the year 1987–88, Aboriginal people and organisations were found to contribute $187 million to the regional economy, approximately onethird of total regional output. This financial analysis was used to underline the central role played by Aboriginal spending in underpinning the Central Australian economy.18 The 1989 Central Australian study became a template for future investigation of the Aboriginal economy at the regional level. In 1991, Kimberley Aboriginal people at the ‘Crocodile Hole meeting’ endorsed the preparation of a similar study to investigate regional economic issues. In the publication arising from this decision, the Chairman of the Kimberley Land Council explains the importance of regional Aboriginal economic research in the following terms: The majority of Kimberley Aboriginal people are now totally displaced from our lands and marginalised in the region’s economy. We want to negotiate new Self Determination arrangements with the Commonwealth and the Western Australian Governments. We also want to develop local economic initiatives so that we can free ourselves from the dependence and control of governments. The purpose of this study is primarily to provide Aboriginal people and their organisations in the Kimberley with information to achieve these objectives.19 Subsequently, further regional Aboriginal economic research has

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been undertaken on the Northern Territory Top End20 and in the Kimberley (a follow-up study to Crough and Christopherson’s 1991 report).21 The common feature of the studies cited above is the attempt to aggregate Aboriginal economic activities into a combined whole, thus rendering ‘visible’ the economic role played by Indigenous people and organisations. At the regional level — especially in northern Australia — the economic significance of Aboriginal people lies not only in their direct consumption of economic goods, but their use and consumption of public goods, services and amenities. In the regional economies of northern Australia in particular, a considerable proportion of public sector activity is dependent upon, and motivated by, the provision of services to Aboriginal people. By examining these funding arrangements, and placing them in the context of regional economic flows, these studies expose the degree to which the regional economies of Australia’s north actually depend upon Indigenous people and organisations.

THE ABORIGINAL ECONOMY OF THE KIMBERLEY These issues are highlighted by recent research on the role of Aboriginal people in the Kimberley regional economy. 22 The Kimberley provides a good case for examining the role of Aboriginal people in a regional economic context. The region’s remoteness (see Figure 8.1), intra-regional distances and small population (27 712 at 1998) dispersed over an enormous area (421 000 square kilometres — roughly twice the size of the State of Victoria) imposes a specific character on the nature of regional commercial activity. Historically, the geo-climatic requirements of the pastoral industry provided the Kimberley with a source of regional identity. Expansion of the pastoral industry meant that the Kimberley’s regional identity was synonymous with the concept of the Kimberley pastoral belt. Once established in this way, the ‘Kimberley region’ became reified in the administrative boundaries of government agencies and grew to become a well-known ‘taken-for-granted’ geographical space. The pastoral industry, however, is no longer the driver of Kimberley regional development. Kimberley pastoralism generated an average annual gross value of $38 million over the period 1993–94 to 1997–98, in comparison with the mining sector ($574 million), pearling ($144 million) and tourism ($112 million).23 Expansion of these industries restructured and fuelled the growth of

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the Kimberley regional economy through the 1990s. However, over this same period the Kimberley’s Aboriginal population also grew rapidly and attained new rights over land and resources. Aborigines currently comprise 45 per cent of the Kimberley population. The congruence of rapid regional economic growth alongside significant change to Aboriginal people’s legal and political situation suggests that in the twenty-first century, patterns of regional economic development in the Kimberley may differ markedly from historical trends. To date, the generation of wealth associated with rapid economic growth in the Kimberley has largely bypassed Aboriginal people. Aboriginal people in the Kimberley face chronic levels of socioeconomic disadvantage. Yet at the same time, it is apparent that Aboriginal people and Aboriginal interests are becoming increasingly central players in charting the Kimberley’s economic future. Kimberley Aborigines are asserting their voices and playing a more active role in the future direction of regional economic development. These two facts are pivotal for future regional development strategies in the Kimberley. On the one hand, the need to address Aboriginal socioeconomic disadvantage must be a pre-eminent concern for future regional development; on the other, regional development paths will be driven increasingly by the legal, political and commercial powers of Aboriginal people, organisations and companies within the regional economy. Examining these issues brings into focus the role of government within this region. In the Kimberley, as in other areas of northern and ‘outback’ Australia, regional identity is closely associated with themes of private industry, enterprise and hardship. These themes may accurately reflect the personal identities and dominant cultures prevalent in these areas, but they tend to encourage a mythologising of these regions’ economic bases. The ‘opening up’ of these regions for commercial development has involved massive investments by the public sector. Basic public services — electricity, education or police, etc — are inordinately expensive to deliver in these regions. Submissions to the Commonwealth Grants Commission by the West Australian, Northern Territory and Queensland Governments testify to the cost impositions faced by these administrations through their need to provide services to their northern populations. The delivery of these services to the Kimberley rests on complex sets of financial transfers within and between the Commonwealth, West Australian and local governments.

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Thus, what passes as much ‘private sector’ activity in the Kimberley (and in other regions of northern Australia) could be reclassified as ‘semipublic’, in the sense it is reliant ultimately on the public sector for contracts, direct and indirect subsidies, or financial guarantees. The concept of the ‘semipublic’ economy provides a neat way to describe the interplay of private and public sector interests in frontier regions. It was first coined to analyse the experiences in the ‘frontier’ economy of the US South-West, where research identified an extensive reliance by private enterprise on public sector expenditures and contracts.24 These conceptual issues are vital for understanding the role of Aboriginal people in the Kimberley regional economy. The mythologised, private-sector frontier discourse of Kimberley regional development highlights the role of extractive industries in the generation of jobs and income regionally. By extension, these accounts may marginalise the position and role of Aboriginal people as economic actors. In contrast, identifying the Kimberley as a semipublic regional economy brings into focus the web of public sector financial arrangements that underpin monetary flows into and within the region, thus enabling evaluation of ‘the Aboriginal component’ of the Kimberley economy. Research by Pritchard and Crawford conducted in 1999–2000 used these terms in an attempt to quantify the economic contribution of Aboriginal people regionally. This involved two steps. First, the researchers examined and reviewed the financial and structural relationships between Kimberley Aboriginal people and governments. The financial resources expended by Commonwealth, State and local governments on Aboriginal people in the Kimberley were measured and analysed using published and unpublished financial data from 31 public sector agencies in the Kimberley. In effect, the researchers posed the question: ‘how many additional public sector monies enter the Kimberley economy because of the presence of Aboriginal people living in the region?’. Second, the researchers assessed the regional significance of these monies through the detailed analysis of the expenditure patterns of Kimberley Aboriginal organisations. This was undertaken through accessing and analysing the financial statements of 67 Kimberley Aboriginal organisations.25 Significant conceptual and empirical difficulties arise when attempting to assess the financial relationships between Kimberley Aboriginal people and governments. Although some arms of

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government cater specifically for Indigenous people (for example, ATSIC or Aboriginal-specific public housing programs), Aboriginal consumption and use of many public services and amenities occurs through mainstream agencies. In such cases it becomes necessary to apportion public sector agencies’ expenditures between Aboriginal and non-Aboriginal populations. For example, in 1997–98 Aboriginal people comprised 63 per cent of patients in Kimberley hospitals (although comprising just 45 per cent of the Kimberley population). Accordingly, it can be suggested that 63 per cent of recurrent expenditure on the Kimberley hospital system can be attributed to meeting the health needs of Aboriginal people. The task of apportioning expenditures between Aboriginal and nonAboriginal populations however is more complex in certain other areas of government. In the case of road funding (a major expenditure item in the Kimberley), some classes of roads may be readily allocated to Aboriginal people (say, an access road to an Aboriginal community) but others (general highway funding) are not so easily apportioned. In such cases the researchers discussed these issues with agencies and, based on whatever data was available, attempted to generate ‘reasonable’ estimates of the extent to which public funding could be said to be justified by the service needs of Aboriginal people and communities. Table 8.1 summarises the findings from this exercise. It indicates that in 1997–98, the service needs and citizenship entitlements of Kimberley Aboriginal people underpinned approximately $238 million of public funds in the region. Within this amount, payments to individuals comprised $80.3 million (including CDEP [work for the dole] payments of $58.5 million and Centrelink payments of $22.3 million) with the remainder largely comprising infrastructure and services. To put this in perspective, ABS data indicate that in 1998 an estimated 27 682 residents of the Kimberley had a combined annual taxable income of $878.5 million.26 The second task of the research was to assess the impacts of these expenditures on the regional economy. This reflects an important issue in regional economic debates in northern Australia. Gross regional product measures of these economies highlight the role of resource and extractive industries, notably mining. In the case of the Kimberley for example, the minerals sector generated average annual gross production of $574 million during the period in question, considerably larger than any other individual sector. Yet this production

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Table 8.1 A financial summary of the Aboriginal component of government expenditures in the Kimberley, 1997–98 Co-ordinating agencies Education & Training Health Justice Essential services Community wellbeing and development Citizenship entitlements Grand total SOURCE

$’000 89 021 40 474 34 061 10 983 35 951 5 530 22 301 238 321

Pritchard 2001.

has rather less impact on the Kimberley than such measures might suggest. In 1999 the major mine in the region, the Argyle Diamond Mine in the East Kimberley managed by Rio Tinto, incurred total expenditures of $423 million. Of this amount however, only $38.5 million (or 9 per cent) was spent directly in the Kimberley. The vast bulk of Argyle’s expenditures bypass the region. This reflects the company’s use of fly-in fly-out employment practices, and the mine’s largely extra-regional sourcing strategies.27 Thus, although certain extractive industries may be the major economic agents within a region when measured in terms of gross regional product, this might not accurately reflect their actual regional expenditure impacts. In contrast to a case such as the Argyle Diamond Mine, expenditures of Aboriginal organisations were found to be highly localised. Much of the governmental expenditure identified in Table 8.1 is channelled through Aboriginal organisations (incorporated bodies empowered to undertake particular social or economic functions). Assessment of the audited accounts of 67 Kimberley Aboriginal organisations revealed that in 1998–99 these bodies had a combined income of $104 million. Some $12.6 million, or 12 per cent of total income, was generated through private sources; the remainder of income reflects funding for service provision or citizenship entitlements. Analysis of the geographical patterns of expenditure by these bodies highlights their localised circulation. Approximately 50 per cent of Kimberley Aboriginal organisations’ expenditures take the form of wages and salaries (including CDEP). An important characteristic of wage and salary payments is that they are paid, and generally recycled, within the local economy. Added to

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other local expenditures, it was found that in 1998–99, Kimberley Aboriginal organisations directly injected $70 million to the regional economy. This is an extremely high local multiplier (approximately 0.7) reflecting the fact that monies expended by Aboriginal organisations have an extremely high propensity to be spent locally. The general findings from the Kimberley study support similar (but more limited) research into the Aboriginal economy of Katherine, NT, which found that in 1994–95, 92 per cent of the expenditure of Aboriginal organisations in Katherine were made locally. Some 35 per cent of Katherine businesses identified Aboriginal people and organisations as their major clients.28 Several key insights emerge from the Kimberley research. First, mythologised ‘frontier’ discourse provides only partial perspectives into the nature of regional economies in northern Australia. Such analyses—typically describing these regions in terms of a collection of extractive or resource industries—fails to emphasise the complex network of public sector financial arrangements that underpin the provision of regional infrastructures and local circulation of money. An alternative regional economic perspective is provided through the concept of the ‘semipublic’ economy. Deploying this concept reveals the significant reliance of these regions on government structures and, that this financial infrastructure is linked closely to the service needs and citizenship entitlements of Indigenous people. Hence, although Indigenous people may be individually poor, they are not marginal within these regional economies. The existence of Indigenous people in regional economies, especially in Australia’s north, helps sustain local businesses; employ local teachers, nurses and other service professionals; contribute to the tourist potential of the region, and provide the basis for ongoing funding of local governments and other public sector agencies.

FUTURE ISSUES AND DIRECTIONS This chapter has highlighted the influential role played by Indigenous people in Australia’s regional economies. It has suggested that over time, Indigenous people and organisations will likely assume heightened significance in the charting of regional development directions. Regional policy practitioners, therefore, need to be alert to the need for inclusive regional development strategies. With this in mind, three strategic challenges are proposed.29

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S T R AT E G I C C H A L L E N G E 1 IDENTIFY INDIGENOUS PEOPLE AS AN U N TA P P E D R E G I O N A L R E S O U R C E Profound employment and skill mismatches characterise labour markets in rural and regional Australia.30 Increasingly, the solution to these problems is seen to rest with local job creation and skill-formation initiatives. These issues centrally concern Indigenous populations, which are featured generally by low rates of labour force participation and high rates of unemployment. In national terms, relatively low employment levels of Indigenous people imposes direct costs in the form of social security payments, and indirect costs in the form of social pathologies (poor health etc) encouraged by economic marginalisation. At local levels, however, Indigenous populations represent a labour resource that, if appropriately mobilised, can contribute significantly to regional economic development. Improved labour market outcomes for Indigenous people must rest on the provision of appropriate public sector support within frameworks of self-determination and self-management. Indigenous labour markets operate differently to non-Indigenous labour markets, due to the importance of social and cultural factors within many Indigenous peoples’ lives. Official statistics utilising definitions and categories relevant to mainstream labour markets do not always capture the characteristics and complexity of Indigenous peoples’ connections with paid and unpaid employment.31 There are often substantial barriers to the task of improving the labour market position of Indigenous people in rural and regional economies. It has been noted that the prevalence of generally poor conditions in the rural economy: …affects Aboriginal people in these places particularly, and it is evident that unemployment rates are often highest in these towns. It is also clear… that the relations between Aboriginal and non-Aboriginal people in small towns are often very poor.32 A fundamental step towards promoting Indigenous access to regional labour markets is the provision of appropriate education and training. There are powerful arguments for investment in this area within regional development agendas. The social rate of return on education for Indigenous people is greater than for non-Indigenous people, due to the strongly positive flow-on effects of education for improving

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employment and health, and for reducing exposure to the criminal justice system.33

S T R AT E G I C C H A L L E N G E 2 HARNESS INDIGENOUS EXPENDITURES FOR LOC AL ECONOMIC DEVELOPMENT Public and private sector expenditures to Indigenous people and communities represent an important income source for many regional economies. Indigenous monies are spent locally and may be less cyclical than some rural industries. When considered a single ‘sector’, the Indigenous economy can be seen to represent the commercial backbone of many small towns in regional Australia, especially in remote areas. The importance of harnessing Indigenous monetary flows gains heightened importance in the context of question marks over the regional economic significance of many large-scale investments. There remains a tendency in much policy discourse to look for largescale investment as the source of employment and economic growth. Increasingly however, many large-scale investments are commercially disarticulated from the regions in which they are situated. The advent of fly-in fly-out employment and regional bypass of input sourcing implies that many large-scale investments possess relatively weak local multipliers. The Ranger uranium mine at Kakadu, for example, has been estimated to inject just 18-35 cents into the NT economy for every dollar of sales.34 More recent mining developments in remote Australia, such as McArthur River, possess even weaker regional multipliers.35 S T R AT E G I C C H A L L E N G E 3 PURSUE REGIONAL ECONOMIC DEVELOPMENT T H R O U G H C O - O P E R AT I O N O N LAND AND RESOURCE USE The emergence of Indigenous people as important stakeholders in many regional economies has encouraged consideration of the development of formal land and resource use agreements. These agreements would use the legal recognition of native title as a basis for broad regional strategies covering issues such as land access, employment, environmental management and the structures for public service provision. North American precedents for this kind of agreement have been reviewed by Australian Indigenous leaders. In Canada, the

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Nunavut Agreement, Yukon Umbrella Final Agreement and Sahtu Agreement (all 1993) establish co-operative regimes for Indigenous/non-Indigenous relations that embrace a range of economic, socio-cultural and political factors. Evidently, North American models are not automatically translated to the Australian context. However, legal recognition of native title opens a wider array of issues relating to the structures and relationships that underpin regional economies. Establishing co-operative fora for the development of these issues plays an important role in the creation of sustainable structures for regional economic development. The 1995 Economic Development Strategy for the Arnhem Region, NT, provides an exemplar for the development of an inclusive regional economic development strategy. Although the process leading to this strategy did not encompass a regional agreement, it saw the establishment of a regional development model built from co-operative Indigenous/non-Indigenous mechanisms. This strategy is premised on five points: •

development must be compatible with the needs and requirements of the traditional land owners;

•

development must be structured and implemented generally at a pace which is controlled by the relevant Aboriginal group or community, and which is in line with community self-management capacity;

•

development is likely to emerge from the innovation and skills of the region’s existing community, both Aboriginal and non-Aboriginal;

•

development will probably need to be environmentally and culturally sustainable as well as sustainable in an economic sense;

•

the majority of initiatives are likely to be relatively low-key.36

The approach suggested by the Arnhem Region economic development strategy looks to the construction of innovative joint ventures between Indigenous and non-Indigenous communities. There exist a range of existing models of such joint ventures, especially within northern and remote Australia. In some Northern Territory towns, local car dealers have established joint ventures with Aboriginal communities that formalise supply and repair arrangements, in conjunction with traineeships for Aboriginal people. Similarly, some Aboriginal groups have entered into arrangements for the provision of facilities and supplies for remote mining camps, as part of wider mining exploration and development agreements.

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In early April 2002 the town of Quorn in South Australia’s Flinders Ranges lost its last bank when the National Australia Bank (NAB) closed its branch. On the same day the NAB’s share price rose 36 cents or approximately 1 per cent1 in the expectation of further job cuts and branch closures.2 The two events were not directly related but the sharemarket’s bullish assessment of the NAB’s prospects reflected its opinion of the company’s plans for further rationalisation and cost cutting. Quorn’s plight captures in microcosm tensions that have been played out in services across all parts of Australia, metropolitan and non-metropolitan alike. Small and often vulnerable communities3 have felt the direct impact of economic restructuring, while the corporate sector has grown more prosperous. Over the last two decades banks have closed branches,4 the public sector has shed functions and employment5 and many places have had to address the bitter legacy of the loss of employment within the service sector and the loss of access to facilities and opportunities that appear essential to contemporary life. The private consumption of services has not been alone in experiencing a contraction of supply. Both metropolitan and non-metropolitan regions have suffered from a shortfall in infrastructure, and this has acted as a check on the growth of businesses, as well as an impediment to greater levels of wellbeing. Inadequate infrastructure and the loss of services is often viewed as a problem confronting ‘the bush’ but many metropolitan communities have suffered as greatly from the rationalisation of public and private services. There have, for example, been more bank branch closures in the capital cities than in the country 6 and

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the closure of schools, government offices and health services have been evident in metropolitan and non-metropolitan Australia alike. What has been behind the contraction in services to Australia’s communities? Has it been a consequence of government actions, or does it reflect the inevitable outcome of a more open and market-oriented economy? Are there ways communities can work to secure and expand their access to services, and will new technology such as the Internet offer solutions to those who appear to be disenfranchised by the loss of access to services? Finally, will the Federal Government’s focus on greater levels of economic growth result in a set of regions sufficiently prosperous and market-focused to find local solutions to their infrastructure and service problems?

E C O N O M Y, G O V E R N M E N T A N D S O C I E T Y Public and private sector services have been caught in a pincer movement: on the one hand governments have stepped back from service provision roles to reduce expenditures and create new opportunities for the private sector. On the other, the private sector has rationalised in response to declining market conditions and in order to achieve greater profitability. Falling access to infrastructure and services reflects both the apparently inexorable outcome of market processes and the conscious decisions of large-scale actors within the Australian economy. We need to fully appreciate past economic and governmental circumstances if we are to understand why both impersonal markets and individual actors appear to conspire against the supply of services in some regions. From 1945 to the mid-1970s Australia experienced a ‘long boom’ with high levels of full-time male employment, a burgeoning population, sustained employment growth and low interest rates. Prosperity came from a highly protected manufacturing sector (employing up to 27 per cent of the workforce) and strong markets for Australian commodities such as wheat, wool and minerals. Economic growth was supported by what O’Neil and McGuirk refer to as a ‘triad’ of policies: tariff and other trade protection for domestic manufacturers; centralised regulation of the labour market to redistribute wealth; and immigration to ensure sustained and rising demand.7 O’Neil and McGuirk point out that the economy was propped up by the high prices received for agricultural commodities and minerals, and the rural sector was in turn compensated via

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government intervention in the provision of infrastructure and services, as well as assistance in dealing with the exigencies of agricultural production in an unstable physical environment. The 1980s and 1990s ushered in declining terms of trade for many of Australia’s traditional exports as well as Federal policies of market liberalisation and economic rationalism. The declining value of traditional agricultural exports, and the difficulties confronting a manufacturing sector exposed to world markets for the first time, had a profound impact. Unemployment, and in particular long-term unemployment, emerged as a major problem within the traditional manufacturing regions of the capital cities. In many rural areas population fell as increased mechanisation and falling prices on world markets forced farmers to ‘Get big or get out’. This in turn reduced the viability of retail and other services in country towns.8 Sorenson notes that once started population and economic decline in country towns may become self-sustaining. He considered a number of potential triggers of decline including the withdrawal of public services; the closure of branches by large firms; the reduction of hinterland population due to economic stress in the farm sector or ‘out migration’; and an ageing population.9 Decline brought about by population loss in rural Australia has been exacerbated by other market trends, such as the leakage of retail and business expenditure from the country to the capital cities, which has increased.10 Over the last decades city-based businesses have achieved greater penetration into non-metropolitan markets. Similar processes have operated in the capitals, with larger retailers taking the lion’s share of the market while smaller enterprises have closed.11

T H E R O L E O F G OV E R N M E N T S Governments have played a direct role in waning access to infrastructure and services. Worsening terms of trade on world markets, in combination with sustained high rates of unemployment and inflation through the 1970s and 1980s, encouraged Australia’s Federal and State governments to emphasise economic growth in their policy settings. This has included, amongst other initiatives: •

the removal of most trade barriers for imports, with tariffs averaging 5 per cent by 2004;

•

the floating of the Australian dollar;

•

deregulation of the finance sector;

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a commitment to the reduction of public sector borrowings as a proportion of total borrowings across Australia;

•

substantial deregulation of the labour market;

•

the sale of government business enterprises and the commercialisation of other trading entities;

•

reform of the tax system; and,

•

the introduction and implementation of National Competition Policy.

O’Neil and McGuirk point out that these policies were — by their own standards — spectacularly successful as they ushered in ‘the new prosperity’.12 The 1990s was the second longest period of economic growth in Australia’s history. However, this economic regime failed to account for distributional issues, and hence contributed to a concentration of economic activity and opportunities in Melbourne, Brisbane and most spectacularly Sydney, and falling life chances elsewhere. Previously governments took an active role in the provision of services and infrastructure13 but the desire to reduce public sector outlays combined with the application of National Competition Policy has seen this diminish.14 Increasingly, infrastructure and services are either not provided or are provided under new and different terms and conditions. This has included the privatisation of many government trading enterprises, the application of user-pays principles in a broader spectrum of circumstances, and a belief that the private market can provide many of the services previously furnished by governments.15 Shifting philosophies of economic management and swings in the attitudes of governments to the provision of infrastructure and services have called into question the public sector’s role in regions. It is reasonable to ask, what is the role of governments in regions if they are no longer active providers of infrastructure and services? And, do governments need to be involved in ensuring the wellbeing of regions, and if so, what part should they take? The political history of the last half-decade shows that governments must be concerned with the welfare of regions or risk electoral defeat. The Howard Government’s argument that policies that ensured sound economic management would best serve the needs of regional Australia16 appeared to find little sympathy amongst traditional Liberal and National Party voters. At the State level, the Bracks

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Labor Government came to power in Victoria on the back of disaffected regional voters, while the rise of Pauline Hanson’s One Nation Party — at both the National and State levels — challenged conservative politicians in traditionally safe seats. On the other side of politics, Federal Labor’s lack of success in the 2001 election was partly attributed to a policy vacuum and its failure to address distributional issues.17 Simon Crean embarked upon a highly publicised visit to the outer suburbs of Australia’s largest city upon election to the leadership of the Federal Labor Party after that election. Clearly, there is a need for governments to be seen to be engaged with regional communities, and this generates tensions with a political and economic ethos that emphasises a smaller role for governments and greater reliance upon the marketplace. The Howard Coalition Government has marked out a distinctive set of policies for Australia’s regions. These polices reflect a unique compromise between political expediency and the desire to be seen to be active within the regions. Perhaps the most distinctive feature under the Howard Governments has been the definition of ‘regions’ as non-metropolitan Australia. With some exceptions, regional policy has been directed to rural Australia, an electorate that traditionally has voted conservatively. Second, Federal regional policy re-emerged in the late 1990s after virtually disappearing when the Howard Government first came to power in 1996.18 Policy statements have emphasised ‘whole of government’ approaches to meeting regional needs19 with various publications tallying Federal Government expenditure in non-metropolitan Australia as proof of the government’s commitment to regional Australia. One publication suggested the Federal Government spent $28.5 billion outside the capitals between 1996 and 2001 but this included defence expenditures, aged pensions, family support payments, Federal funding to local government and many other activities that could be considered part of the normal functioning of government.20 Whether this expenditure is genuinely indicative of a commitment to regional policy and regional development is open to question, but the argument was treated with a good measure of scepticism when presented to a meeting of regional development practitioners and local government officials in 199921 and appears to find no favour with the electorate. A third feature of Federal regional policy initiatives since 1996 has been an emphasis on the provision of services, rather than infrastructure or development assistance. This was clearly flagged in 1996

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with the transfer and renaming of regional functions from the Department of Housing and Regional Development to the Department of Transport and Regional Services. The emphasis on services reflects the government’s concern to ameliorate the impacts of restructuring without interfering in the processes of economic change. The government, for example, introduced a program to fund Rural Transaction Centres rather than intervene to stop the closure of bank branches, or the shutting of its own regional agencies. Similarly, in the area of telecommunications policy the Networking the Nation Program provides funding to non-metropolitan communities to devise solutions to their telecommunications needs. This may include the establishment of local Internet Service Providers or the roll out of infrastructure. The alternative would be for the government to mandate a level of service provision in regions for the large providers — especially Telstra — to adhere to. The National Heritage Trust (NHT) perhaps best typifies this approach: the Federal Government used a portion of the proceeds from the part privatisation of Telstra to fund community-based environmental projects. The NHT represents a neat political solution to dealing with the problems arising out of economic restructuring, as non-metropolitan users have been staunch opponents of Telstra’s privatisation. These regions have received the major portion of NHT monies. Throughout the 1990s and into the new century governments have redefined their role within regions. However, some aspects of government policy have remained unchanged. Through the late 1990s the Federal Government introduced a number of relatively small programs focused on meeting the needs of regional communities. They have, to a degree, illustrated some of the dangers of Federal involvement with area-based programs. The Regional Solutions Program was introduced to provide funding to disadvantaged regions but analysis undertaken in 2002 suggested that community groups in the electorate of Gwydir in Northern NSW and O’Connor in Western Australia had been disproportionately successful. These electorates received the greatest quantum of funding under the program, despite there being 10 electorates across Australia more disadvantaged than Gwydir and 32 more disadvantaged than O’Connor.22 The seat of Gwydir is held by John Anderson, Minister for Transport and Regional Services while O’Connor is held by Wilson Tuckey, the junior minister within that portfolio. The political significance of this distribution has not

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escaped attention. John Cherry, the Australian Democrats’ spokesperson on employment commented: The principal criteria for this scheme is supposed to be the degree of disadvantage. The tragedy is that this program is being turned into a pork-barrelling exercise.23 Governments continue to provide many services, but there is a lesser concern with direct public sector intervention to ensure the prosperity of regions. The new arrangements operate to the benefit of some regions and to the considerable disadvantage of others. There are a number of dimensions to this change and in this chapter they are explored through the lens of infrastructure provision, telecommunications, banks and financial services, and housing. Other services — such as health or education — could have been examined but those discussed here reflect the breadth of experience across service needs.

INFRASTRUCTURE Infrastructure is the physical stock of publicly available assets used to generate wealth and provide services to the population. It includes power stations, roads, railways, telecommunication networks, ports, bridges and the sewerage system. While the term can be used to embrace ‘soft infrastructure’ such as housing or community facilities, it is most commonly used to refer to assets that contribute directly to the functioning of the economy. Public sector investment in infrastructure provision has fallen over the last two decades as Federal and State governments have reined in their budgets.24 This has been accompanied by the privatisation or commercialisation of some facilities such as electricity generation and transmission (Victoria and New South Wales), the rail network (National Rail Freight Corporation), airports and the proposed sale of the 50.1 per cent of Telstra that remains in the hands of the Federal Government. Governments, especially the Federal government, have attempted to reduce public sector borrowings in order to reduce demand within the capital market and thereby lower interest rates. Governments have pursued two infrastructure-related strategies in pursuit of this goal, first the transfer of infrastructure assets and operations to the private sector and second, limiting expenditure on government-

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owned infrastructure. Privatisation and commercialisation has had uneven impacts, as the private sector has been a willing investor in some classes of assets — such as electricity supply, the CityLink project in Melbourne and Sydney’s motorways — but elsewhere investment has lagged or proved unprofitable, as in the privatisation of some hospitals. The second approach has been more debilitating as it has contributed to the decline in funding for basic infrastructure across Australia. Kearney argued that: The overall picture of public investment which emerges is that the Federal Government with its public trading enterprises has maintained its investment levels, but the Federal Government has cut capital grants to other levels of government so that the investment performance of the public sector as a whole has been curtailed.25 Some types of region and some classes of infrastructure have suffered more than others from reduced investment in infrastructure. It is relatively easy to privatise or commercialise assets such as telephone networks or power supply, but it is far more difficult to attract private sector investment into breakwaters, piers or similar categories of infrastructure. Shortfalls in infrastructure may have profound effects. Kevin O’Connor and Bob Stimson have pointed out that superior access to infrastructure, especially telecommunications and air transport, has been one of the drivers of growth in the major capitals (especially Sydney and Melbourne).26 Similarly, the OECD lists investment in infrastructure networks as one of four actions governments can take to improve regional competitiveness.27 These observations are consistent with the tenets of the New Institutional Economics (NIE) that emphasise reducing transaction costs confronting business. This definition of transaction costs — which essentially is a measure of the friction of doing business — embraces legal institutions, work practices, and physical infrastructure.28 From this perspective a region can be made more attractive as a place of business through improvements to its facilities. It also follows that cities are more attractive places for business than non-metropolitan regions because: The city itself can be conceptualised as a high concentration of infrastructure supporting urban economic systems. The role of infrastructure is, at base, to minimise the ‘transaction costs’ of firms within markets.29

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Access to infrastructure is important for the development of regions but the funding mechanisms and philosophies currently in place deny many communities the infrastructure they believe they need. This gap is the product of a number of factors. First, capital markets are simply not interested in participating in small-scale infrastructure projects. The provision of a power station in Broome, the upgrading of a railway terminal in Mildura or the development of a transport hub in Kalgoorlie are simply too small to attract the interest of the major financial institutions, regardless of their potential profitability.30 Industry sources suggest financiers will only consider projects with a value greater than $50 million because the costs of initiating and implementing a project — legal fees, auditing fees and so on — remain relatively constant, regardless of the size of the transaction. Second, finance markets are wary of investing in remote locations about which they have little or no knowledge.31 Third, governments have failed to develop financial instruments that encourage the private sector to invest in regional infrastructure projects. Governments have introduced a number of policies that facilitate private sector investment in major infrastructure projects — such as Build Own Operate and Transfer (BOOT) schemes and the Infrastructure Borrowings Tax Offset Scheme introduced by the Federal Government in 1997. However, these initiatives have not assisted investment in smaller-scale developments. In the late 1990s the Federal Government in partnership with the governments of Victoria, Tasmania, Western Australia, New South Wales and Queensland established the Institutional Investor Information Service (IIIS). This initiative was to provide a register of ‘investor-ready’ projects in non-metropolitan areas. It was intended that major financial institutions could select, or bundle together, projects that had been prepared with a standard set of financial documentation, thereby reducing costs for the investor.32 The IIIS was wound up in 1999, without financing a single project. To this day an effective policy for encouraging private sector investment in ‘regional’ projects remains elusive. What should we conclude about the future of infrastructure provision in Australia’s regions? How can economic development practitioners generate the infrastructure their regions need? The answer to the first question appears relatively straightforward. The private sector is unlikely to become a major provider of

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infrastructure outside the major capitals, and in all likelihood, outside Sydney, Melbourne and Brisbane. Regions, especially the smaller regions, will continue to rely upon government providers for the infrastructure they need. The second question is more difficult to answer as the ability of any single agent to affect infrastructure outcomes is limited. However, a sur vey of economic development practitioners undertaken in 2001 suggested that lobbying governments to provide infrastructure was one of the most important activities undertaken by economic development professionals.33 It is reasonable to expect that practitioners will continue to lobby governments — especially State, Territory and Federal Governments — to provide the necessary funding for infrastructure provision. The West Australian Government conceded this point in its submission to the Time Running Out Inquiry of the House of Representative’s Standing Committee on Primary Industries and Regional Services. It accepted that more senior levels of government had a responsibility to provide infrastructure where local governments or community groups lacked resources.34 State and Federal Governments will need to recognise and accept that private provision of infrastructure is not appropriate for all classes of asset, or all locations. As the Western Australian Regional Development Council noted: For a substantial part of [regional Western Australia’s] infrastructure the returns to local, state and national economies can exceed the returns to private investment and ownership. This is particularly true of long-lived assets that may generate high-income flows only after a period of time has passed. …In many cases, despite the net economic benefits, the risk adjusted return to private sector capital is insufficient to encourage or warrant capital expenditure. In such cases it is valid for government to step in and encourage or assist such projects.35 Governments and policy makers must, once again, accept responsibility for the provision of infrastructure in many of Australia’s regions. At the same time practitioners — either individually or collectively — need to continue to pursue alternative funding sources, possibly from within their communities.

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THE BANKS AND FINANCIAL SERVICES The loss of banks and other financial services from country towns and metropolitan suburbs alike has been a high profile issue. Rural areas in particular have felt the impact of the withdrawal of bank branches. Branch closures have a number of impacts. First, there is the immediate loss of access to services. Argent and Rolley suggest 23 per cent of rural and 30 per cent of remote communities lost their bank branches between 1981 and 1998.36 Banking becomes less convenient and possibly more expensive, with reduced choice in those places where one or more financial institutions remain, and forced travel in those suburbs or towns where all banking services have been withdrawn. Of course, this loss of amenity can be compensated through alternative delivery arrangements. Automatic Teller Machines (ATMs) can provide retail cash, and Australia Post outlets have expanded their range of financial services to cover bill paying, account handling et cetera.37 Some banks have made arrangements with retailers to provide banking services, and elsewhere Rural Transaction Centres have been funded by the Federal government. Alternative delivery mechanisms are not a full replacement for traditional retail banking services. Research in Queensland into towns that had lost all banking services found that many had seen their last branch close before ATMs or Electronic Funds Transfer at Point of Sale (EFTPOS) had been installed. Moreover, older people and other vulnerable groups were reluctant to use this technology.38 The loss of retail trade is a second impact of bank branch closures and this effect is not compensated by the introduction of alternative delivery arrangements. It has been estimated that bank branch closures in country towns reduce retail trade by $1400 per person per year.39 Ralston’s research showed there were three serious outcomes for country businesses arising out of the closure of bank branches: the level of spending declined significantly; the level of investment in terms of housing and business loans decreased; and community confidence decreased dramatically.40 In addition, small businesses may be required to keep substantial volumes of cash on hand, and this in turn generates security and transport problems. Reduced local influence over lending decisions is a third impact of branch closures. Where once local bank managers developed strong and long-term relationships with their customers, towns or regions without banks have no financial managers within their community. This makes access to finance more difficult as savings histories and local

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circumstances are less likely to be awarded significant weight in funding applications. Fourth and finally, the loss of a bank branch means a loss of local employment and may rob the community of a leader. Banks have been an important source of employment for young people, especially women. At more senior levels, bank managers are often community leaders in rural and urban areas. Their withdrawal may significantly reduce the managerial skills and experience within a region. Many see the closure of bank branches as a breach of trust with the Australian people. One Federal Minister responded to the National Australia Bank’s announcement of more branch closures with the comment that: The bank was built on the sheep’s back and rural Australia has been very good to it over the years….It is time that they repaid some of that loyalty.41 Indignation at branch closures will not influence the decisions of the major banks but there are steps communities and regions can take. Over the last decade the Bendigo Bank, Australia’s only regionallybased bank, has successfully extended its community banking model from Kulin, WA to rural Victoria, and from Virginia in Adelaide’s urban fringe to Coleambally in NSW and Biggera Waters in Queensland. The Bendigo Bank’s operation relies upon local communities proving their commitment to the enterprise by raising capital locally, with the resultant branch half-owned by the local investors, and half by the Bendigo Bank.42 The branch makes use of the Bendigo Bank’s facilities and expertise and benefits from being part of a national-scale organisation. Credit Unions are another way local communities can work to meet their needs for financial services. While Credit Unions and the Bendigo Bank have been successful — with the latter experiencing remarkable growth over the last five years — they remain small players within Australia’s financial system. In 1998 the Bendigo Bank and the Credit Unions had assets of $33 million compared with $150 billion in assets for the national scale banks. 43 Central governments, local governments, community groups and economic development practitioners can, and should, work to foster the growth of community banking models. Credit Unions are considered an integral part of the ‘Social Economy’ or ‘Third Sector’ in many parts of Europe. The provision of banking services to disadvantaged communities is seen as a fundamental step to economic growth.

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T E L E C O M M U N I C AT I O N S Telecommunications have been held out as a potential saviour for Australia’s non-metropolitan regions. Telecommunications and the Internet, it has been argued, will bring the services of ‘the city’ into ‘the bush’. But how will telecommunications fill the gaps created by the withdrawal of banks and retailers? And, as importantly, will enhanced telecommunication technologies have positive impacts only?

THE INTERNET AND THE REGIONS The rise of Internet-based technologies was one of the defining characteristics of the 1990s, and the influence of the Web has not diminished into the 21st century. The Internet has generated new opportunities for businesses, as firms have been able to offer their products and services to global, rather than local, customers. Increasingly conventional business activities — such as banking and retail purchases — are conducted on the Internet, while some enterprises have established Internet-only profiles. The bookseller Amazon.com is the best-known Internet retailer globally, but there are many other enterprises, some very small, based entirely on Internet revenues. The Internet has two key advantages for any business. First, it is a ubiquitous technology that can project a firm’s products into the living rooms or boardrooms of many potential customers. Second, small businesses can have a substantial profile on the Internet, often the equal of their much larger competitors. A firm’s size is less important on the Internet because other factors, such as the recency and ease of use of their web site, as well as their profile within search engines, are also important.44 What are the potential impacts of the Internet on both metropolitan and non-metropolitan regions? The Internet opens up new opportunities for all businesses but also generates greater levels of competition for large and small businesses alike. A study by the National Office of the Information Economy (NOIE) suggests that over 40 per cent of Australia’s regions may lose employment because of ‘disintermediation’ — the linking of consumers and suppliers directly, and the bypassing of intermediaries.45 As with many aspects of economic change, the Internet holds out the prospect of greater national productivity but at a potential cost for some regions. Castleman and Coulthard suggested that non-metropolitan regions are especially vulnerable to economic changes ushered in by e-commerce because businesses in the country tend to be smaller than their

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competitors in the cities, and less likely to adopt e-commerce.46 They went on to suggest substantial government intervention is needed — in the form of e-commerce training for business proprietors and the development of regional portals. Local governments and development practitioners have an important role as the development of web sites that advertise the locality or community can assist small businesses become more successful in their Web-based ventures, and reduce the leakage of expenditure from the region. The Internet and associated telecommunications also offer substantial potential for economic development practitioners, local government officers and community workers. The Internet can be an important source of information on development opportunities and strategies. One arid zone regional development board, for example, used the Internet to gain data on, and network with, a Texas agency involved in the production and marketing of aloe products. Elsewhere Internet technologies have been used in a more sophisticated fashion. A group of councils and economic development agencies in SouthEast Queensland joined to form the Beaudesert, Caboolture, and Kingaroy Business Online Network (BaCKBONE) which aims to provide online mentoring and assistance to small businesses.47 Gurstein has documented a number of other ways in which the Internet can be incorporated into development activities, these include: •

as a marketing tool for small producers;

•

as an enabling technology that permits the mobilisation of a much wider range of resources to support local economic development;

•

to support distributed production, i.e. work sharing, remote administration, continuous communication; and,

•

the establishment of flexible manufacturing networks.48

The Internet presents fresh opportunities for development practitioners, regardless of whether their focus is community development or economic development. Some regions and some communities have made the Internet and associated communication possibilities central to their futures. The State of Minnesota in the United States, for example, established a Rural Telecommunications Panel to devise a strategy to secure access to the Internet for all and ensure greater competence in its use. The Panel devised a set of strategies that would encourage the deregulation of telecommunications on the one hand, and at the same time broaden training

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opportunities for all residents, generate demonstration programs, integrate the Internet into lifelong learning and empower local communities to become involved in telecommunications development.49

T E L E C O M M U N I C AT I O N S TA N DA R D S The standard of telecommunication services available across regions is an important issue politically and economically. There have been a number of investigations into the adequacy of telecommunication services — the National Bandwidth Inquiry 50and the Besley Inquiry — all of which reflect community unease at the future of telecommunication services outside the capitals. As the House of Representatives Standing Committee on Primary Industries and Regional Services noted: …the telecommunications sector is the fastest growing sector in Australia, generating $21.7 billion in revenue and employing 122 000 people. Yet there has been limited or no competition for the provision of services requiring considerable investment in regional Australia, with carriers and service providers choosing to concentrate on more profitable and less risky urban markets.51 The Committee went on to add: Despite the licensing of three major carriers, five mobile phone carriers and around 700 Internet Service Providers (ISPs) since deregulation, the committee is concerned with this lack of investment in telecommunications infrastructure beyond the cities.52 It is perfectly explicable that a privatised and privatising telecommunications sector focuses on profitable markets and neglects rural and remote populations where the costs of supply are higher and demand is limited. In divesting itself of Telstra, the nation’s major telecommunications carrier, the Federal Government has attempted to guarantee the level of services offered to rural customers through the imposition of a Universal Service Obligation (USO). This USO guarantees that all Australians have reasonable access to standard telephony and since 1999 there has been a requirement for a separate ‘digital data service’ to be available to 96 per cent of the population at a defined standard.53 In addition, Telstra has a self-declared Customer Service Guarantee relating to connection times and

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repairs. While most maintenance is undertaken within the parameters of the Guarantee,54 there have been well-publicised failures. Telecommunication standards in rural areas remain an important economic, social and political issue. In mid-2002 the Howard Coalition Government announced a new Regional Telecommunications Inquiry55 to determine whether Telstra had made progress in the delivery of services to rural and regional Australia. The Inquiry was seen as a step towards the sale of the remaining proportion of Telstra owned by the government. The Inquiry was structured to follow on from the Besley Inquiry, which had concluded that at a general level there were significant gaps in rural telecommunications infrastructure.56 More specifically, the Besley Inquiry found there was widespread concern in rural and remote Australia that service levels were inferior to those available in the cities; that many customers were frustrated by unreliable telephone services; that telecommunication networks lacked capacity; and that the telecommunications needs of Indigenous Australians were not being met.57 The impact of the last point was borne out by a complaint to the Human Rights and Equal Opportunity Commission58 that new residents in Oodnadatta in South Australia’s far north — essentially an Aboriginal community — experienced long delays in getting access to a basic telephone service, and often had to wait until an existing resident died or left town. The cost of telecommunication services in non-metropolitan Australia is also a matter of concern. Several submissions to the Time Running Out inquiry argued that the cost of the greater distance of regional calls was trivial when compared with switching and billing charges. 59 There would appear to be a strong case for reducing timed STD call charges as current funding models reflect historical, rather than current, provision costs. Some aspects of telecommunications are inadequate in non-metropolitan regions, but it is important to recognise that location is only one of a number of factors affecting the use of these services. Economic status and other factors are often the primary determinants of the use of telecommunications, a point borne out by research by Hellwig and Lloyd.60 They found the factors influencing the use of the Internet were — in order of importance — household income; educational qualifications; age; the presence of children older than 10 years; region; and gender. Importantly, region was only a minor discriminator in the use of Internet services with:

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…metropolitan areas having a connection rate which is 1.3 times the connection rate of non-metropolitan regions. Forty per cent of adults in metropolitan regions are connected compared with 30 per cent in non-metropolitan regions.61 Region per se did not exert a significant influence on access to, and the use of, the Internet, though factors such as household income, educational qualifications and age all vary by region. Telecommunications highlight many of the issues of concern to regions arising out of privatised infrastructure. Private sector models of service provision and charging must favour the areas of greatest demand, and the locations with the lowest marginal production costs. Private sector infrastructure providers are disciplined by their need to generate profits and are not in the business of manufacturing demand, meeting community needs or working to satisfy the interests of the nation. This suggests that in the long term non-metropolitan regions will have to accept lower levels of telecommunication services and/or higher costs, or governments will need to provide further subventions to ensure rural and regional telecommunications meet the expectations of residents.

HOUSING AS A DETERMINANT OF REGIONAL GROWTH Housing is an often-neglected dimension of regional development in Australia, though it has received considerable attention in other countries.62 Housing exerts a profound influence on the wellbeing both of metropolitan and non-metropolitan regions, though the nature and the direction of the impact varies by location. Housing has a considerable impact on the prosperity and strength of metropolitan economies because of the importance of housing costs in determining overall living costs and regional wages. Higher housing costs can flow through to higher wages and reduced regional competitiveness in industries sensitive to labour costs. Very high housing costs can even impede the growth of ‘sunrise’ industries such as information technology. The ‘Massachusetts boom’ of the 1980s reduced the competitiveness of IT firms in and around Boston by pushing up wage rates and mortgages.63 The large firms within the region were unable to attract the high-quality graduates critical for success. Instead, this talented and sought-after pool of labour was able to find equivalent jobs in more affordable parts of the US.

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Similarly, Saxenian reports that industry leaders in Silicon Valley became involved in urban planning in order to maintain the region’s ability to attract key staff. High housing costs and a degrading environment had reduced the region’s attractiveness for new business start-ups and relocating firms.64 On a more positive note, lower housing costs and lower wage rates relative to London have contributed to the growth of Dublin as a centre for the IT and financial services industries. American firms eager to establish a European presence in an English-speaking country have found Dublin a costeffective alternative.65 The regional economic impacts of buoyant metropolitan housing markets have not been as evident in Australia as in the United Kingdom. However, through the 1980s and 1990s Sydney experienced a significant loss of its Australian-born population as young adults left Australia’s largest city to find work in Brisbane and Melbourne where home purchase was more affordable. At the same time, many older residents cashed in their housing equity and moved to the North Coast of NSW where the cheaper housing helped fund their retirement.66 Higher housing costs not only affect the wages paid in a region’s dominant or export-focused industries; they also influence wage rates in the services sector. In 2002 it was estimated that childminding attracted a wage of $22.50 per hour in the Eastern Suburbs of Sydney, compared with $8.50 per hour for the same service in Adelaide.67 Similar differentials could be found in a host of other services, such as the wages paid to car mechanics, cleaners et cetera. Housing costs have become so high in the South-East of England that the British Government has introduced low interest loans and housing subsidies in order to attract and retain teachers, police officers and nurses to the region. The welfare of regions outside the capitals is also shaped by the state of their housing markets. Some regions have excess housing stock. Places such as Whyalla in South Australia and parts of the wheat-sheep belt have vacant dwellings.68 In these places vacant stock can act as a check on growth as empty dwellings serve as a powerful symbol of poor development prospects. Depressed housing markets may also make it difficult for homeowners to move to regions with better employment and income opportunities. Unemployed people whose only asset is their home may be daunted by the thought of selling up for a discount price — if any sale is possible — and then moving to a capital city or other region where housing costs may be

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four or five times greater. Paradoxically, regions with low house prices may also have limited land for residential development and an inadequate supply of housing for professionals.69 Some non-metropolitan regions are confronted by booming housing markets: prices may be high relative to incomes and there may be few, if any, vacancies in the rental stock. In 2002 Hamilton in Victoria faced an emerging housing crisis as the development of a mineral sands processing facility added 400 workers and their families to the city’s population. Elsewhere Wagga Wagga and Albury in NSW have had tight rental markets. Housing shortages can arise for a number of reasons. On occasion regions may experience a ‘growth shock’ that stimulates the demand for housing but does not immediately lead to the supply of additional dwellings. Long-term factors, however, have also contributed to the shortage of accommodation in some regions. The South-East of South Australia has experienced a shortage of rental accommodation for a number of years and its experience is instructive of how economic processes limit the supply of housing in some non-metropolitan regions and, in turn, how housing shortages may act as a check on regional economic growth. The next section discusses the housing circumstances of this region and the failure of governments to implement a solution.

T H E S H O RTAG E O F R E N TA L AC C O M M O DAT I O N IN THE SOUTH-EAST OF SOUTH AUSTRALIA Over the last decade the South-East of South Australia has been one of the State’s most prosperous regions. It is a region bounded by the Victorian border to the east, the Southern Ocean to the south and extending north to just beyond Bordertown, and westward to Keith and Meningie (Figure 9.1). The region’s relative prosperity has arisen out of the growth of a number of industries, including horticulture; the processing of raw materials (such as forestry products); tourism; meat processing and viticulture. The region embraces a number of wine regions, including some that are well known, such as the Padthaway and the Coonawarra regions, as well as emerging regions such as Wrattonbully, Bordertown and Koppamurra.70 While the success of the wine industry is much publicised, other industries have had nearly equal success. The meat processing industry is represented by a number of very large plants producing for global markets, and it is one of the largest employers in the region. Over the last several years plantation forestry has also expanded rapidly, especially

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Figure 9.1 The South-East of South Australia

Port Augusta

Port Pirie

Clare Valley

Port Lincoln

Whyalla

Murray

River

Yorke Pe ninsula

Eyre Peninsula

Renmark Loxton

Adelaide

Berri

Murray Bridge

Kangaroo Is. Keith Bordertown

Naracoorte Penola

N 0

100

Mt. Gambier

200 Kilometers

Blue Gum plantations for the Asia-Pacific market. Overall, there has been substantial expansion of agribusinesses, with significant investment by major corporations in wine, timber, meat production and vegetables. The success of industries in the South-East of South Australia has created a considerable demand for labour. The wine industry provides an illuminating example of the sorts of employment impacts arising out of increased investment. Wine industry sources suggest that for the first three years post establishment, 20 additional work-

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ers are needed for every 100 hectares of new vineyard. Subsequently two additional workers are needed per 100 hectares. Between 1995 and 1998 plantings around Penola and Naracoorte increased by 2000 hectares, directly generating 400 jobs. Over the same period employment in horticulture and dairying expanded, and two of the major meat processing plants (one based at Naracoorte and one at Bordertown) announced significant expansions. This growth is expected to continue. In 1998 employment was forecast to increase by a further 400 jobs between 1998 and 2000, with an additional 1200 jobs coming between 2000 and 2008.71 It should be recognised also that this growth occurred within an already tight labour market and in a region with a small population. The largest town in the region, Naracoorte, has a population of approximately 4000 people and only 18 000 people live within the Mid and Upper SouthEast. The job growth experienced since the mid-1990s has therefore had a substantial impact on the region. The buoyancy of the regional economy has not resulted in an effectively functioning housing market. While there was growth in new housing construction for home ownership, the private rental sector has been stretched beyond capacity in the mid and upper parts of the region, that is the area stretching north from Penola to Bordertown. A report prepared in 1998 estimated that an additional 100 rental units were needed immediately to meet the backlog of demand, and a further 100 would be required by 2000.72 To put this into perspective, an increase of this magnitude would result in a doubling of the private rental stock in this area of critical need. At the level of the individual, and individual businesses, the failure of the private rental market has had profound implications. Many workers coming into the region have had to stay for extended periods in caravan parks, or have been forced to reside out of the region and commute to work. Even senior executives have been troubled by the complete absence of available accommodation. The newly appointed Chief Executive Officer of one of the local governments in the region almost did not take up his post because he could not secure rental accommodation. 73 Employment growth is a significant part of understanding the escalating demand for rental accommodation in the Mid and Upper South-East but the nature of employment is equally significant. Many of the newly created jobs are insecure and relatively poorly paid. Once again, developments in the wine industry are indicative of broader trends. For a vineyard to be established the ground must be

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prepared, trellises erected, irrigation installed and vines planted. The vines will not come into production for three to four years and over that period the young vines must be trained, that is a worker must manually guide individual shoots to grow where required, and if necessary, trim unwanted shoots. The establishment process is therefore labour intensive and potentially expensive. Most vineyards established in Australia over the last decade have relied upon sub-contractors and the labour they employ. The sub-contractors recruit unskilled workers and place them on short-term contracts, this keeps wage costs to a minimum and ensures winemaking firms do not incur long-term liabilities. When local labour is not available sub-contractors recruit from other regions and in the South-East of South Australia many have come from as far afield as Adelaide, Port Pirie or Port Augusta. They are picked up on a Monday morning, bussed down to the South-East and then accommodated in temporary quarters until Friday evening, when they return to their permanent residence. Of course, many of these workers would prefer to live in the South-East, but the absence of rental accommodation forces them to remain itinerant.74 Relatively low and insecure wages are a defining feature of many of the jobs in the South-East of South Australia. The wine industry relies upon poorly paid workers employed on a casual or contract basis. Employment is also insecure in the meat processing industry. Layoffs arise out of seasonal conditions or shifts in the market. Significantly, pay rates have fallen for many meat workers as a result of the shift from award-based rates of pay, to pay rates based on Enterprise Bargaining. One estimate suggests that over the last decade average take home pay for meat workers in the South-East has fallen from $60 000 per annum, to $38 000. This fall in income significantly reduces the capacity of many working in this industry to enter home purchase, especially given its propensity to enter periods of shut down. There is an interesting gender dimension to the casual labour force in the South-East of South Australia: females are preferred for the routine task of ‘training’ young vines, while the meat industry workforce is predominantly male. However, these circumstances do not suggest that complete households necessarily find work. Clearly, and despite the general prosperity of the region, a significant section of the workforce in the South-East of South Australia faces difficult employment and housing circumstances. Their circumstances suggest a situation of entrapment where entrapment affects

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‘those excluded from access to both good jobs and good housing.75 Individual workers therefore pay a cost for the shortage of rental housing in the region, as does the regional economy through a high leakage of expenditure as workers living elsewhere spend their wages in other regions. The private sector has not met the demand for affordable rental housing in the South-East of South Australia. First, it has failed because Australia’s private rental sector depends upon small-scale investors who normally purchase one or two dwellings only, and usually close to their place of residence. The South-East, as a sparsely populated region, has a small pool of potential investors and therefore limited rental supply.76 Second, a significant percentage of rental investors base their purchase decisions on anticipated house price movements rather than rental yields.77 Non-metropolitan housing is seen to offer less favourable prospects for capital gains, and is therefore unable to attract big city investors. Third, the low-cost end of the rental market is perceived to offer greater rental returns to investors, but greater risks. This discourages many investors. Fourth, the tax breaks that drive the investment decisions of many landlords direct them to more expensive dwellings in the larger cities.78 This group of landlords is unlikely to invest in non-metropolitan regions. These factors mean that policies that rely upon the private market to supply affordable rental housing in the South-East are likely to fail. The South Australian Government has struggled to find appropriate policies that will supply the housing infrastructure needed in the South-East of South Australia. In the past, State Housing Authorities (SHAs) — of which the South Australian Housing Trust (SAHT) was an exemplar — directly provided accommodation for workers taking up employment with firms relocating or expanding beyond the capitals. In some instances, such as in the development of Whyalla, very extensive tracts of public housing were constructed. However, most regions had more modest stocks of public housing provided for this purpose. The recasting of the role of SHAs from public housing provision to welfare housing provision has significantly reduced the capacity of these institutions to provide housing to facilitate non-metropolitan development. Instead, governments have relied upon the private market to provide rental accommodation. Other regions, like the South-East of South Australia, have experienced market failure and this has forced some to consider more direct policy interventions.

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The Western Australian Government, for example, instituted a major review of housing provision in non-metropolitan regions in 1996 and the Regional Development Council, its peak regional development advisory body, concluded: The shortage of housing in regional areas has a detrimental effect on the ability of businesses to attract employees and on regional and state economic growth. A number of regions reported that business growth is being retarded because prospective employees will not move to regional areas because of the lack of housing. This shortage includes private as well as public housing and extends to quality private housing for highly skilled or executive workers.79 Remarkably for an industry department which traditionally relies upon market solutions for policy problems, the Department of Commerce and Trade concluded that: The proposition is that the housing market suffers from market failure (emphasis added) in regional areas. For example, the high rental prices do not necessarily lead to increases in the number of rental properties. In a number of regions a balance between supply and demand has not eventuated.80 The Department went on to conclude that ‘governments have a role to play in normalising regional housing markets’.81 The report prepared by the Department endorsed substantial — especially by the standards of the 1990s — policy intervention. First, it recommended upgrading and expanding the role of existing government agencies involved in the direct provision of housing to government employees. Second, it advocated the provision of subsidies to firms to enable them to provide housing for workers attracted to new or expanding operations. Third, it canvassed the removal of stamp duty on property transactions in regional areas; and, finally, it considered granting housing investors in regional areas access to infrastructure bonds. A specialist agency was to develop strategies tailored to meet the needs of each region. The South Australian Government has been more reluctant than the Western Australian Government to address the housing needs of non-metropolitan regions. The problem has been well documented: the South Australian Regional Development Taskforce recognised

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that the shortage of accommodation in some areas was a significant impediment to development.82 The South Australian Government, however, has shied away from direct provision and subsidies. Instead, in 2001 it commissioned a study to investigate ways of stimulating private supply at minimal cost to itself.83 In many ways government responses to the shortage of rental housing in the South-East of South Australia encapsulate the policy dilemmas surrounding regional infrastructure of all forms. The private sector is unable or unwilling to meet need, and the public sector no longer recognises it has a role in the direct provision of facilities. To further complicate matters, the ‘silo mentality’ of bureaucracies can exclude worthy projects from policy attention. In this instance, the department responsible for economic development has not recognised housing as falling within its remit, while the housing portfolio focuses on accommodating low-income people who meet defined criteria — with 85 per cent of new entrants to public housing in Australia in receipt of a statutory benefit and 45 per cent with a disability84 — and awards no priority to regional concerns. To further aggravate the policy hiatus, the local regional development board was unsuccessful in its bid for funding under the Regional Solutions Program to try an innovative approach to the provision of temporary accommodation. Clearly, regional infrastructure raises dilemmas that the private market and the public sector fail to resolve.

CONCLUSION Adequate infrastructure is a fundamental ingredient for the wellbeing and prosperity of any region. Over the last decade developments within both the public and private sectors have made access to necessary services and facilities more difficult for many regions, especially outside the largest capitals. In many ways the emerging disparity in incomes between the prosperous capitals and the remainder of Australia is mirrored in the provision of infrastructure. The gap between services available to the most prosperous regions and those available to the least developed regions has widened, and it is reasonable to expect this trend to continue. Local practitioners have a limited capacity to address infrastructure shortfalls as the scale of investment required in many areas — such as health, transport, and education — is beyond the scope or powers of individual communities. Local government officials, economic development practitioners and community activists can, however, take action: they can contin-

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ue to promote Credit Unions and other community-based models of service provision, they can work to secure Federal and State funding for community development initiatives, and they can ensure that existing facilities such as colleges of TAFE, high schools and university campuses, are used to their full potential. KEY LESSONS IN INFRASTRUCTURE WHAT

IS INFRASTRUCTURE?

It is the stock of publicly available assets essential to the functioning of an economy. Infrastructure includes education facilities, roads, railways, sewerage and waste water systems and telecommunications. WHY

IS INFRASTRUCTURE AN IMPORTANT ISSUE FOR

AUSTRALIA’S

REGIONS?

Increasingly a region’s competitiveness within global and national markets is determined by its access to infrastructure. High quality infrastructure reduces production costs, attracts new enterprises and industries, assists the application of new production techniques such as ‘Just-In-Time’ inventory management and helps attract skilled labour. Over the last decades, public sector investment in infrastructure has contracted, and there has been limited take-up of infrastructure investment opportunities by the public sector. In some areas, such as financial services, there has been a contraction in supply. WHAT

CAN PRACTITIONERS DO?

Practitioners can and should continue to lobby governments for adequate infrastructure, especially in those regions that are likely to remain unattractive to private provision. Practitioners should also work to find local solutions to local problems. This may include encouraging the formation of community banks or credit unions, and the pooling of resources — both by companies and individuals — to meet collective needs. In some areas of infrastructure regional provision may be appropriate. Some regional agencies, for example, have seeded regional telecommunications companies, though not always successfully. Practitioners and local communities should also make use of Federal and State Government programs — such as Networking the Nation — that provide funding for regionally-based infrastructure. There is scope also to include Internet-based strategies in regional marketing; small business advice, mentoring and business incubators.

10

GREEN REGIONS

The title of this chapter can be interpreted in several ways. Green regions could be regions that market their natural environments as attractive, unspoilt tourist destinations, or regions that market their exports as the high quality products of a clean, green environment. Green regions could also be those which are successfully implementing strategies to reduce environmental degradation, and to manage natural resources more sustainably. This chapter focuses on the last of these interpretations, but the issues discussed are equally relevant to the other two. It starts by outlining the concept of ‘sustainable development’, a set of principles that attempts to integrate environmental management with the economic and social needs of communities and regions. The chapter then examines the following questions: what is the present sustainability of the environmental resources on which both rural and urban regional economies in Australia depend; will becoming environmentally more sustainable damage regional economies; what actions to improve environmental sustainability can be taken at the regional level; what are some of the barriers to taking these actions; and what is the process of developing and implementing a regional strategy for environmentally sustainable development?

S U S TA I N A B L E D E V E L O P M E N T The concept of sustainable development goes back at least to the 1970s, but it was widely adopted after the 1987 report (Our Common Future) of the World Commission on Environment and Development.1 It is a concept about development as well as about the environment, and argues that development, to be sustainable,

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must meet human needs and raise human welfare, be equitably distributed between nations and people, and be environmentally sustainable for future generations. Sustainable development therefore combines economic, social and environmental sustainability, but this chapter will focus only on the environment. There are some important assumptions that distinguish sustainable development from other environmental ideologies. One is that sustainability is about human populations and their wellbeing — it is human-centred rather than environment-centred. The concept is therefore criticised by environmentalists for lacking concern for the integrity of nature separate from human interests. Another assumption is that economic growth can be compatible with environmental sustainability, although this can only occur if economic growth improves human welfare at the same time as it reduces human pressure on the environment.2 Sustainable development is rejected by many ‘deep green’ environmentalists on the grounds that it compromises the integrity of nature, encourages a view of the environment as a set of resources for human use, does not recognise limits to growth, and provides scope for producers and consumers to avoid significant change.3 These criticisms must be taken seriously, but this chapter accepts sustainable development as a valuable concept that makes it possible to integrate economic, social and environmental considerations into regional development discussions. The importance of sustainable development is now widely accepted by business, government and much of the community. Environmental, economic and social sustainability now make up the three components of the ‘triple bottom line’ advocated as a goal for business. However, it is also a concept that cannot be reduced to precise principles and rules, and so has taken on a range of meanings as different groups interpret it to suit their interests. While some elements of environmentally sustainable development can be defined and measured, others are essentially value judgements.4 Sustainable development starts with the observation that the environment performs three functions in supporting human life and economic activity. The first is the production of raw materials from the natural resources of soil, water, forests, minerals and marine life (the earth’s ‘source’ function). The second is the safe absorption (through breakdown, recycling or storage) of the wastes and pollution produced by production and human life (the earth’s ‘sink’

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function). The third function is the provision of the environmental services that support life without requiring human action, such as climatic stability, biodiversity, ecosystem integrity, protection from ultraviolet radiation, and the amenity services provided by areas of natural beauty or wilderness (the earth’s ‘service’ function).5 A fundamental principle in sustainable development is that the ability of the environment to support human life and economic activity through these functions should be sustained into the future. The goal of environmentally sustainable development can therefore be expressed as ‘Development that improves the total quality of life, both now and in the future, in a way that maintains the ecological processes on which life depends’, which is the definition in the Commonwealth Government’s 1992 National Strategy for Ecologically Sustainable Development. To determine whether Australia’s regional economies, both rural and urban, are environmentally sustainable at present we need to turn this idea into criteria for sustainability. Using the ‘source’, ‘sink’ and ‘service’ functions of the environment, we can propose that environmentally sustainable regional development is development which ensures that: •

renewable resources in a region are only exploited at or below their rates of renewal, or at a cautiously lower rate if their rate of renewal is uncertain (‘source’ function);

•

non-renewable resources are not exploited faster than the rate at which they can be substituted by other resources, or maintained through technological progress or recycling (‘source’ function);6

•

wastes are not added to the environment faster than they can be broken down and recycled, and pollution does not threaten human health and wellbeing (‘sink’ function); and

•

the amenity and life support functions of the regional environment are protected (‘service’ function).

It is important to reiterate that environmental sustainability does not mean that resources cannot be developed and used in new ways, or that some forms of production cannot be increased. Increased human use of environmental resources is compatible with environmental sustainability provided that it does not reduce the capacity of the environment to provide its source, sink and services functions in the future. The environmental services function is the hardest to express as

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measurable criteria. Yet scientists argue that environmental services such as biodiversity, climatic stability, or major wetlands are not renewable or substitutable once they have been altered or destroyed, and constitute ‘critical natural capital’ that must be maintained for future generations. This is a ‘strong’ interpretation of sustainability, and involves the precautionary principle, which states that since there is uncertainty about the highly complex way in which environmental systems work, we must be cautious about any actions which might cause them to be disrupted. Under this principle we should avoid actions where there is a risk of irreversible environmental damage, especially when there is a lack of scientific certainty about the nature of the risk.7 Another sustainability principle, and one particularly relevant to regions, is the principle of trans-frontier responsibility, which means that sustainability in one region or country cannot be achieved at the expense of environmental conditions elsewhere.8 A region cannot export its environmental impact, such as salt down the Murray River or polluted urban stormwater into marine environments, and claim to be environmentally sustainable.

T H E E N V I R O N M E N TA L S U S TA I N A B I L I T Y O F AUSTRALIAN REGIONAL ECONOMIES Using these principles, how environmentally sustainable, or green, are Australia’s regional economies? The reports of the Australia State of the Environment Committee 2001 (the Committee) and the National Land and Water Resources Audit, with additions from other sources, help us to answer this question. Their evaluations are reported by types of environments, which correspond to particular types of regional economy.

URB AN ENVIRONMENTS The Committee reports that urban air quality has generally improved, the reuse of treated wastewater and stormwater is increasing, and domestic water use per capita declined for most large urban centres during the 1990s. However, most indicators of resource consumption, such as vehicle kilometres travelled, continue to grow faster than population. Australians have a high per capita level of greenhouse gas emissions by world standards, and while the volume of solid waste appears to have stabilised, this is at a level that is also high by international standards. The Committee concludes that ‘if

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existing trends continue, pressures from human settlements are not consistent with a sustainable environment’.9 These findings are supported by a study of trends in the physical use of a set of nine environmentally significant factors (such as energy consumption, steel production and tonne-kilometres of freight), which concluded that the per capita use of every factor increased over the period 1970 to 1996, except for steel consumption.10 Urban households, businesses and organisations also have an impact on the environmental sustainability of non-urban regions. One way of assessing the magnitude of this impact is through ecological footprint analysis. This calculates the area of land needed to produce the natural resources consumed, and to assimilate the wastes produced, by a nation or region, expressed in per capita terms. It includes the area of forest required to assimilate the CO2 produced by the consumption of fossil fuels. Canberra residents have been estimated to have an ecological footprint of 4.44 hectares, and residents of the largely urbanised South-East of Queensland a footprint of 4.9 hectares,11 with around one-third of the footprint relating to fossil fuel use. If the latter figure is applied to the population of Sydney, then the approximately four million residents of the Sydney Statistical Division would have a footprint of nearly 18 times the area of the Division, equivalent to one-quarter of the area of the whole of the State of New South Wales. Another example of urban impact relates to water resources. In her book Watershed, Fullerton asks why should city people care about rural water, and answers that ‘fresh foods at Woolworths wouldn’t exist without water from the inland’. She provides estimates on the water consumed to produce various food items, ranging from 14 litres for a cup of lettuce, 114 litres for 30 grams of white rice, 1500 litres for 230 grams of chicken to 5600 litres for 230 grams of steak.12

LAND ENVIRONMENTS The Committee reports that significant environmental degradation has occurred to land and water systems in rural Australia. The rate of land clearance has accelerated, mainly in Queensland and New South Wales, and this is a problem because ‘Broadscale land clearance can fundamentally change the functioning of ecosystems, including regional climate, and in the medium to long term, undermine agricultural production and regional economies’. In addition, ‘large areas of acidic and sodic soils [commonly caused by hydrological

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imbalance] contribute to poor water quality, secondary salinity and loss of ecosystem function’. It is estimated that 5.7 million hectares of land are at risk from salinity, and that this area could increase to 17 million hectares by 2050.13 On the other hand, the Committee notes that Australia uses much lower levels of pesticides and fertilisers than other OECD countries, leading to lower levels of environmental contamination. In addition, new and much more sustainable grazing and cropping systems have been developed and implemented,14 and degradation of the rangelands has declined or been halted in many regions as a consequence of improved management.15 However, biodiversity remains threatened by land clearing, changing hydrological conditions, fragmentation of ecosystems and salinity. The Committee concludes that ‘Despite numerous examples of good irrigation practice, tillage systems and pasture and rangeland management, enormous areas are still suffering from damage, and large areas are being degraded or are under threat of degradation in the future’.16 Williams supports these conclusions, noting that many current plant production systems in Australia are not sustainable, and that ‘Degradation of soils, water and natural vegetation puts at risk income from rural production systems...’.17

I N L A N D WAT E R S The National Land and Water Resources Audit reports that 26 per cent of surface water management areas are either close to or overused when compared with the requirements for sustainable flow regimes. These areas account for 55 per cent of water use in Australia, ‘and are the vast majority of Australia’s areas where water resource development is a viable option’. Similarly, 30 per cent of groundwater management units are either close to or overused when assessed by their estimated sustainable yield. In addition, 61 per cent of assessed river basins had nutrient levels above State or Territory guidelines and 32 per cent had salinity levels above the guidelines.18 The report of the Australia State of the Environment Committee concludes: ‘The information available reveals that the pressures on inland waters have increased and many water bodies in the developed southern and eastern areas of Australia are significantly degraded as a result of activities in the catchments and water extraction for agriculture and urban development’.19 Looking to the future, an OECD report on Australia’s environmental performance stated: ‘Given the magnitude of the pressures [on water resources] and the delays in

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responses, current measures and funding will not be sufficient to halt or reverse the degradation of Australia’s land and water resources’.20

C OA S TA L A N D M A R I N E E N V I R O N M E N T S The Committee reports that there has been loss of coastal habitat (including mangroves and seagrass which are important fish habitats) through the spread of urban settlements along the coast and pressures from tourism. It also reports that large nutrient loads are still being discharged to coastal and estuarine waters and that there are continuing pressures on Australia’s coral reefs. The Committee also states that many Australian fisheries are fully or over-exploited. While no species being commercially fished are threatened with extinction, ‘clearly sustainable development demands much more than this benchmark’.21 In addition, some aquaculture activities have the potential to adversely affect the marine environment, although the environmental effects of aquaculture are still not fully understood.22 The Committee concludes that while some Australian coastal marine environments are in excellent condition, in others there is loss of habitats as a consequence of poor land management and poor management of urban settlements, and that ‘There is uncertainty in the ability of coastal ecosystems to absorb rising levels of sediment and pollutants from land uses in the coastal zone’.23 W H I C H WAY A R E W E G O I N G ? Has Australia’s performance in environmental management been improving? The OECD review is somewhat negative: After some 50 years of dramatic changes to Australian biodiversity, pressures from fishing, forestry, agricultural land clearing and grazing continued to result in major reductions in and stresses on life-support systems. In the light of the extent and pace of these pressures on terrestrial and aquatic ecosystems, progress with programmes for biodiversity conservation outside protected areas has been extremely limited, though more progress has been made in improving the sustainability of agricultural, fishery and forestry practices. It is not certain that the improvements so far have the strength, scope and speed to reverse the trends in these pressures and related biodiversity degradation.24 Lawn, using the methods of ecological economics, estimates that the Australian economy is not heading in the direction required to

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achieve sustainable development. For example, there has been no improvement in the throughput of resources needed to maintain a given amount of human-made capital.25 An assessment by Yencken and Wilkinson is also negative. Despite some successes, they conclude that ‘There is no evidence yet that current policies and programs are unambiguously leading to a reversal of overall adverse environmental conditions’, and ‘There is little likelihood that current environmental policies and programs will on their own prevent continuing environmental degradation’.26 We therefore conclude that, despite considerable efforts by individuals, businesses, communities and governments, many regions in Australia have environmentally unsustainable patterns of consumption, production and resource exploitation. Some environmental problems are immediate and local, such as erosion or urban water quality, while others are long term and global, such as climate change. It also needs to be stressed that unsustainability is an issue for both rural and urban regions in Australia.

W I L L P R OT E C T I N G T H E E N V I R O N M E N T DAMAGE THE ECONOMY? Opposition to the introduction of measures to improve the sustainability of resource use in Australia is often based on the belief that such measures will lead to a loss of production, income and employment. Forestry and fishing communities faced with unemployment and the possible death of their community if logging or fishing is banned are naturally hostile to such proposals. Irrigators told that the amount of water they can extract from river systems will be reduced, or its price increased, also feel threatened with financial loss,27 as do farmers faced with restrictions on land clearing. These are understandable reactions, and in such situations there may be a case for compensation for those whose livelihood is affected by environmental measures.28 However, losses of production, income and employment are inevitable in the long term if Australians fail to adopt more sustainable systems of farming, grazing, forestry and fishing. Some of the present financial costs of unsustainable resource use are illustrated in the first half of Table 10.1, which is taken from a report prepared for the National Farmers’ Federation and the Australian Conservation Foundation. The total cost in lost production of nearly $1.4 billion is about one-third of the net value of total agricultural production of

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$3.9 billion in 1998–99.29 These estimates do not include off-farm costs of environmental degradation, such as: •

the costs of water treatment, loss of commercial and recreational fisheries, and reduced stream flows caused by riparian, wetland and estuarine pollution and degradation;

•

damage to coastal and marine environments from coastal sedimentation and nutrient influxes;

•

damage to infrastructure, especially from saline groundwater;

•

loss of environmental amenity and consequent loss of income from tourism; and

•

loss of natural habitat, carbon store and biodiversity.

The report estimates that adding these costs (some of which are listed in the second half of the table) could bring the total annual cost of land and water degradation to more than $2 billion,30 a figure which could increase to over $6 billion annually if no action is taken.31 The economic significance of environmental degradation to agriculture was summed up by an independent working group advising the Prime Minister’s Science and Engineering Council in 1995, who wrote: A primary contention of this and succeeding papers is that if Australian agriculture continues ‘business as usual’, a decline in the condition of natural resources will continue and contribute to Australia’s economic position becoming more precarious... There is every possibility that we will soon reach the point (if we have not already) where the cost to manage the impact of agriculture, both on-farm and off-farm, will exceed the net worth of the industry.32 It is not possible to produce comparable data on the costs of coastal and marine degradation, but the Australia State of the Environment Report 2001 states that: ‘There are risks to the economic viability of the $2.3 billion commercial fishing industry if we cannot manage the sustainable use of the marine ecosystems from which the fish are caught. The tendency in the past has been to discount the ecosystem risks or uncertainties because of economic pressures’.33

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Table 10.1 Estimates of the current costs of land degradation in Australia Type of degradation

Estimated current cost ($million pa)

Salinity Acid Soils Sodic Soils/Structural Decline Erosion Irrigation Salinity Water Quality Total Freshwater Algal Blooms Loss of Added Fertilisers Damage to Roads from Salinity

27034 30035 20036 8036 6536 45036 136537 180–24038 25039 50040

The most difficult area of environmental degradation to cost is to the indirect environmental services that ultimately sustain human life. These services, which do not involve the direct production of food and raw materials and are therefore hard to measure in dollar values,41 include: •

Regeneration processes: detoxification and decomposition of wastes, generation and renewal of soil and soil fertility, purification of air and water, dispersal of seeds necessary for revegetation, pollination of crops and native vegetation.

•

Stabilising processes: coastal and river channel stability, compensation and substitution of one species for another when environments vary, preservation of ecosystem resilience, control of the vast majority of potential agricultural pests, moderation of weather extremes, partial stabilisation of climate, mitigation of droughts, floods and salinity through regulation of the hydrological cycle.

•

Life-fulfilling functions: aesthetic beauty, cultural, intellectual and spiritual inspiration, existence value, scientific discovery, serenity.

•

Preservation of options: maintenance of ecological components and systems needed for the future, value of goods and services yet to be discovered.42

Most of these functions and processes have no substitute, and should therefore be conserved under the precautionary principle, but

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what level of conservation is necessary is a value judgement that will ultimately be decided through the political process.43 Assessing the costs of urban environmental degradation is also difficult. Some areas of concern include: •

The health costs of atmospheric pollution, mainly from ozone, particulate matter and hydrocarbons.44

•

The impact of urban residents on other regions through their consumption of food, water and raw materials (the ecological footprint), and through recreation and tourism.

•

Loss of environmental quality and amenity in many areas of poorly planned coastal settlement.

•

Degradation of estuarine and coastal ecosystems from urban water pollution and nutrient flows.45

•

The high per capita consumption of energy generated by fossil fuels, both directly by individuals, households and organisations, and indirectly through the energy embodied in the goods and services they consume. Energy use based on fossil fuels contributes to climate change, and will therefore create costs through the effects of global warming.

Global warming, and the greenhouse policies that may have to be adopted to reduce climate change in the future, also have cost implications for regions. While estimating the combined effects of changes in carbon dioxide, temperature and rainfall is difficult, CSIRO predicts that grain and pasture production in southern Australia will decrease as a result of reduced winter and spring rainfall. Coral reefs, alpine ecosystems, mangroves and wetlands, tropical forests and other natural ecosystems are also threatened by global warming. Pests and weeds are likely to spread and become more damaging, and there will be decreases in stream flow in southern Australia, where the use of water resources is already unsustainable. On the other hand, both stream flow and rangeland plant production in northern Australia may increase. Urban and coastal communities will experience greater damage from an increase in the intensity of severe weather events, and there is likely to be an increase in mosquitoborne diseases. Many of these changes will reduce production, incomes and employment across Australia, and add to costs, with the impact varying from region to region.46 Moves towards a more sustainable process of development could

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not only reduce or prevent these costs in the future, but also create new industries and new jobs. For example, a House of Representatives Standing Committee found that jobs would be created in pollution control and clean production technologies; waste management and recycling; new energy technologies; land management (environmental rehabilitation); and nature conservation and ecotourism.47 Other areas could include organic farming; green consumer products (including the remanufacturing of used materials); public transportation; redevelopment of the buildings and infrastructure of the major cities to make them more sustainable; paying landholders to provide carbon sequestration services, preserve biodiversity and habitat, and maintain scenic and recreation areas; and environmental research, assessment, monitoring and management services.48 An OECD report found that jobs resulting from environment-related spending already accounted for between 1 and 3 per cent of employment in OECD countries, and future growth was likely to be strong. Furthermore, a large element of this employment was relatively unskilled labour, a group with unacceptably high levels of unemployment at present.49 Another source of opposition to measures for more sustainable development is the belief that stricter environmental policies will damage business competitiveness and so cost jobs. The OECD report, however, found that: •

the costs of complying with environmental regulations were a very small percentage of total costs in all but a small number of industries;

•

environmental regulations push firms into adopting new technologies that raise their efficiency and competitiveness;

•

the evidence for job losses resulting from environmental policies is that these have been limited, and caused more by the way that the policies were implemented than by the policies themselves; and

•

macro-econometric modelling suggests that the net effect of environmental policies on employment has been (or will be) positive but small.50

The common assumption that stricter environmental protection causes a net national loss of jobs therefore appears to be unfounded. However, most of the OECD analysis relates to manufacturing rather than to the resource-based industries on which much of regional Australia depends. These industries have greater difficulty adjusting to the costs of complying with environmental regulations, because

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they compete internationally on the basis of price rather than product differentiation. For example, the energy and mining industries have opposed ratification of the Kyoto Protocol to reduce greenhouse gas emissions partly because they believe that the measures required would reduce their international competitiveness and lead to major job losses in a number of regions. This view has been challenged by many economists, who question the assumptions underlying some of the models produced to show that cutting emissions will have severe economic impacts on particular industries and regions. The models also fail to take any account of the costs that will be incurred by not reducing emissions, and ignore the potential employment opportunities for regional and rural Australia flowing from the development of renewable energy sources.51 As one group of economists conclude: ‘Overall, regional Australia has very little to lose and much to gain from compliance with the Kyoto Protocol. On the other hand, it has a great deal to lose if climate change goes unchecked’.52 Gray and Lawrence argue that improved sustainability could greatly benefit regional economies, by providing a stable resource base for continued production, lowering costs of production by reducing inputs,53 opening up new markets for ‘cleaner’ food, possibly employing more people in agriculture, and potentially creating new employment in alternative forms of land management.54 On the other hand, in regions where the exploitation of a resource base (land, timber, fish or minerals) is banned for environmental reasons job losses are inevitable, yet a study in the United States found that these losses were smaller than predicted, and in all but a few cases did not lead to large flow-on effects in the rest of the regional economy.55 Another US study argues that the environmental quality of a locality is also an economic resource, and one that has created economic development in formerly extractive-industry communities through tourism, retirement settlement, the in-migration of people in the work force, and the consequent growth of new service industries.56 Some of these conclusions may not apply in Australia, where the population to create this development is smaller and the decentralisation of economic activity is less marked than in the United States, but the contention that the quality of an environment is an economic resource, and one that can also support employment, is an important one. These arguments can be illustrated from the forest industry in

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Australia. Forestry has been a major arena of conflict between environmentalists, industry and government, particularly focused on the felling of old-growth native forests. During the 1990s the Commonwealth Government developed a Regional Forest Agreement (RFA) process by which State and Federal governments could reach agreement on the long-term management and sustainable use of forests in a particular region.57 The nine RFAs reached by mid-2000, although criticised by both industry and environmentalists for opposite reasons, have led to an expansion of the area of conservation reserves in all regions and therefore a reduction in the resource available to the industry. The overall impact of this reduction on employment is likely to be quite small,58 but concentrated in the 35 towns in which more than 20 per cent of the workforce is employed in forest industries.59 Supporters of conservation argue that employment in the industry has been declining for reasons other than conservation (such as structural changes, technological innovation that displaces labour, and past over-cutting), and that there are better ways of generating employment from native forests than woodchipping. They agree with a 1999 position paper by the Western Australian Branch of the National Party, which argued that: …there is significant scope to shift the timber industry’s reliance on low-value commodity exports, such as woodchips, which sustain little labour employment, to quality-driven domestic processing and manufacturing which enhances community development and employment opportunities in forest areas.60 The adjustment plan for the industry in Western Australia provided a $41.5 million package that included low cost loans to install value-adding equipment, expand local manufacturing, and assist marketing. Another $17.5 million was provided for the development of new tourism and recreation facilities and the construction of tourist roads.61 Throughout Australia a small amount of employment will also be created in managing the new reserves, and a much larger amount through the growth of the hardwood plantation industry. The first part of the answer to the question that started this section — will protecting the environment damage the economy — is therefore that there is unlikely to be an overall negative impact on the national economy, that damage will be confined to a very small number of industries and regions, and that well designed adjustment

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assistance can minimise regional hardship. On the other hand, failure to protect the sustainability of environmental resources will inevitably damage Australia’s regional economies. The second part of the answer is that it is possible to use environmental protection to create employment and incomes. How to do this is outlined below.

W H AT C A N B E D O N E AT T H E REGIONAL LEVEL? Working towards environmentally sustainable development at the regional level requires actions to protect the ‘source’, ‘sink’ and ‘service’ functions of the environment noted earlier in this chapter. The specific actions needed will vary from region to region, but the checklist below provides an example for an urban area of sustainabilty objectives and actions. Actions involve changing the behaviour of both producers and consumers, and are not only targeted at business. C H E C K L I S T F O R M O N I TO R I N G P R O G R E S S TOWA R D S F U T U R E S U S TA I N A B I L I T Y 6 2 1 Pollution reduced by: • establishing the environmental capacity of the region for emission of pollutants; • setting up inducements and penalties to cut existing emissions. 2 Natural resources conserved by: • encouraging rehabilitation rather than redevelopment; and • stimulating regional production of renewables to replace finite non-renewables. 3 Total volume of wastes stream reduced by measures such as: • reducing business rates for firms using ‘closed cycle’ processes; • introducing graduated charges for waste collection. 4 Increased recycling of most waste materials including: • recovery of scarce inorganic materials for re-use; and • composting of organic wastes. 5 Reduced energy consumption and increased percentage from renewables by: • raising the energy efficiency of all buildings; • greater use of combined heat and power systems; • reducing commuting and shopping distances to reduce car use;

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• concentrating new development around public transport nodes and corridors; • traffic demand management through road pricing or congestion charges; and • development of renewable energy sources. 6 Major increases in biomass by: • protection of existing urban open space and creation of new open space in areas of deficiency; • additional urban tree planting and other green vegetation; and • more green areas in new development projects. 7 Regional water supplies augmented and consumption reduced by: • tree planting to maximise rainwater retention in watersheds; • applying ‘closed cycle’ methods to water use; • separating ‘grey’ water for filtering and return to groundwater reserves; and • reducing urban run-off by use of more permeable paving,providing natural channels and lagoons in place of closed drains. 8 Community involvement increased by: • community education and awareness programs; and • community representation in environmental management institutions. 9 Environmental management capacity increased by: • the development of the regional sustainable development plan and implementation strategy outlined later in this chapter.

These actions reduce the impact of the existing economic activities and population on the regional environment and protect environmental resources. They help to decouple economic growth from environmental pressures by reducing the resource and energy inputs needed for a unit of output, preventing waste, and reusing or recycling materials. They can also be used to generate new employment in environmental rehabilitation and remediation. Equally important are strategies that shift the structure of the regional economy towards industries and technologies that use fewer environmental inputs and produce less waste. These strategies include: •

promoting the development of the environmental industries outlined earlier, and a range of ‘green jobs’;

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promoting job creation by addressing unmet social needs, especially by utilising community-based sector solutions (e.g. home-based services, recycling programs, drug prevention).63 The aim is to promote employment that is socially beneficial and uses a minimum of materials and energy;

•

encouraging local buyer–supplier chains in order to increase the extent to which local needs are met by local production, and transport is reduced;64

•

assisting the establishment of firms which diversify the local economy and reduce imports, both local firms and through targeted inward investment;

•

the development of eco-industrial estates or parks, in which proximity allows firms to exchange energy and waste materials in order to reduce costs and reduce wastes.65

Consequently it is essential to integrate local economic development agencies into the institutional arrangements established to promote sustainable regional development.

WHO SHOULD BE RESPONSIBLE FOR S U S TA I N A B L E R E G I O N A L D E V E L O P M E N T ? The regional and local level is widely advocated as the location for planning and management for sustainable development, for the following reasons: •

a regional approach allows strategies to be designed to suit regional conditions and circumstances, or to translate state or national polices into locally-relevant strategies and actions;66

•

it is at the regional level that the connections between economic, social and environmental sustainability are best made;

•

effective environmental management, and particularly the behavioural changes needed to achieve greater sustainability, requires the mobilisation and involvement of individuals, and the empowerment of the community. This can be most effectively achieved by working at the regional and local level;

•

conflicts between interests and organisations over environmental issues can best be resolved regionally;

•

environmental problems, whether local or global, have to be addressed by changing behaviour at the local level. Selman reports that as much as 60 per cent of the content of sustainable development action programs will need to be addressed locally.67

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A Commonwealth Government discussion paper on a national strategic policy framework for the sustainable management of natural resources strongly supports a regional approach to natural resource management.68 The paper proposes that: …regional institutional structures be established to develop strategies relevant to the region, taking into account social, economic and environmental circumstances and acknowledging that different models would be suitable for different regions and may build upon existing structures and networks. The devolution of authority to regional bodies would be complemented with resourcing and skilling to assist regional communities to develop and implement strategies, including planning, negotiating and monitoring regional strategies.69 A key issue is what exactly these regional institutional structures should be. Should they be based on bio-regions, including catchments, or should they be based on administrative regions, particularly local government? Local government is an existing institution which is already responsible for a range of environmental issues and services, many councils across Australia have developed Local Agenda 21 environmental management plans, and ‘Arguably the greatest significance of local government for the environment lies in its ability to respond to local concerns and the potential for empowerment at the local level’.70 Local government is also increasingly involved in economic development, and therefore has the capacity to integrate economic development with environmental management. However, there are concerns that local government may be undemocratic, dominated by pro-development interests, too small, lacking the human and financial resources to undertake new functions, too subject to state government control, and have boundaries that do not correspond to logical environmental regions.71 While agreeing with some of these concerns, Dovers and Wild River argue that local government does have many of the attributes they see as necessary for effective environmental management, such as legal status and longevity, capacity to co-ordinate, ability to involve the community, and knowledge of the local area.72 Daly also supports a stronger role for local government in environmental management, but argues that the responsibilities and regional structure of local government must be reformed.73 Gray and Lawrence, on the

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other hand, argue for the establishment of genuinely participatory regional governments with the powers and the resources to undertake co-ordinated and sustainable development. They point to the current problem of the large number of separate local bodies, with different boundaries, set up by different government departments to undertake specific functions.74 The interconnectedness of environmental processes, and the need to link environmental, social and economic issues together, make it imperative to create more multi-functional institutions that can manage these linkages, as well as co-ordinate the activities of national, State and local government agencies. If these institutions are not local government itself, they should incorporate strong local government representation. Whatever their form, local and regional institutions cannot undertake sustainable regional development on their own. They need technical and financial support from State and national government, a strong legislative framework, national policies and standards, and a fiscal and regulatory regime that reduces or redirects demand, discourages or restricts environmentally damaging production processes, and rewards investment in more sustainable businesses and practices. For example, where the benefits of improved environmental management are experienced outside the region incurring the costs, the motivation to participate in new practices is reduced. This type of problem requires the development of national principles and national targets.75 Area-based strategies also need to be complemented by industry and sector-based policies, as local and regional bodies will find it difficult to enforce changes on large corporate operations in their area if these changes are not part of a national or even international framework. In addition, some actions that will promote better environmental performance can only be undertaken by State or national governments. An example is the provision of adjustment assistance to an industry subjected to stricter environmental regulations, as in the case of the forest industry in Australia under the Regional Forest Agreements.76 Another is the promotion of new energy technology by requiring electricity generators to meet a specified share of their production from emission-free sources, as in the Commonwealth Government’s Mandatory Renewable Energy Target which became law in 2000.77 A third example is the restructuring of corporate taxes to discourage environmentally damaging production and encourage environmentally friendly and more labour-intensive production, although the evidence on the effectiveness of this strategy is mixed.78

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W H AT A R E T H E B A R R I E R S TO A C H I E V I N G E N V I R O N M E N TA L S U S TA I N A B I L I T Y AT T H E R E G I O N A L L E V E L ? Achieving greater sustainability at the regional level, as well as at state and national levels, will not be easy. There are a number of technological, attitudinal and institutional barriers that slow the adoption of more sustainable resource management, production and life style practices.

D I S AG R E E M E N T O N W H E T H E R T H E R E I S A P R O B L E M In some regions there can be strong differences of opinion on whether there is a problem of resource degradation or unsustainability. For example, a study of natural resource management in the rangelands of Queensland found that the pastoralists interviewed ‘did not really feel or believe that they have a problem of natural resource degradation’.79 No pastoralist in the survey mentioned loss of biodiversity as an issue, which others saw as an important form of resource degradation. They believed that they knew best how to manage their land, but that their experience and knowledge was overlooked by outside agencies. There was therefore no broad agreement on the problems and the objectives of rangeland management, and pastoralists were not strongly motivated to engage in resource management strategies developed by outsiders. Consequently their involvement in Landcare was limited. Other natural resource examples include the long history of ignoring warnings about the effects of land clearing on salinity in the Western Australian Wheatbelt;80 disagreement over controls on irrigation development on the Darling River;81 the opposing views on forestry expressed by environmental activists and defenders of the timber industry in Western Australia;82 and the conflict over the allocation of water to the Macquarie Marshes in New South Wales.83 At a more general level, ABS surveys find that just over one-quarter of Australians have no concerns about the environment. Amongst the majority who are concerned, over three times as many are concerned about air pollution as are concerned about soil erosion, salinity and land degradation, yet the latter problems must rank higher in their impact on the welfare of Australians.84 In some of these situations, such as the forest industry, governments can impose regulations, but in most cases effective environmental management requires the active involvement of producers and consumers, as well as the political support of a largely urban

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electorate. Much therefore remains to be done to define sustainability issues more precisely, and to develop a shared awareness of these issues. Where this has been achieved, as in the Goulburn Broken Catchment in Victoria, where the main problem is dryland salinity, ‘respondents had positive attitudes towards conservation, working together, [and] working with government...’.85

I N S U F F I C I E N T K N OW L E D G E The task of developing more sustainable methods of managing natural resources is complex and difficult, and much research is still needed. Williams comments that ‘there is a strong perception in many natural resource management agencies in Australia that we have at hand practical land use practices that are ecologically sustainable. It is my view that we do not’.86 In salinity control, while politicians and the public see tree planting as part of the answer, scientists differ over the relative effectiveness of perennial grasses and legumes compared with trees, especially in areas where the pre-European vegetation was dominated by perennial grasses.87 There are also too few environmentally sustainable and economically viable alternative land use systems for landholders to adopt, especially in areas of dryland salinity.88 In the fishing industry lack of data, along with the complexity and variability of marine ecosystems, is also restricting the development of management plans for some fisheries.89 There are even greater gaps in knowledge about some of the major urban environmental issues, such as climate change, and much work remains to be done to develop economically viable alternative energy sources. However, it is also important to recognise that research will never answer all questions, and that decisions will have to be made, and not put off, under conditions of uncertainty.90 C O N S T R A I N T S TO L A N D H O L D E R A D O P T I O N O F M O R E S U S TA I N A B L E R E S O U R C E M A N AG E M E N T P R AC T I C E S A number of observers argue that while many landholders have a strong ethic of stewardship, they face significant constraints that limit their adoption of sustainable resource practices. For example: •

landholders often underestimate the extent of degradation on their own properties;

•

many practices involve ‘increased complexity, risk and skill, offer intangible

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benefits that are frequently captured by someone else, or occur a long way into the future...’;91 •

many farm businesses do not produce sufficient income surpluses to permit investment in protection of the environment; and

•

even if landholders do have the funds to invest, there is often no economically viable alternative land use system to invest in, and farmers are unlikely to adopt new agricultural systems if they do not return an adequate income.92

L AC K O F A S T R O N G N AT I O N A L P O L I C Y F R A M E WO R K In the early 1990s Australia developed a National Strategy for Ecologically Sustainable Development, in response to the report of the World Commission on Environment and Development, Our Common Future. Subsequently a number of national and State policies were developed, covering a range of problems and sectors, and ecologically sustainable development principles became widely incorporated into the language of government at all levels. Although the outcomes of the National Strategy process were criticised as dominated by economic and political interests, they were a major advance on previous policies, and attracted international interest. With a change of Prime Minister, and then a change of government, there has been a partial withdrawal of the Commonwealth from environmental management, and a shift in emphasis towards economic rather than environmental sustainability.93 Yencken and Wilkinson conclude that there is little likelihood that current national policies ‘will on their own prevent continuing environmental degradation’. This is because: •

existing policies do not deal comprehensively with the identified problems (for example, there are no policies for the urban areas, and no national action on land clearing);

•

many programs are inadequately funded and implemented;

•

the legislative or administrative base for environmental protection has considerable deficiencies;

•

the policies do not address the need to reduce pressures on the environment (for example, there is no policy on materials use, or on population);

•

there is no systematic monitoring program; and

•

there is no evidence that current strategies are reversing environmental degradation.94

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Similarly, a report by the Industry Commission into ecologically sustainable land management stated that: To date, the incorporation of the principles of ecologically sustainable development into government policy has been ad hoc, incomplete and tentative. This inquiry has identified that Australian governments have yet to realise a comprehensive, integrated and far sighted way of promoting ecological sustainability in agriculture, in all its various dimensions.95 Dovers recognises some positive developments, such as the Great Barrier Reef Marine Park Authority and the Landcare program, but argues that ecologically sustainable development has not been firmly institutionalised in national policy and administration. He compares the institutional underpinnings of national economic policy (such as strong departments, national accounts, the Productivity Commission, and National Competition Policy) with the marginalisation of ecologically sustainable development, its negligible impact on decision making, and the abandonment of initiatives like the Resource Assessment Commission.96 While most of the responsibility for environmental management lies with the States, the fiscal imbalance between the Commonwealth and the States, and the national and international nature of many environmental problems, means that a national framework is essential to support actions at the regional and local levels.97 The House of Representatives Standing Committee on Environment and Heritage, in its report on catchment management, concluded that: What is clear is that the uncertain boundary between Commonwealth and state responsibilities has led to the present disjointed, piecemeal, ad hoc approach. Moreover, uncertainty over its area of responsibility has prevented more decisive action by the Commonwealth and the development of national, consistent policies.98

T H E L I M I T S O F C O M M U N I T Y- B A S E D E N V I R O N M E N TA L M A N AG E M E N T Through the Landcare, Coastcare, Rivercare and Bushcare programs funded by the Natural Heritage Trust the Commonwealth Government has made a major investment in community-based envi-

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ronmental management. Evaluations of these programs have pointed to a number of achievements. Landcare participation, for example: … has increased awareness of issues, enhanced landholder skills and knowledge, and contributed to increased adoption of best management practices. There are examples where groups have accomplished on-ground work likely to reduce land and water degradation at the local or subcatchment scale.99 Landcare involves more than one in every three farms in Australia, and has been particularly effective in creating an awareness of problems and in changing attitudes to land conservation, without which landholder action is unlikely.100 However, these programs have some limitations that restrict their ability to achieve major environmental change. One problem is that funding has not been targeted at the worst cases, or at areas which would produce the best return for the expenditure, because of a lack of strategic planning and priority setting. For example, according to the mid-term review of the NHT, it has ‘no overarching strategy plan, there is no clear relationship between its programmes, and there is a lack of purpose, plans, objectives, indicators, compliance and communication mechanisms’.101 However, the Federal Government is now planning to allocate most of the NHT funding to projects which fit the priorities established in yet-to-be-developed regional natural resource management plans, which should go a long way towards meeting these criticisms. There are concerns over the representativeness of committee members, and over the lack of resources for the administration and professional management of programs and consequent burnout amongst some Landcare participants. Complex application procedures and shortterm funding are also seen as obstacles to effective community involvement. Finally, some critics contend that Landcare groups do not challenge the existing agricultural practices that may be the cause of the problems, they pay insufficient attention to biodiversity, and the adoption of more sustainable farming practices is still relatively slow.102 Dovers believes that community-based arrangements, ‘having proved their worth, deserve to move from short-term program funding to long-term funding, legal status, solid administrative capacity and better defined roles and powers’.103 Others argue that constraints to the implementation of more sustainable agricultural practices in Australia need to be overcome before community-based programs like Landcare can be truly effective.104

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T H E D O M I N A N C E O F E C O N O M I C OV E R E N V I R O N M E N TA L S U S TA I N A B L I T Y The OECD review of Australia’s environmental performance concluded that ‘In many cases, economic objectives take priority over environmental concerns, with most decision-makers believing that the wealth created by economic activities will overcome environmental effects’.105 Many rural producers are understandably focused on economic survival and economic sustainability, and disagree with environmental scientists and environmentalists on the extent of environmental problems.106 There is strong resistance from some key industry groups to change that might disadvantage them in the short term. Many government departments, and the politicians that administer them, also tend to protect short-term economic (or political) interests rather than long-term environmental sustainability. Given the arguments advanced in this chapter, this lack of action is actually damaging Australia’s long-term economic interests. The implementation of the Regional Forest Agreements (RFA) provides a good example. The objective of the process was to obtain long-term agreement on industry access to forest resources in a region, while protecting the environmental and heritage values of forest areas.107 The principles of the process seemed exemplary. They involved Commonwealth–State co-operation, the establishment of scientific criteria for the conservation of biodiversity, old-growth forests and wilderness, the assessment of environmental, economic, social and heritage values in each area, and consultation with a wide range of interest groups. The process ‘seemed to promise that environmental decision-making would be lifted to a new level of professional excellence’.108 However, the final agreements were negotiated between Commonwealth and State government officials with no public scrutiny, the achievement of conservation targets was made subject to this being ‘practicable and possible’, data on the non-commercial values of forests was often limited, little attention was paid to private forest land, and in at least two regions the final boundaries of the reserves to be protected from logging seem to have been drawn ‘by bureaucrats without substantial expertise in nature conservation and without the aid of modern selection techniques’.109 While the RFA process has produced a major expansion in the area of reserved forest land, the outcomes have been criticised as not meeting the scientific criteria for the adequate protection of biodiversity, and of having been compromised by economic and political considerations.110

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Public opposition to the logging of native forests continues, partly because a centralised, technocratic process cannot deal with the ideological differences between opposing groups.111 Australian concepts of sustainability are still at the weak end of the spectrum of interpretations. There is so far little attempt to reduce or redirect demand, limited incorporation of sustainability principles into decision making, little adoption of accounting systems that include the costs of environmental degradation (i.e. the costs of depleting natural capital), no interest in changing the structure of the economy towards one that is environmentally more sustainable, little interest in dematerialisation (reducing material and energy consumption per unit of GDP),112 insufficient support for renewable energy, little attempt to address the environmental issues of the cities, and a lack of long-term and holistic planning. Yet many studies and even government reports argue that all these strategies are needed to achieve environmental sustainability. Australia has so far largely failed to understand the need to significantly change the type of economic growth, and to redesign old industries in ways that reduce the use of resources and the production of wastes. This way of using the economy to improve sustainability is part of government policy in several European countries, and is often described as ‘ecological modernisation’.113 While its application in these countries has some problems, it represents a more hopeful approach than in Australia, where the development process ‘is stuck in the 1970s with environment and development groups remaining polarised because of an absence of leadership to show how these interests can be integrated’.114 Integrating economic development with environmental management at the national, State and local levels is essential to the achievement of greater environmental sustainability, and it is here that regional activities can have a major impact.

DEVELOPING AND IMPLEMENTING A REGIONAL S U S TA I N A B L E D E V E L O P M E N T S T R AT E G Y There are a number of guides on how to develop and implement a sustainable regional development strategy.115 All emphasise the importance of establishing a sound process for engaging in sustainable regional development. Process is important for at least three reasons. First, the establishment of good process is essential to the achievement of good outcomes.116 Second, as noted earlier in this chapter, the active participation of business and the community is essential for

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the adoption of more sustainable environmental practices, and this can only be achieved by setting up a process that involves and includes them. Third, there is the argument that sustainability is itself a process rather than an end point, one in which individuals, households, businesses and organisations work to adopt practices that reduce and eventually reverse current rates of environmental degradation.117 This progress towards sustainability involves a circular process of learning and adapting, starting with strategic planning and moving on to implementation, monitoring, reviewing and reassessing, and so to a new phase of implementation based on the experience gained. Typical steps in this process are set out below. T H E S U S TA I N A B L E R E G I O N A L D E V E L O P M E N T P R O C E S S •

Establishment of an organisational structure to undertake the process.

•

Assessment of the current state of the regional environment.

•

Identification of issues.

•

Creation of awareness and support by consulting and involving the general public, local firms and landholders.

•

Building partnerships.

•

Setting priorities.

•

Setting goals, indicators and targets.

•

Identification of strategies and actions to achieve the targets.

•

Preparation and dissemination of a plan.

•

Establishment of systems to ensure that the plan is implemented.

•

Implemention of actions.

•

Monitoring of progress.

•

Evaluation and review of strategies and actions.

•

Revision of the plan.

The organisational structure required to achieve this circular process of implementing, learning and adapting should have the attributes that Dovers argues are needed to support ‘adaptive management’. These are: • • • •

persistence; purposefulness; information-richness and sensitivity; inclusiveness; and

•

flexibility.118

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To this list Dore and Woodhill119 would add power, by which they mean the devolution of legislative powers, decision-making authority and resources to regional organisations, and the extent to which these organisations are seen as legitimate. This brings the discussion back to the questions of governance, power and responsibility for sustainable regional development raised earlier in this chapter. Dore and Woodhill argue that Australia’s system of governance does not cope with the regional scale, and that this is ‘the root cause of many of the difficulties [sustainable regional development] initiatives are currently experiencing’.120 Community-based environmental groups such as Landcare are not able to fill this gap, as they do not have some of the key attributes identified by Dovers. Successful sustainable regional development in Australia will therefore depend on the creation of much stronger regional institutions for environmental management, whether these are a strengthened and reformed local government, or new institutions that build on local government, or some other form.

CONCLUSION Ignoring lessons has become a characteristic of Australian natural resource management. It is only in the last 30 years that many Australians have developed a renewed commitment to a conservation ethic. Yet, what has emerged is a very complex and contradictory set of attitudes and processes. Some economic and social imperatives require individuals, communities, financial institutions and governments to give priority to wealth creation, whereas there is a powerful and growing desire to pass on to the next generation a land in better shape than was inherited.121 This chapter has argued that the key to resolving these contradictory pressures lies in integrating environmental management with economic development at the regional level, with the aim of creating ways of generating production, employment and incomes that at the same time reduce human impact on the environment. These could be new farming systems, improved manufacturing processes, environmental industries, green consumer products, sustainable urban development projects, changes in consumption patterns or renewable energy projects. Modest successes in these areas could create the changes in attitudes needed to make the more difficult adjustments that may be required in the future to ensure the sustainability of Australia’s regional economies and quality of life.

11

A LOCAL AND REGIONAL DEVELOPMENT POLICY FOR AUSTRALIA

The challenges facing Australia’s regions are profound. The pathways to growth that Australia has followed for 20, 30 or 40 years are no longer secure.1 Other processes and other considerations are becoming more prominent. Relying on the exploitation of natural resource endowments is not good enough in a global economy that emphasises intellectual property, ‘smart’ technology and the trade in financial and other services. Our inability as a nation to keep pace with the rest of the developed world contributed to the devaluation of the Australian currency and lower standards of living during the last part of the 1990s and the first years of the new century. The failure to develop our regions has resulted in a failure to develop fully as a nation. At the same time, environmental degradation has blocked new development opportunities in many regions and brought into question the sustainability of existing activities. The further expansion of irrigated agriculture in and around Shepparton, Victoria, for example, is hampered by a rising water table that has made it impossible for milk tankers to pass along some roads. Dryland salinity in the upper catchment of the Blackwood River in Western Australia has threatened an enormous swathe of agricultural land, and become a problem for downstream industries such as fisheries and horticulture. The need to consult with, and include, Indigenous Australians in development proposals — especially outside the capitals — also challenges previous paradigms and modes of operation. There are substantial policy dilemmas associated with the economic development of Australia’s regions over the next one or two decades. To a certain degree the growth prospects of every Australian region have already been determined. The nature and rate of

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economic expansion will reflect the mix of industries, resources and opportunities already contained within their boundaries. To a certain measure also, the prospects and rate of growth or decline will be determined by external forces — national or international — that are beyond the control of individual regions. The appreciation or depreciation of Australia’s currency, interest rate rises, conflict between the United States and others, a global shift in consumption preferences or the arrival of a new distance-defeating technology could determine the economic future both of individual regions and sets of regions. However, there is much that individual regions can do to shape their future economically, socially and environmentally. The policies of central governments — Federal and State — will also crucially determine how and in what way regions develop. Intelligent policies will facilitate the processes of growth, while clumsy or ill-advised programs will act as a check on development. It is therefore important to ask what sort of policies and what types of government interventions are required? Do we need more government intervention or do we need less? Which strategies or suites of strategies are likely to maximise the growth both of regions and the nation? Which tier of government should be responsible for implementing the plans and processes that are selected? And, who should be charged with co-ordinating initiatives and ensuring that assistance is available to all who require it? This concluding chapter examines these issues of policy direction. It begins with an examination of three policy scenarios: in the first we examine the costs and benefits of applying a free-market approach to the issues of regional development. The second scenario examines the other end of the policy spectrum as it considers the outcomes associated with a highly structured approach to addressing the needs of Australia’s regions that consciously attempts to provide systemwide solutions. We consider its strengths and weaknesses, ask how it would benefit Australia, and at what cost. The third and final scenario considers a model of regional development where governments provide sustained and significant support for regional development initiatives, but leave it to individual communities and their leaders to identify and develop strategies to address their needs. Finally, the chapter considers how each tier of government in Australia could, and should, act to ensure better regional development outcomes — a more efficient and productive economy, a more equal distribution of income and opportunity, and less acute problems of alienation and exclusion.

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SCENARIO 1 AUSTRALIA’S REGIONS IN AN UNFETTERED MARKET An Australian government elected within the next handful of years could choose to maintain current policy directions, but increase the pace of change in governmental and micro-economic reform. It would transform the nation into a genuinely market-oriented economy. The pursuit of the ‘level playing field’ would force the Australian economy to become more efficient but there would be profound implications for many regions. There would be winners and losers. But even those who benefited economically from the change may wonder at the cost in terms of increased congestion, economic instability and a more divided nation. Gross national income would almost certainly rise but other indicators of quality of life — social capital, income distribution, health outcomes and so on — would plummet. What policies could a Federal government pursue to ensure that the Australian nation behaves more like a corporate entity — Australia Incorporated? This new corporate nation would have a focus on the generation of wealth alone and it would abandon policies and programs that could reduce the efficient allocation of resources. The first step would be the fundamental reform of intergovernmental relations. Revenues generated by the Goods and Services Tax (GST) are collected by the Federal government and paid to the States according their share of the nation’s population. Income and some other taxes, however, are collected by the Federal government and distributed to the States according to a complex formula that takes into account population size as well as factors relating to the cost of providing a standard level of service in each jurisdiction. The net effect is that the smaller States (Tasmania, South Australia, Northern Territory) are heavily subsidised by the larger States (especially New South Wales and Victoria). The whole process is administered by the Commonwealth Grants Commission and the skewed distribution of funds has been formalised since 1929 as the principle of ‘horizontal fiscal equalisation’. This principle could be renounced and Federal funds could flow to States according to their per capita population. The larger States, and the larger regions, would benefit as they would have more money to provide the services and infrastructure their populations require. They would be able to lower taxes and charges for the facilities they provide, and thereby

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contribute to a more productive and efficient economy. The quality of life might suffer in the smaller States as lower Federal revenues force the closure of schools and hospitals, but this would simply encourage some to move to the larger States where there are more resources and facilities are of a higher standard. After all, Tasmania has been losing population almost without interruption for the last 150 years,2 and that has been with subsidies. Change in funding arrangements would simply speed the process. The Federal government also provides approximately $1 billion per year to local governments across Australia. Those funds are allocated according to a complex process, which involves a per capita allocation to each State, and within each State individual Grants Commissions are required to allocate funding according to a formula which incorporates a number of elements including a minimum per capita payment for each local government, a measure of relative need, and a measure of road length.3 The Federal government could replace these complex mechanisms with a simple per capita formula. It would ensure that all Australians receive the same subsidy, but it would result in a significant hole in the finances of rural and outer metropolitan local governments across non-metropolitan Australia. Services in many parts of non-metropolitan Australia, such as libraries, aged care facilities for the aged, and even some roads, would have to be closed or sold off. The removal of the few remaining tariffs on imported goods into Australia would be a third fundamental step towards a more marketoriented society and economy. Since the early 1970s Australian governments have reduced tariffs such that by the year 2000 tariffs stood at only 5 per cent on most commodities with some items, such as cars, attracting a 15 per cent tariff. Removing the last vestiges of tariff protection would force all Australian companies to become world competitive or go out of business. Some regions and some industries would be decimated. Car manufacturers would contract to one, or maybe two, domestic producers and those parts of Adelaide and Melbourne that rely upon the vehicle building industry would face high unemployment and economic hardship. The remnants of Australia’s textile, clothing and footwear industry would also be hard hit, with only specialist manufacturers producing goods for niche markets surviving. Many workers in clothing factories and those employed as outworkers would be unemployed and would face considerable difficulties finding other work. Some industries, however,

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would benefit from the change. Australia’s traditional exporters, such as the mining industry and the agricultural sector, could benefit from lower input costs. However, those benefits are likely to be marginal and may well be lost to other factors such as fluctuations in the Australian currency. Overseas markets could also force down prices to capture some of the efficiency benefits. Complete deregulation of the labour market would be an essential step to generating greater productivity within the Australian economy. Indeed, the Federal Treasurer, Peter Costello suggested in the middle of 2000 that deregulation of the labour market was the solution to the problems confronting Australia’s non-metropolitan regions.4 Poorer regions would be better able to cope with declining economic circumstances if enterprises were able to negotiate with employees to lower rates of pay and reduce other employment conditions. The Treasurer argued this would result in more productive and profitable businesses, higher rates of employment in these regions, and enhanced growth prospects. This position echoes the findings of the Industry Commission’s Inquiry into Regional Industry Adjustment. This Inquiry concluded that the ability of regions to adjust to changing economic circumstances must be severely limited unless employers are able to negotiate labour costs with their employees, subject only to some basic minimum standards.5 It accepted that Australia’s labour market had become more flexible since 1990 but believed that greater flexibility in wages, and greater differences in wage rates between regions, was needed. Subsequent research has shown that the income gap between metropolitan and non-metropolitan regions has widened,6 but further differences may be necessary to achieve full ‘adjustment’. The removal of Federal government programs targeted to specific regions, or groups of regions, would be part of a ‘liberalising’ agenda. A raft of government interventions would be abolished including targeted labour market programs such as those administered by the Federal government’s Area Consultative Committees; special assistance for university campuses located outside the capitals; adjustment packages for industries — such as the dairy industry — experiencing rapid transformation; financial support for families in remote areas who must send their children to boarding school; as well as special funding provided to Tasmania.7 Stepping away from such programs would help lower taxes and complete an ideological commitment by the Federal government to divorce itself from

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matters of territorial development,8 adversely affecting those that have benefited most from these programs. In the main the more vulnerable regions, and the communities at risk within more robust regions would suffer the most. The full implementation of national competition policy would be the final step in moving towards a market-based economy, freed from the strictures of government action. The Hilmer Report9 concluded that the involvement of government trading enterprises in many areas of business distorted markets and impeded Australia’s economic growth. Subsequent Federal legislation provided funding to encourage the State governments to embrace competition policy. At the same time, a regulatory framework has been established to ensure that public sector entities do not unfairly compete with their private sector counterparts. State governments have been encouraged to sell electricity generating and distributing capacity and reform other activities. Local governments have also been subject to national competition policies. To date, many of the activities of both State and local governments have been exempted from scrutiny. A more rigorous application of national competition policy would force State and local governments to divest themselves of many more business-like activities, including aged persons homes, local government provided child care, museums, recreational facilities such as swimming pools and conservation parks, water supply, as well as any other activity which potentially could be operated as a business. All tiers of government would be restricted to a regulatory role. All the policy scenarios considered here would benefit some regions and operate to the cost of others. In this instance the beneficiaries will be those regions and places that have already done well out of deregulation of the Australian economy. Sydney, Melbourne, Brisbane and Perth have grown on the back of a rapidly expanding services sector. The Gold Coast, Cairns, Coffs Harbour and some of the capitals have reaped the benefits of a booming tourism industry. ‘Global Sydney’10 has mushroomed to become Australia’s major link to the global financial services sector, and along the way it has become a major force of national growth and prosperity. A more market-oriented philosophy of government would further fuel its growth, and the growth of similar regions around the country. Too often commentators deride such an outcome. But financial services provide high-quality well-paying jobs, they support cutting-edge infrastructure and they can be an important source of capital for

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development elsewhere. Some non-metropolitan regions and industries would also grow: the mining sector has pushed for a more market-oriented society for some time, and the forestry, fishing, meat processing and wine industries would almost certainly benefit. There would be a negative side to a more liberal economy, and some of the consequences would affect the Australian system of government. Industrial recruitment is likely to become more intense under hardline economic rationalism. The smaller State Governments in particular would be anxious that the loss of businesses would result in the further loss of population and State government revenue. They would bid for firms until their Treasuries ran dry. There would be considerable social cost as current patterns of youth migration from the countryside into the cities increased, and Australia’s shockingly high rural suicide rate could escalate even higher as regions struggled to cope with the consequences of substantial ‘adjustment’. Regions with older industrial structures such as the western suburbs of Melbourne, the northern and southern suburbs of Adelaide, Whyalla and the La Trobe Valley would face further plant closures and employment loss. The implementation of further labour market reform would have both costs and benefits. The wealthy regions would be able to buy their services and products more cheaply while the less prosperous regions in the cities and in the countryside would probably experience some growth in the number of jobs. But most of these jobs would be in ‘old economy’ industries that are sensitive to the price of labour. There would be some movement of employment from more prosperous regions where the cost of labour is higher but this would not necessarily result in an improvement in national aggregate employment. Importantly, the reliance upon market signals alone does not guarantee that evolution within the labour market, or in the nature of industries. The imperative on the firm to improve their product or find new markets is lessened if wages can be negotiated lower and lower. Whole regions could get locked into a ‘dumbing down’ of the labour force and into declining industries. Removing the subsidies within the Australian system of government would have very serious implications for some communities and some regions. The capital cities would, perhaps for the first time, have sufficient funding to meet their infrastructure needs but smaller communities and more remote regions would witness the wholesale loss of services. The more rigid interpretation of national

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competition policies would compound this effect11 as State and local governments were required to divest themselves of income generating activities, which in many instances could not be run profitably or could find no buyer. We already know that the imposition of Compulsory Competitive Tendering on local governments in Victoria by the Kennett Government resulted in many of the services that had previously been provided by small communities for small communities being centralised in larger settlements. Larger companies in regional cities were able to undercut their small town competitors. The net result was a substantial loss of employment and economic activity in many rural areas.

SCENARIO 2 S Y S T E M AT I C P L A N N I N G F O R L O C A L AND REGIONAL DEVELOPMENT An Australian government could consider a new and radical approach to regional development to mark the beginning of the 21st century. It would be radical politically because the Federal government — rather than the States or Territories — would attempt to address the costs of uneven development, and it would be an intrusive agenda that would require an exhaustive set of interventions to achieve its objectives. It would also represent a fundamental break with previous philosophies of government because, with some limited but notable exceptions, Australian governments have never managed the spatial development of cities of regions, though they have regulated it.12 This new mindset would take the form of a National Urban and Regional Development Strategy13 and aim to: … consider the survival needs of small towns, the pressures of rapid development upon fragile coastal locations and the spatial pressures of the continued expansion of our larger capital cities...a national spatial plan would allow Australia to better address issues such as population increase through migration, interstate and intrastate migration for employment and lifestyle reasons, and the identification of areas where particular attention is warranted. Nationally funded items such as investment grants, government utilities (or part thereof these days) would then be required to develop in accordance with this policy, and the impacts of any proposed reductions in staff at particular locations would be considered in relation to the policy.14

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A strategy of this magnitude and purpose would represent a significant shift in direction from the policies pursued by Australian governments over the last two decades. There are, however, precedents. Australia’s history of regional development is littered with initiatives aimed at establishing comprehensive, nation-wide solutions to the problems of uneven development across Australia’s regions.15 The Chifley Labor Government attempted such a solution as part of its program of postwar reconstruction,16 as did the McMahon and Gorton Coalition Governments through the Cities Commission and the National Urban and Regional Development Agency (NURDA). The Whitlam Labor Governments pursued this goal through the Department of Urban and Regional Development (DURD). A National Urban and Regional Development Strategy would, in concept at least, be attractive to some elements within Australian society. Non-metropolitan interests — such as the NSW Country Mayors’ Association who have been vocal in their criticism of cutbacks to services in country towns — would undoubtedly support any program that offered to secure the schools, hospitals and financial services they have been losing. They would also welcome the prospect of a strategy whose avowed aim was to boost the population of regional cities and rural areas. An Australian National Urban and Regional Development Strategy would not be alone in the world. The Irish Government started work on a National Spatial Strategy17 as the 20th century became the 21st.18 This initiative is aimed at providing a comprehensive blueprint for the provision of transport services and infrastructure for all of Ireland over the next 20 years, as well as facilitating policy co-ordination. There is a Spatial Planning Unit within the Department of Environment and Local Government, as well as an Expert Advisory Group drawn from around Ireland and internationally.19 Such grand plans are commonplace within Europe. The Blair Labour Government in Britain established a suite of Regional Development Agencies (RDAs) partly as a way of gaining access to European Union regional development funds. These monies are only available to projects that fit within an identified regional plan, and some of the English regions have economies larger than Australia’s. The European Union is avowedly interventionist in its policies, seeking to achieve both a more equitable society with a relatively equal distribution of opportunities across Europe’s regions, and a more efficient economy. Indeed, many of the

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European regional development and industry support policies are intended to help European businesses become as innovative and as competitive on world markets as their American and Japanese counterparts.20 The potential benefits of a co-ordinated National Urban and Regional Development Strategy are substantial. It would allow for the provision of infrastructure when and where it is needed, it would assist in accommodating population growth through immigration, and provide some solution to the costs and difficulties experienced both by cities and regions in decline as well as those struggling to accommodate growth. It would help the private sector plan for new plants and enterprises and be a first step to ensuring that public sector investment is wisely directed. There is a real chance that such a strategy would help address the backlog of infrastructure and services across Australia. Local governments would be able to anticipate the likely demands on their budgets and State governments could adjust their planning processes in the light of the national Strategy. A National Urban and Regional Development Strategy is an ideal solution to the problems of too much development and economic activity in some regions, and too little in others. Unfortunately it is an ideal solution in a society and a system of government that is far from ideal. Heroic attempts to plan the spatial development of Australia have failed in the past, and this initiative would be doomed also. Why it would fail tells us much about the Australian system of government and its interaction with market processes. Critical factors include timing, the division of powers between governments and the role of market forces. A National Urban and Regional Development Strategy would take some time to prepare and disseminate. Once this project started a staff would need to be recruited, plans would need to be drafted, communities across Australia would need to be consulted, and governments would need to make a commitment to implementing the results. The National Spatial Strategy for Ireland will take at least two years for completion, and that is for a country of just over 3 million people, that would fit comfortably within the borders of NSW. An Australian National Urban and Regional Development Strategy would be a long-term solution to the problems confronting regions but it is an approach that would be presented within a political environment that operates on much shorter time frames.21 A successful National Urban and Regional Development Strategy must span the

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term of at least one government, and even if the government did not change, political imperatives almost certainly would. Changing governmental priorities would not be the only concern as the processes of public sector administration and development would continue, as would private sector development. A strategy of this nature may well be out-of-date as soon as it is produced. Market forces would have moved on, and investments in the built fabric of the environment made in the preparation period would have created new opportunities for development in some regions, and impediments in others. We should ask, what power or influence would there be to implement a National Urban and Regional Development Strategy? States and local governments have responsibility for statutory planning and in the past State governments particularly have jealously guarded their role in this area.22 Achieving consensus across the three tiers of government that such an exercise was appropriate would be a great challenge. It would be even more difficult getting governments to agree on the content of the plan. 23 The New South Wales Government, for example, might be called upon to limit Sydney’s growth to half or two-thirds its current rate, and at the same time commit its resources to providing additional infrastructure and services in places such as Dubbo, Wee Waa, Bega, Coonamble or Yass. The South Australian Government would be required to endorse a planning document that formally accepts little or no growth in Adelaide over the next two decades, while the Queensland Government could be required to invest substantial sums in infrastructure outside the South-East of the State. Local communities would be marked for growth or decline, and some residents would object to either circumstance. The political implications would be immense. And, of course, this assumes that a Federal government would be able and willing to make decisions of this nature. Certainly the history of Federal indecision on the location and need for a second major airport in Sydney suggests that national policy makers are as vulnerable to local political pressures as their State and local government colleagues. The idea of a National Urban and Regional Development Strategy assumes that governments have the capacity to influence, if not determine, patterns of economic growth and decline. However, this is not the case now, and it may never have been so. A modern globalised economy depends upon private sector investment. Shifts in world markets exert a powerful influence that government planning and

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investment in infrastructure cannot overturn. Attempting such an ambitious planning exercise may have a negative impact both on the general economy and on the regions the National Urban and Regional Development Strategy was intended to assist. Uncertainty while the plan was being developed could generate a hiatus in public and private sector investment, and ultimately result in investment decisions that commit resources to inappropriate projects.

SCENARIO 3 AN ENTREPRENEURIAL MODEL OF ECONOMIC DEVELOPMENT A new Australian government could choose to propel the development of Australia’s regions along a third course based on providing incremental assistance, and incremental solutions, to the problems confronting cities, suburbs and rural areas. It is a philosophy that accepts market processes will determine the rate and pace of economic change in any locality. As with the first scenario, this approach relies on the market to generate and distribute economic opportunities. However, it goes further as it sees governments as having a role in facilitating development and helping regions and firms overcome the problems arising out of Australia’s small domestic market and marginal position in the global economy. This model recognises that while life does not begin and end with economics, the strength of the local economy has a major influence on quality of life — on the range of social and cultural activities available in any region, the strength of social cohesion, and the ability to determine how we live as communities. Poor regions often have powerless communities. The strategies and techniques for encouraging growth locally and regionally are known. The provision of assistance to small business; the building of appropriate infrastructure; enhancing the quality of the workforce; fostering networks between firms; export facilitation; encouragement for small business start-ups; the development of partnerships between universities and local companies; Research and Development activities; and the establishment of business incubators all contribute to more dynamic regional economies and a more prosperous nation. An entrepreneurial model of economic development would attempt to help regions find solutions to their problems. It would make funding available at an appropriate level to support business incubators, meet bottlenecks in infrastructure and provide some

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of the start-up capital needed to help new businesses emerge and small businesses grow. Small assistance programs can have substantial impacts. One award-winning program in the ACT and the SouthEast of NSW used monies left over from other programs to fund projects associated with agribusiness.24 The program budget of just over $40 000 provided 13 grants which between them attracted $212 800 in immediate investment and a further $13.3 million in longer-term investment. At least 94 new jobs were created as a consequence of the program.25 An entrepreneurial model of economic development would go further than simply providing very modest grants to industry bodies and individual businesses. Regional development agencies and local governments should be able to gain access to infrastructure funding. While State governments must remain the major providers of large infrastructure such as highways and ports, there are many smaller infrastructure projects that are not important at the State level but which are critical for the development of individual regions or localities. Port Lincoln in South Australia, for example, has a rapidly expanding aquaculture industry. Early experiments with the fattening of wild-caught tuna have proved very successful, oyster farming has grown, and the on-shore production of abalone has emerged as an important industry. Significant Research and Development investment has gone into aquaculture and the labour force is retraining to take up the new opportunities offered in this field. Unfortunately, growth of this industry has been checked by an uncertain power supply and a shortage of physical infrastructure, such as groynes and piers.26 These infrastructure shortages are best identified, and dealt with, by the local governments and regional bodies on the ground. What would this approach to the development of the Australian economy look like? In large measure it would be similar to current arrangements, as the suite of methods employed would remain constant but the scale of operations would expand considerably. There would be a shift from economic development initiatives of local significance27 to genuine regional development initiatives. This entrepreneurial model would see community groups funded to enhance social capital and develop leadership. There has been growing recognition of the importance of regional leadership both within the academic literature,28 and in the programs of government,29 but unlike current approaches, funding would be significant and potential leaders supported and trained over

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a three- or five-year period. Business Enterprise Centres would be expanded, with more of them and they would be better funded. Regional or local empowerment would be an important feature of this approach such that the labour market programs currently administered by the Federal government’s Area Consultative Committees would pass to organisations that are more representative of their regions. Business incubators would proliferate across Australia and high-technology clusters emerge from government-sponsored collaborations between higher education institutions and industry.30 There would be funding pools for regional infrastructure of an appropriate size, such that individual regions could expect a $2 or $3 million infrastructure injection most years, and $10 million or more in a successful year. The providers of income support and human services would also change their approaches to meeting human needs. Instead of warehousing the unemployed in public and private rental ghettoes they should adopt interventionist philosophies, working with disadvantaged communities to build social capital and develop life skills that ultimately result in the unemployed re-engaging with the formal labour market and participating fully in Australian society.31 The entrepreneurial development model would have costs. Its implementation would have an immediate impact on the budgets of governments and they in turn would have to find more resources to fund infrastructure and business development initiatives. Of course, governments could choose to finance this expenditure by cutting back on industrial recruitment. Politicians and the bureaucracies would need to adjust to opening business incubators or small business advisory services, rather than announcing yet another grant to induce a multinational into their city, State or region. A weakness of this approach is that some projects and some initiatives will inevitably fail. Regions are likely to nominate poorly conceived projects that reflect the interests of local political figures rather than the real needs of the community. Some business development initiatives would not result in a more vibrant commercial community, and the level of achievement among some agencies would be low. As a nation we need to accept those risks. Finally, we need to accept that some regions and some places will not be helped by any level of government intervention. There are communities who choose to shun innovation while others may be in such a parlous position that halting their decline may be too difficult and too expensive. The policies implemented under this model must accept that reality. Governments

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cannot ignore market processes or the dominating influence of the global economy. To a certain degree the entrepreneurial model of development is a ‘good enough’ solution to the problems of local and regional development. It represents a compromise between the unfettered market values embedded within the first scenario, and the heavily interventionist philosophy of the second. Like any compromise it contains tensions, but those tensions can be managed.

GOVERNMENTS, REGIONS AND COMMUNITIES An appreciation of what types of policies could be pursued inevitably leads to questions about who should be responsible for ensuring the social, economic and environmental sustainabilty of our regions. Ed Blakely has observed that local economic development initiatives will be more successful if they are instituted at the community or local level.32 This observation has been formalised within the European Union where they have adopted the principle of ‘subsidiarity’ which is not evident in place-based strategies for economic development in Australia: there is a confusing mix of Federal, State and local government organisations.33 More recently community approaches to economic development have found favour. The issue of who should be responsible for economic development is made more complex by the financial structure of government in Australia. The Federal government collects more than 70 per cent of tax revenues but its own programs represent only 50 per cent of public sector expenditures. The remainder goes as grants to the States and local governments. This circumstance — referred to as vertical fiscal imbalance — means that local governments have the fewest resources to devote to growth while the Federal government has more resources but limited knowledge of local needs. It is also constrained in what it can do by constitutional structures34 and its own administrative apparatus. How could the delivery of place-based economic assistance be improved in Australia? What structures are likely to be most effective, and how do they relate to other dimensions of government activity? Every State operates its own model of regional development and there is much to learn from each.35 In an ideal world the agencies and organisations working for local or regional development would have strong community representation (as in Queensland), and local governments would play a central part in their financing and activities. Local government must be central because ‘community entrepreneurship and

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leadership are exercised mainly at this level’.36 These agencies might be run solely as an agency of local government (as they are in Victoria), or they could be a joint venture between State and local governments (South Australia). Regardless of how they are constituted, there is a need for a strong link between the development agency and the other organs of State governments where so many of the public sector decisions affecting the wellbeing of regions are taken. This is one of the great strengths of the Western Australian and NSW systems. Federal governments have an important role in funding regional development initiatives. The history of Federal engagement with regional issues through the 1990s suggests that there is little to be gained, and much to be lost, from the establishment of Federally funded regional development agencies. The Regional Development Organisations established by the Keating Labor Government eventually foundered because of conflict manifested at the State and regional levels. The addition of another tier of development agency to an already crowded economic development scene reduced the impact of the Keating Government’s Regional Development Program. It countered the considerable promise of the philosophies and strategies the program espoused. When the Howard Coalition Government came to power (1996) it rapidly distanced itself from regional development programs,37 however, the initiatives developed by the second Howard Government (2001) show greater sensitivity to regional needs and greater flexibility in their application than those the Keating Government tried to implement.38 Together the Regional Solutions Program, the Stronger Regions Program and the Understanding Rural Australia Program represent a larger cash commitment to the development of regions than the programs announced by the Keating Government in 1994. Moreover, funds are available to established groups and communities and these have networks and social capital that assist in the identification of regional needs and in the delivery of solutions. It is, however, regrettable that only non-metropolitan regions are recognised. Is there a role for communities in promoting development — economic, social or cultural? Haughton concludes that community economic development is the only sustainable path to improving the welfare of cities and regions39 while others have suggested that communities and small towns need to organise to secure their economic future.40 These sentiments are admirable but can they be put into operation and how can we create an effective environment for

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fostering growth? In part the problem stems from the term ‘community’. Virtually any group can represent themselves as a community and while the term carries positive connotations — with individuals working for the common good — it has a negative side also. A community may represent a particular segment of the population and a distinct set of interests. The community banner can be used to exclude some groups and can be a mechanism for establishing a monopoly on power and resources. There are, for example, strongly developed communities in Northern Ireland but they are either Protestant communities or Catholic communities and the community ‘voice’ is used to shut out the other group.41 Similarly we should ask, how many community groups in Australia actively seek to embrace Indigenous issues and members? A focus on community development carries a second danger: it can be used as a slogan by governments to shift the effort, responsibility and cost of economic development from government to residents. Certainly Cox and Caldwell have identified this tendency in the Howard Federal Government’s adoption of social capital as a mechanism for, and objective of, social policy.42 Communities working with their own resources can achieve significant progress but in the absence of professional expertise, the resources to initiate major projects or up-to-date information on economic opportunities, community initiatives flounder. Community involvement and community support for economic development activities are essential. However, the community mantra should not be used to excuse governments from their obligation to work for the development of all citizens and all regions. There are many instances across Australia where community initiatives are supported by government programs or their local economic development agency. Working in partnership in this way increases the chance of success and ensures that there is an open and accountable development process. No single group should be able to capture the development agenda.

CONCLUSION Australians need to give more thought to how we develop as a nation and how we nurture the regions and localities within that nation. Our history will exert a strong influence on economic growth but there are choices available to us that would result in both a fairer and a more productive society. Government policies

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must play a central role. Australia has experienced two decades of economic rationalism and it is time to consider policies of economic facilitation. Within academic circles and in the public sector perhaps too much attention has been given to the shortcomings of Federal government programs and policies. While it is fair to challenge the national government’s omissions — because of its role in setting monetary and fiscal policies, and its greater tax revenues — State governments have probably been absolved of blame too readily. They hold responsibility in this area, and they have undoubtedly made questionable decisions. Their fervent pursuit of competitive Federalism — with State after State bidding for national and multinational firms — has been a negative influence. We also need to reconsider the role of local government. While local government has failings43 there are positive elements also: local government is representative of its communities; it is a major provider of infrastructure and services for metropolitan and non-metropolitan residents and it is well placed to understand local economic needs and their potential solutions. Increasing the quantum of funding made available to local governments would be a first step to solving many of the problems confronting regions. Governments need to reconsider how they reconcile their rhetoric with their actions. For both Federal and State governments much of the policy debate is concerned with new regional policies and programs. By that measure, many governments have performed well over the last decade as there have been significant new initiatives. However, any advances arising out of these regional policies have been undercut by the regional implications of other government actions. As the first scenario outlined earlier suggested, the restructuring of government services, the imposition of national competition policy, and the pursuit of a leaner public sector have adversely affected some regions, metropolitan and non-metropolitan.44 Some governments have attempted to overcome this problem by adopting a ‘whole-of-government approach’ to regional issues45 but as Tony Sorenson has pointed out, ‘the greater the need for policy co-ordination, the more difficult and expensive it becomes’.46 The second vision for the future of Australian regional policy would achieve co-ordination through a formal planning process. The third option would accept the absence of formal co-ordination but would be accompanied by a rationalisation of structures and responsibilities and would see more funding flowing to the regions. This may

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achieve a level of co-ordination naturally or this could be a role State or Federal governments take on. Finally, we need to adjust our language and discipline our thinking. It is folly to think of regional issues as being uniquely non-metropolitan issues; it is also folly to present policies and programs that are for either the cities or the country. Australia is a single nation and the factors that bind us together — history, culture, labour markets, national aspirations, structures of government, income transfer systems and the taxation system — are far stronger than any perception of difference.

NOTES

CHAPTER 1 AN AUSTRALIA OF REGIONS 1

2 3 4 5 6 7 8 9 10

11

12

It is ironic that the brand of economic rationalism introduced by the Hawke and Keating Labor Governments was promoted to the Australian people on the basis that it would create a ‘level playing field’ for industries and individuals. The results for the Australian people have been to the contrary, with greater levels of income inequality, more pronounced regional disparities and more poverty. Rich, D. 1987 The Industrial Geography of Australia, Methuen, Sydney. Walmsley, D. and Weinand, H. 1997 Is Australia Becoming More Unequal? Australian Geographer, 28:1, pp 69-88. Lloyd, R. Harding, A. and Hellwig, O. 2000 Regional Divide? A Study of Incomes in Regional Australia, NATSEM Discussion Paper No. 51, p 22. O’Connor, K. and Stimson, R. 1995 The Economic Role of Cities, Economic Change and City Development, AGPS, Canberra. Reich, R. 1991 The Work of Nations: Preparing Ourselves for 21st Century Capitalism, Knopf, New York. National Institute for Economic and Industrial Research, State of the Regions 2000, ALGA, Canberra. Baum, S. et al 1999 Community Opportunity and Vulnerability in Australia’s Cities and Towns, AHURI, Melbourne. Beer, A. 1999 Regional Cities within Australia’s Changing Urban System, 1991-96, Australasian Journal of Regional Studies, 5:3, pp 329-48. Tonts, M. and Jones, R. 1998 Rural Restructuring and Uneven Development in the Western Australian Wheatbelt, pp 139-153 in Lawrence, G. Lyons, K. and Momtz, S. (eds) Social Change in Rural Australia, Rural Social and Economic Research Centre, Central Queensland University, Rockhampton. GPs are defined here as medical practitioners who performed more than 1000 GP services for which Medicare payments were claimed. This definition includes part-time practitioners and follows Glover, J. Shand, M. Forster, C. and Woolacott, T. 1996 A Social Health Atlas of South Australia, Second Edition, SA Health Commission, Adelaide. Beer, A. and Keane, R. 2000 Population Decline and Service Provision in Regional Australia: A Case Study of Rural and Remote South Australia, People and Place, 8:2, pp 69–76.

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16 17 18

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24 25

26

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Human Rights and Equal Opportunity Commission 1999 Bushtalks in Port Augusta, HREOC, Sydney. Badcock, B. 1994 ‘Stressed-out’ communities: out-of-sight, out-ofmind? Urban Policy and Research, 12:3, pp 191–197. Davis, R. and Stimson, R. 1998 Disillusionment and Disenfranchisement at the Fringe: Explaining the Geography of the One Nation Party Vote at the Queensland Election, People and Place, 6:3, pp 69–82. Mac Sharry, R., White, P. and O’Malley, J. 2000 The Making of the Celtic Tiger, The Inside Story on Ireland’s Boom Economy, Mercier Press, Cork. OECD 2000 Revenue Statistics 1965–99, OECD, Paris. Henton, D. and Walsh, K. 1994 Reinventing Silicon Valley: Creating a Total Quality Community, pp 310–26 in Cities and the New Global Economy, OECD, Melbourne. Hurley, F. 1994 Regional Development in the Big Picture, The Australian Journal of Regional Studies, 8, pp 1–11. Saxenian, A. 1994 Regional Competitive Advantage, Harvard University Press, Harvard. Independent Committee of Inquiry into Competition Policy in Australia 1993 National Competition Policy: Executive Overview, AGPS, Canberra. Madden, J. 2000 The Regional Impact of National Competition Policy, Regional Policy and Practice, 9:1, pp 3–9. Tesdorpf, P. 1998 The Impact of Compulsory Competitive Tendering on Small Town Employment, Paper Presented to the Australian & New Zealand Regional Science Association Annual Conference, Tanunda, September. Stilwell, F. and Troy, P. 2000 Multilevel Governance and Urban Development in Australia, Urban Studies, 37:5–6, pp 909–30. Commonwealth Grants Commission 2001 Draft Report of the Operation of the Local Government (Financial Assistance) Act, 1995, Discussion Paper LG 2001/1, January. Collits, P. 1995 Balanced State Development in New South Wales Policy Making – Past Glories and Future Prospects, Paper presented to the Australian and New Zealand Regional Science Association Conference, Brisbane, December. Searle, G. and Cordeau, R., 2000 Planning, Economic Development and the Spatial Outcomes of Market Liberalization, Urban Policy and Research, 18:3, pp 355–76. Beer, A. and Maude, A. 1997 Effectiveness of State Frameworks for Local Economic Development, Local Government Association of South Australia, Adelaide. See McKinsey and Co. 1994 Lead Local, Compete Global, McKinsey and Co, Sydney. Forth, G. 2000 The Future of Australia’s Declining Country Towns: Following the Yellow Brick Road, Regional Policy and Practice, 9:2, pp 4–11. Putnam, R. 1992 Making Democracy Work: Civic Traditions in Modern Italy, Princeton University Press, Princeton. Cooke, P. and Morgan, K. 2000 The Associational Economy: Firms, Regions & Innovation, Oxford University Press, Oxford. Porter, M. The Competitive Advantage of Nations, The Free Press, New York.

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CHAPTER 2 DEFINING LOCAL AND REGIONAL DEVELOPMENT 1 2 3 4

5 6

7 8 9

10

11 12 13 14

15 16

17

See, for example, Haughton, G. 1999 Community Economic Development, The Stationery Office, London. Tietz, M. 1994 Changes in Economic Development Theory and Practice, International Regional Science Review, 16:1, pp 101–6. Blakely, E. 1994 Planning Local Economic Development, Sage, Thousand Oaks, p 50. See, for example, Moon, J. and Willoughby, K. 1998 An Evaluation of Local Enterprise Initiatives, Australian Regional Developments, 19, DILGEA, Canberra; Blakely, E. and Bowman, K. 1986 Taking Local Development Initiatives: A Guide to Economic and Employment Development for Local Government Authorities, Australian Institute of Urban Studies, Publication No. 129, Canberra. Blakely, E. 1994, p 52. The delicate balancing act of priorities and strategies for economic development are illustrated by a program run by one state government. This initiative aimed to improve the profitability of small businesses but had the potential to generate job losses as it showed small business proprietors how to reduce costs and reduce staffing. The government department involved persisted with the program because it felt the small business sector was at risk, and there was a danger of even greater employment loss if action wasn’t taken quickly. Dore, J. and Woodhill, J. 1999 Sustainable Regional Development, Final Report, Greening Australia, Canberra. House of Representatives Standing Committee on Primary Industries and Regional Services, 2000, Time Running Out, AGPS, Canberra. See, for example, the Gladstone and Moree case studies in Beer, A. Bolam, A. and Maude, A. 1994 Beyond the Capitals: Urban Growth in Regional Australia, AGPS, Canberra. The Universities and Regional Development Forum hosted by the Federal Government in March 2001 is one example of the growing awareness of the importance of education institutions. See Saxenian, A. 1994 Regional Competitive Advantage, Harvard University Press, Harvard. Roberts, B. and Enright, M. forthcoming The Emergence of Regional Industry Clusters in Australia, European Planning Studies. Roberts, B. and Enright, M. forthcoming The Emergence of Regional Industry Clusters in Australia. For useful reviews, see Young, C. and Lever, J. 1997 Place Promotion, Economic Landscape and the Consumption of City Image, Tidjschrift voor Economische en Sociale Geografie, 88:4, pp 332–41; and Millington, C. Young, C. and Lever, J. 1997 A Bibliography of City Marketing, Journal of Regional and Local Studies, 17, pp 16–42. McKinsey & Co. 1994 Lead Local, Compete Global, McKinsey and Co, Sydney. Research by Howard, K. and Forth, G. 2001, Regional Policy and Practice, 10:1 suggests the results are, at best, mixed with few economic opportunities arising out of such exchanges. Tually, S. 2001 Streets Ahead? A Review of Main Street Programs: The South Australian Experience, Regional Policy and Practice, 10:1, pp 38–43.

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19 20

21 22 23 24

25 26 27 28

29 30 31

32 33

34 35

36 37 38 39

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Collits, P. 1997 Community Economic Development in NSW, History, Theory and Practice, Paper presented to the Australian and New Zealand Regional Science Association Conference, Wellington, 8–12 December. Saxenian A. 1994 Regional Competitive Advantage. Amin, A. and Thrift, N. 1995 Globalization, Institutional Thickness and the Local Economy, pp 92–107 in Healey, P., Cameron, S., Davoudi, S., Graham, T. and Mundani-Pour, A. (eds) Managing Cities: The New Urban Context, John Wiley and Sons, London. Amin, A. and Thrift, N. 1995 Globalization, Institutional Thickness and the Local Economy. Putnam, R. 1993 Making Democracy Work: Civic Traditions in Modern Italy, Princeton University Press, Princeton, NJ. Cooke, P. and Morgan, K. 1998 The Associational Economy, Oxford University Press, Oxford. Martinez-Fernandez, C. 1999 The Network Perspective in Regional Regeneration: An Organic Analysis of the Hunter Regional Network for Economic Development, Australasian Journal of Regional Studies, 5:3, pp 279–96. Industry Commission 1996 State, Territory and Local Government Assistance to Industry, Productivity Commission, Melbourne. Tietz, M. 1994 Changes in Economic Development Theory and Practice. Mac Sharry, R., White, P. and O’Malley, J. 2000 The Making of the Celtic Tiger, The Inside Story on Ireland’s Boom Economy, Mercier Press, Cork. See Beer, A. 2000 Regional Policy in Australia: Running out of Solutions, pp 169–94 in Pritchard, B. and McManus, P. Land of Discontent, UNSW Press, Sydney. Stilwell, F. and Troy, P. 2000 Multilevel Governance and Urban Development in Australia, Urban Studies, 37, 5–6, pp 909–30. Hurley, F. 1994 Regional Development in the Big Picture, pp 1–11. See, Beer, A. 2000 Regional Policy in Australia: Running out of Solutions and Sorenson, A. 1994 Silk Purse or Sow’s Ear: Canberra’s Recent Approaches to Regional Development Policy, Policy, Spring, pp 33–36. National Commission of Audit 1996 Report, AGPS, Canberra. NSW Country Mayors’ Association 1993 Balanced State Development, NSW Country Mayors’ Association, Sydney; and Collits, P. Balanced State Development in NSW Regional Policy Making Past Glories and Future Prospects, Paper presented to the Australian and New Zealand Regional Science Association Annual Conference, Brisbane, 11–13 December, 1995. Logan, M. 1978 Regional Policy, in Scott, P. (ed) Australian Cities & Public Policy, Georgia House, Melbourne. Collits, P. 1997 Community Economic Development in NSW, History, Theory and Practice, Paper presented to the Australian and New Zealand Regional Science Association Conference, Wellington, 8–12 December. Collits, P. 1995 Balanced State Development in NSW Regional Policy Making. —— 1995 Balanced State Development in NSW Regional Policy Making. —— 1995 Balanced State Development in NSW Regional Policy Making. Beer, A. and Maude, A. 1997 Effectiveness of State Frameworks for Local Economic Development, Local Government Association of South Australia, Adelaide. The Queensland Government in its 2001–02 Budget committed $8.7 million to the support of five regional economic development corpora-

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(National Economics 1999 State of the Regions 1999, National Economics, Sydney, p 100). National Economics 1999 State of the Regions 1999, p 101. For an example, see Johnson, L., and Wright, S. 1994 (White) Papering over the Regional Problem: Unemployment in Geelong and the Federal Government Response, Australian Geographer, 25, pp 121–25. Stilwell, F. 1992 Understanding Cities and Regions, Pluto Press, Sydney, p 45. Davidson, G., Hirst, J. and Macintyre, S. (eds) 2001 The Oxford Companion to Australian History, Oxford University Press, Melbourne, p 7. Santich, B. 2002 Regionalism and Regionalisation in Food in Australia, Rural Society, 12: 1, pp 5–16. Bradley, D. 1989 Regional Dialects in Australian English Phonology. In Collins, P. and Blair, D. (eds) Australian English: The Language of a New Society, University of Queensland Press, St Lucia. Bryant, P. 1989 Regional Variation in the Australian English Lexicon. In Collins and Blair, Australian English. See also the ABC’s Australian Word Map, which is collecting examples of words, phrases and expressions used in particular regions (www.abc.net.au/wordmap). Crowley, F. (ed) 1974 A New History of Australia, William Heinemann, Melbourne, pp 431–33. Thrift, N. 1994 Taking Aim at the Heart of the Region. In Gregory, D., Martin, R. and Smith, G. (eds) Human Geography: Society, Space and Social Science, Macmillan, London, pp 200–231. Stilwell 1992 Understanding Cities and Regions, p 46. OECD 2002 Redefining Territories: The Functional Regions, OECD, Paris. Smailes, P. 2000 The Diverging Geographies of Social and Business Interaction Patterns: A Case Study of Rural South Australia, Australian Geographical Studies, 38, p 159. Raagma, G. 2002 Regional Identity in Regional Development and Planning. See Allen, J., Massey, D. and Cochrane, A. 1998 Rethinking the Region, Routledge, London and New York. Malecki, E. 1997 Technology and Economic Development: The Dynamics of Local, Regional, and National Competitiveness, Longman, London, pp 10–11. National Economics 2001 State of the Regions 2001. McManus P. and Yiftachel, O. 1993 The Political Economy of Regions in the 1990s: The Case of Perth and its Surrounds. Paper presented to the Annual Conference of the Australian and New Zealand Section of the Regional Science Association, Armidale, December. ABS 2001 Statistical Geography: Volume 1–Australian Standard Geographical Classification (ASGC), ABS Catalogue No. 1216.0, ABS, Canberra, p 13. ABS 2001 Statistical Geography, p 15. Wilson, H. 1998 ABC Radio Spaces: Region, State, and Nation, Media International Australia, 88, pp 39–49. Maude, A. and Beer, A. 2000 Regional Development Agencies in Australia: A Comparative Evaluation of Institutional Strengths and Weaknesses, Town Planning Review, 71, pp 1–24. National Economics 2001 State of the Regions 2001.

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Stilwell, F. 2000 Changing Track: A New Political Economic Direction for Australia, Pluto Press, Sydney, pp 260–67, and http://www.ssn.flinders. edu.au/geog/regionalstates. Logan, M., Maher, C., McKay, J. and Humphreys, J. 1975 Urban and Regional Australia: Analysis and Policy Issues, Sorrett Social Sciences, Melbourne. Office of Local Government, Department of Immigration, Local Government and Ethnic Affairs 1988 Regionalisation of Australia for Comparative Economic Analysis (Australian Regional Developments 4.6), AGPS, Canberra. Beer, A. 2000 Regional Policy and Development in Australia: Running Out of Solutions? In Pritchard, B. and McManus, P. (eds) 2000 Land of Discontent: The Dynamics of Change in Rural and Regional Australia, UNSW Press, Sydney, pp 176–77. Department of Housing and Regional Development 1994 Guidelines for the Regional Development Program, Commonwealth Department of Housing and Regional Development, Canberra. Beer, A. and Maude, A. 1995 Economic and Infrastructure Audit of the Central and Western Murray and Surrounding Areas, Department of Geography, Flinders University, Adelaide. See also Ryan, L. and Taylor, W. 1995 A Critical Review of Problems Associated with the Delineation of ‘Regions’ for Regional Economic Development Purposes: A Queensland Perspective, Regional Policy and Practice, 4, pp 35–47. Regional Australia Summit, Summit Working Groups, Report of Theme 5 – Government, accessed at www.dotars.gov.au/regional/summit/out comes/reports/theme5_report.htm. O’Neill, P. and Fagan, R. 1995 The New Regional Policy: What Chance of Success? Australian Quarterly, 67, pp 55–68. Ryan, P. 1999 Regional Development: Lessons from the Goulburn Valley Regional Development Experience. In Proceedings of the National Agricultural and Resources Outlook Conference, Vol. 2, Agriculture, ABARE, Canberra.

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Beer, A. and Foster, C. 2002 Global Restructuring, the Welfare State and Urban Programmes: Federal Policies and Inequality within Australian Cities, European Planning Studies, 10:1, pp 7–25. Since the late 1990s the South Australian government has endeavoured to achieve economic and population growth by luring ‘home’ graduates of South Australian universities who have moved interstate to find employment. This policy has operated on the presumption that the lifestyle benefits of living in a smaller city and better access to home ownership will lure back captains and potential captains of the corporate sector. The policy ignores the fundamental economic processes that have seen Adelaide’s position within the Australian urban system decline over the last decade. Because of their smaller size and specific characteristics the two territories are not included in this graph. Evatt Foundation 1996 The State of Australia, Evatt Foundation, Sydney. Hayward, D. 1993 The Kennett Cuts: How Necessary Are They? Journal of Australian Political Economy, 33, pp 46–74. ABS 3101 Australian Demographic Statistics.

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O’Connor, K., Stimson, R. and Daly, M. 2001 Australia’s Changing Economic Geography: A Society Dividing, Oxford University Press, Melbourne, p102. Evatt Foundation 1996 The State of Australia. Murphy, P. and Watson, S. 1997 p 99. Jureidini, R. and Healy, E. 1998 A Decade of Change in Industry Employment: Melbourne and Sydney Compared, People and Place, 6:3, p 57. NSW Department of State and Regional Development 2000 The New South Wales Competitiveness Report, DSRD, Sydney, tables B14 and B15. Real Estate Institute of Australia data, cited in Badcock, B. and Beer, A. 2000 Home Truths: Property Ownership and Housing Wealth in Australia, Melbourne University Press, Melbourne, p 43. Real Estate Institute data, cited by Glendinning, L. 2002 A Lousy $11m Makes You a Record-breaker in Melbourne, Sydney Morning Herald, April 27–28, p 11. ABS 3101.0 Australian Demographic Statistics. ABS, 2001 Census, Basic Community Profiles. Measured in terms of total factor income, see ABS 5220.0 2001, table 20. The remainder formed gross operating surplus to owners of capital: often overseas companies. ABS 5220.0 Australian National Accounts: State Accounts 2001, table 20. Beer, A. 1998 Immigration and Slow-growth Economies: The Experience of South Australia and Tasmania Australian Geographer, 29:2, p 225. ——1998, p 230. ABS 3101.0 Australian Demographic Statistics. ABS 6203.0 Labour Force, Australia, January 2002. Note ‘agricultural income’ refers to the gross value of production less production and salary costs, the net effects of taxes and subsidies, and deductions for property income payable. ABS3101.0 Australian Demographic Statistics. O’Connor, K. et al. 2001 Australia’s Changing Economic Geography. Walmsley, D. and Weinand, H. 1997 Fiscal Federalism and Social Well-Being in Australia, Australian Geographical Studies, 35:3, pp 260–70. Gregory, R. 1996 The 1995 Shann Memorial Lecture: Growing Locational Disadvantage in Australian Cities’ Economic Research Centre, Department of Economics, University of Western Australia, Discussion Paper, 96–14, p 5. Walmsley, D. and Weinand, H. 1997 ‘Is Australia Becoming More Unequal?’ Australian Geographer, 28, pp 69–88, p 82. Note: totals for each regional category calculated by authors. See: Stimson, R., Baum, S., Mullins, P. and O’Connor, K. 2001 Australia’s Regional Cities and Towns: Modelling Community Opportunity and Vulnerability Australasian Journal of Regional Studies, 7:1, pp 23–62; Baum, S., Stimson, R., O’Connor, K., Mullins, P. and Davis, R. 1999 Community Opportunity and Vulnerability in Australia’s Cities and Towns, University of Queensland Press/Australian Housing and Urban Research Institute, Brisbane. Stimson et al 2001 Australia’s Regional Cities and Towns: Modelling Community Opportunity and Vulnerability, p 27.

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See Anderson, J. 1999 One Nation or Two? Securing a Future for Rural and Regional Australia, Address to the National Press Club, 17 February. www.dot.gov.au/media/anders/speeches/asl_99.htm. ABS 2002 Australia Year Book, ABS, Canberra, p 84. Salt, B. 2001 The Big Shift, Hardie Grant Books, Melbourne; c.f. O’Connor, K. 2001 Coastal Development: Just a Little Shift in Australia’s Geography?, People and Place, 9:4, pp 49–56. Lloyd, R., Harding, A. and Hellwig, O. 2000 Regional Divide? A Study of Incomes in Regional Australia Australasian Journal of Regional Studies, 6:3, pp 217–92. Quote taken from p 271. Department of Family and Community Services 1999 Social Indicators for Regional Australia: Attachment to the Department of Family and Community Services Submission to the House of Representatives Standing Committee on Primary Industries and Regional Services Inquiry into Regional Infrastructure and the Development of Australia’s Regional Areas, DFACS, Canberra, p 7. Sexton, E. 1998 Overlode Sydney Morning Herald, 13 June, p 93. Lees, L. 2000 A Reappraisal of Gentrification: Towards a Geography of Gentrification, Progress in Human Geography, 24:3, pp 389–408. National Economics/Australian Local Government Association 2001 State of the Regions Report, p A60. Department of Family and Community Services 1999 Social Indicators for Regional Australia, p 49. Daly, M. and Stimson, R. 1994 Dependency in the Modern Global Economy: Australia and the Changing Face of Asian finance, Environment and Planning A, 26, pp 415–34. Gold Coast City Council 1999 Socio-Economic Profile of the Gold Coast, GCCC, p 39. Finch, L. and McConville, C. 1999 Introduction, in Finch, L. and McConville, C. (eds) Gritty Cities: Images of the Urban, Pluto Press, Sydney, p 5. Walsh, M. 1980 Poor Little Rich Country, Penguin, Melbourne. ABS 5220.0 Australian National Accounts: State Accounts. Beer, A. and Foster, C. 2002 Global Restructuring, the Welfare State and Urban Programmes. Stimson, R. Baum, S. and O’Connor, K. 2001 The Social and Economic Performance of Australia’s Large Regional Cities and Towns: Implications for Rural and Regional Policy, Unpublished. Reference Group on Welfare Reform (McClure Report) 2000 Participation Support for a More Equitable Society: Final Report of the Reference Group on Welfare Reform, DFACS, Canberra. Mission Australia 2002 There’s something different about this place, Mission Australia, p 2. Reference Group on Welfare Reform (McClure Report) 2000 Participation Support for a More Equitable Society: Final Report of the Reference Group on Welfare Reform, p 4. Mission Australia 2002 There’s something different about this place, p 21. Haslam-McKenzie, F. 2002 Leadership Development: Flogging a Dead Horse or the Kiss of Life for Regional Australia, Sustaining Regions, 1:2, pp 24–31. Fagan, B. 1987 Local Employment Initiatives: Long Term Strategy for Localities or Flavour of the Month? Australian Geographer, 8:1, pp 51–56.

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Roberts, I. 1996 The Future for Australian Agriculture: Important Issues to 2010, Outlook, 96:2, p 61. Fagan, R. H. and Webber, M. 1994 Global Restructuring: The Australian Experience, Oxford University Press, Melbourne, p 75. Calculations by authors from Australian Bureau of Statistics, National Accounts, Catalogue 5206.0. Ferguson, J. and Simpson, R. 1995 The Australian Rural Labour Market, National Farmers’ Federation Discussion Papers, 9, pp 6–9. Haberkorn, G., Hugo, G., Fisher, M. and Aylward, R. 1999 Country Matters: Social Atlas of Rural and Regional Australia, Bureau of Rural Sciences, Canberra, p 50. Pritchard, W. 1998 The Emergent Contours of the Third Food Regime: Evidence from Australian Dairy and Wheat Sectors, Economic Geography, 74:1, pp 64–74. Lawrence, G. and Gray, I. 2000 The Myths of Modern Agriculture: Australian Rural Production in the 21st Century, in Pritchard, B. and McManus, P. (eds) Land of Discontent, UNSW Press, Sydney, p 39. Haberkorn et al 1999 Country Matters. The table excludes SSDs in the Sydney Statistical Division, and the SSDs of Newcastle and Wollongong. Agricultural employment is defined as persons employed in the ANZSIC categories ‘Agriculture’ and ‘Services to Agriculture’. Stayner, R. and Reeve, I. 1990 ‘Uncoupling’: Relationships between Agriculture and the Local Economies of Rural Areas in New South Wales, Rural Development Centre, University of New England, Armidale, p 1. —— 1990 ‘Uncoupling’, p 27. For a discussion of IO models see: Midmore, P. & Harrison-Mayfield, L. (eds) 1996 Rural Economic Modelling: An Input-Output Approach, CAB International, London; or Armstrong, H. & Taylor, J. 1993 Regional Economics and Policy, Harvester Wheatsheaf, New York. Stilwell, F. 1992 Understanding Cities and Regions, Pluto Press, Sydney, p 108 National Farmers’ Federation 1993 New Horizons: A Strategy for Australia’s Agrifood Industries, NFF, Canberra, p 2. ABS Catalogue 5209.0 Australian National Accounts: Input-Output Tables. ABS Catalogue 5209.0, Table 1. Note that these are national estimates for all industries, and hence overall measures of import dependence may not reflect the actual patterns of particular single industries. Pritchard, W. 1999 Australia as the ‘Supermarket to Asia?’ Governance, Territory and Political Economy in the Australian Agri-food System Rural Sociology, 64:2, pp 284–301. A regional coefficient will be between zero and one. A high regional coefficient, for example, 0.9, suggests that 90 per cent of economic flows emanating from an activity have an impact within the region. Queensland Government Statistician’s Office 1995 Input-Output Analysis and Economic Impact Assessment within the Queensland Public Sector, Government Statistician’s Office, Brisbane. Levantis, C. 2001 Country Towns: Impact of Farmers’ Expenditure on Employment and Population in Australian Towns, Sustaining Regions, 1:1, pp 38–42.

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ABARE 1999 Changes in Nonmetropolitan Population, Jobs and Industries, Report to the Department of Transport and Regional Services, p 39. Environment and Behaviour Consultants 1999 The Social Impacts of Dairy Industry Deregulation and Water Reform on Dairy Farmers and Communities in the Bega Valley. Unpublished report to the Bega Valley Water Management Committee and Bega Valley Shire Council. The survey sample (109) was 73 per cent of the total number of dairy farmers in the region (149). Pritchard, B. and Arrowsmith, M. 2000 An Assessment of the Case for Net Public Benefit Being Derived from Statutory Regulation of Terms and Conditions of Payment in the Murrumbidgee Irrigation Area Wine Grapes Industry. Unpublished report to the Wine Grapes Marketing Board, Griffith. Forth, G. 2000 The Future of Australia’s Declining Country Towns: Following the Yellow Brick Road, Regional Policy and Practice, 9:2, pp 4–10. Prior to 1992 the ABS defined an ‘agricultural establishment’ as an enterprise with annual agricultural production greater than $20 000. In 1992 however it altered its benchmark to take in agricultural enterprises with greater than $5000 annual agricultural production. In 1995, the ABS altered the annual income bands used for measuring the distribution of farm size, making historical comparisons difficult. Gleeson, T. and Lindsay, R. 1997 Changing Structure of Farming, ABARE Current Issues, 4. Davidson, A. 1999 The Dilemma of the Middle: Restructuring of the Dairy Industry in New South Wales, Rural Society, 7:2, pp 17–27. A preliminary examination of these issues for the processing tomato industry is provided in Pritchard, W. and Burch, D. 2000 ‘Contract Farming in the Processing Tomato Industry: Recent Trends’, Paper presented at Agri-Food VIII Conference, Tumbarumba, December. Pritchard, B. and Burch, D. forthcoming The World Tomato? The Globalization Thesis and Agri-Food Studies, Ashgate, Aldershot. O’Faircheallaigh, C. 1986 The Economic Impact on Aboriginal Communities of the Ranger Project, 1979–85, Australian Aboriginal Studies 2, pp 2–14. O’Faircheallaigh, C. 1991 Mining and Economic Development in the Northern Territory: What We Know, What we Need to Know, in Moffatt, I. and Webb, A. (eds) North Australian Research: Some Past Themes and New Directions, NARU Darwin, pp 60–82. O’Faircheallaigh 1991, Mining and Economic Development in the Northern Territory, p 64. —— 1991, p 65. NSR Ltd 1992 Mt Todd Gold Project Draft Environmental Impact Statement, NSR Melbourne (unpublished). Morrissey, D. and Pritchard, B. 1993 Borroloola Employment and Enterprise Development Plan, Unpublished report to the Commonwealth Department of Employment Education and Training, NT Office. Taylor, J. 1988 Aboriginal Population Mobility and Urban Development in the Katherine Region, in Wade-Marshall, D. and Loveday, P. (eds) Northern Australia: Progress and Prospects, Vol. 1: Contemporary Issues in Development, NARU, Darwin, pp 201–23. Storey, K. 2001 Fly-in/fly-out and fly-over: Mining and regional development in WA Australian Geographer 32:2, pp 133–48. Kimberley Development Commission 1999 Indicators of Socio-

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C H A P T E R 6 S U N R I S E I N D U S T R I E S : E N G I N E S O F R E G I O N A L G ROW T H ? 1 2

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Stimson, R., Baum, S., Mullins, P. and O’Connor, K. 2001 Australia’s Regional Cities and Towns: Modelling Community Opportunity and Vulnerability, Australasian Journal of Regional Studies, 7:1, pp 23–62. Ahammad, H. and Greig, R. 2000 A Regional Perspective on Tariffs: The Western Australian Experience, Australasian Journal of Regional Studies, 6:1, pp 67–94. Dwyer, J. and Fabo, J. 2001 The Manufacturing Sector. Organisation for Economic Co-operation and Development (OECD) 1999 OECD Science, Technology and Industry Scoreboard 1999: Benchmarking Knowledge-Based Economies, OECD, Paris, p 115. Forster, C. 1999 Australian Cities: Continuity and Change, Oxford University Press, Melbourne, p 42. Way, N. 2002 Don’t Cry for Melbourne, Business Review Weekly, July 5. Riemens, W. 2001 Drivers of Innovation in the Australian Automotive Industry, AEGIS Working Papers on Innovation, 2001–03, Australian Expert Group in Industry Studies, Sydney, p 5. Fagan, R. and Webber, M. 1999 Global Restructuring: The Australian Experience, Oxford University Press, pp 121–129; Industry Commission 1990 The Automotive Industry, Report No. 5, Industry Commission, Canberra; Industry Commission 1997 The Automotive Industry, Industry Commission, Canberra, Vol II, Appendix C; Productivity Commission 2002 Review of Automotive Assistance, Position Paper, Productivity Commission, Canberra; Riemens, W. 2001 Drivers of Innovation in the Australian Automotive Industry. Ulenbruch, W.W. J. 1997 Automotive and Parts. In I. Marsh (ed), Australia’s Emerging Industries: Achieving Our Potential, Committee for the Economic Development of Australia, Melbourne. For example, as part of the assistance package to Mitsubishi from the Federal and State Governments negotiated in 2002, the South Australian Government gained a commitment from Mitsubishi to establish a global centre for automotive research and development in Adelaide, employing more than 400 people. Department of Industry, Science and Resources 1999 Emerging Industries and Technologies Forum: Report of a Forum held in Canberra, 17 August 1999, Emerging Industries Occasional Paper 1, Department of Industry, Science and Resources, Canberra; Department of Industry, Tourism and Resources, various databases (http://www.industry.gov.au); and Marsh, I. 1997 Australia’s Emerging Industries. Stimson, R. and others 1996 Tourism in Australia: An Overview of Trends, Issues and Prospects, Bureau of Tourism Research, Occasional Paper No. 23, pp 50–52. Department of Industry, Tourism and Resources 2002 Tourism Industry, (http://www.industry.gov.au). Salma, U. 2002 Indirect Economic Contribution of Tourism, 1997–98, Tourism Research Report, 4:1, pp 59–61. Prosser, G. and others 2000 The Significance of Regional Tourism: A Preliminary Report, Occasional Paper No. 2, Bureau of Tourism Research, Canberra. In 1998 holiday visitors accounted for an estimated 46 per cent of total international visitor expenditure, VFR visitors for 15 per cent, business visitors for 13 per cent and education visitors for 21 per cent, with considerable variations between the states in these percentages. Although many people who are VFR, business or education visitors also spend some time

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as tourists, the international expenditure data consequently overestimate spending on strictly tourist activities. The domestic expenditure data are for overnight trips; they exclude day trips and therefore underestimate tourist expenditure in regions close to the major cities. Like the international data they also cover all types of overnight visits, of which 45 per cent in 1998 included a holiday or leisure component, 34 per cent involved visiting friends or relatives, and 19 per cent involved travel for business. Data from Johnson, L. 2000 Tourism Expenditure by Domestic Visitors in Regional Australia, 1998, Occasional Paper No. 31, Bureau of Tourism Research, Canberra; Cook, S. Johnson, L. and Rossetto, A. 2000 Tourism Expenditure by International Visitors in Regional Australia, 1998, Occasional Paper No. 32, Bureau of Tourism Research, Canberra. A 1994 survey found that the top ten attractions most visited by international tourists were all in Sydney, with Sydney shopping the top attraction. Shopping in Melbourne ranked eleventh (Stimson, R. and others 1996 Tourism in Australia, p 72). The Great Barrier Reef is not included because of the major role that air fares and packages play in tourism to this region. Compiled from data in Johnson, L. 2000 Tourism Expenditure by Domestic Visitors, and Cook, S. Johnson, L. and Rosetto, A. 2000 Tourism Expenditure by International Visitors. Domestic visitor expenditure excludes air fares, other long distance fares and packages, and international visitor expenditure excludes air fares, motor vehicles, other capital items and payments by overseas package tour operators to the Australian tourist industry. The region centred on Coffs Harbour. Includes Uluru (Ayers Rock). International visitor expenditure is dominated by students at the University of Wollongong. Includes Murray East for international visitors. Beer, A., Bolam, A. and Maude, A. 1994 Beyond the Capitals: Urban Growth in Regional Australia, AGPS, Canberra, p 212; Getz, D. 1999 Resort-centred Tours and Development of the Rural Hinterland: The Case of Cairns and the Atherton Tablelands, Journal of Tourism Studies, 10:2, pp 23–34; National Economics 2001 State of the Regions 2001, pp 30–36. Stimson, R. and others 1996 Tourism in Australia, pp 74–77; Stimson, R., Jenkins, O., Roberts, B. and Daly, M. 1998 The Impact of Daikyo as a Foreign Investor on the Cairns–Far North Queensland Regional Economy, Environment and Planning A, 30:1, pp 161–79. Ramm, C. 1994 The Economic Impact of the Tourism Sector on the Cairns Regional Economy, Report on the Cairns Regional Economy, 6, pp 1–4. Estimated from Tables 3.17, 4.11, 5.24, 6.10 and 7.4 in Johnson, L., Foo, L., Buchanan, I. and Henrick, B. 2001 Regional Tourism Employment: A Case Study Approach, Bureau of Tourism Research, Occasional Paper No. 33, and Clark, A. 2001 Jobs and Tourism in Regional South Australia: A Case Study of South East South Australia, Tourism Research Report, 3:1, pp 23–38. These jobs may be part time or full time. Excludes international visitor expenditure on airfares and packages. Data for the other regions includes these items.

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Estimated employment created by total tourist expenditure in the region. Includes international visitor expenditure on airfares and packages attributed to the region. O’Halloran, M., Cook, S., Sbragi, A. and Buchanan, I. 2000 Rural Tourism in Australia: The Visitor’s Experience, Occasional Paper No. 30, Bureau of Tourism Research, Canberra, p 19. Henrick, B. 2000 Tourism in Regional South Australia, Tourism Research Report, 2:2, pp 21–28. O’Halloran, M., Cook, S., Sbragi, A. and Buchanan, I. Rural Tourism in Australia, pp 99–100. O’Clery, P. 1999 Tourism: Value Adding to Regional Communities, Background Paper, Regional Australia Summit (www.dotrs.gov.au/ regional/summit). Johnson, L., Foo, L., Buchanan, I. and Henrick, B. 2001 Regional Tourism Employment, p 181. Stimson, R. and others 1996 Tourism in Australia, p 153. Beer, A., Bolam, A. and Maude, A. 1994 Beyond the Capitals, pp 53–54 and the case studies of Cairns and Hervey Bay; Hall, C. L, 1998 Introduction to Tourism: Development, Dimensions and Issues, Longman, Melbourne; Mullins, P. 1992 Do Industrial Cities Have the Highest Rates of Urban Unemployment? Urban Policy and Research, 10:1, pp 24–32; National Economics 2001 State of the Regions 2001, pp 30–36. Hall, P. 1998 Introduction to Tourism, chapters 11 and 12. O’Clery, P. 1999 Tourism; Trotter, R. 2001 Regions, Regionalism and Cultural Development. In T. Bennett and D. Carter (eds), Culture in Australia: Policies, Publics and Programs, Cambridge University Press, Cambridge. Allen Consulting Group 1999 The Australian Service Sector Review 2000, vol. 1, p 1 (http://www.isr.gov.au/industry.gov.au/industry/services/ Volume1.pdf). Data from Allen Consulting Group 1999 The Australian Service Sector Review 2000, pp 1 and 3. O’Connor, K. and Edgington, D. 1991 Producer Services and Metropolitan Development in Australia. In P. Daniels (ed) Services and Metropolitan Development: International Perspectives, Routledge, London; O’Connor, K., Stimson, R. and Daly, M. 2001 Australia’s Changing Economic Geography, pp 59–60, 79–89, 103–17. Daly, M. and Pritchard, B. 2000 Sydney: Australia’s Financial and Corporate Capital. In J. Connell (ed) Sydney: The Emergence of a World City, Oxford University Press, Melbourne, p 181. Daly, M. and Pritchard B. 2000 Sydney; Jureidini, R. and Healy, E. 1998 A Decade of Change in Industry Employment: Melbourne and Sydney Compared, People and Place, 6:3, pp 54–69. Maxwell, P. 1999 The Importance of Mining Services to the Western Australian Economy, CEDA Information Paper No. 65, Committee for the Economic Development of Australia, Melbourne; O’Connor, K. and Kershaw, L. 1999 Outsourcing, Producer Services and Shifts in the Geography of the Australian Mining Industry, Australasian Journal of Regional Studies, 5, pp 73–86; O’Connor, K. Stimson, R. and Daly, M. 2001 Australia’s Changing Economic Geography, pp 117–24. —— 1999 The Importance of Mining Services to the Western Australian Economy, p 19.

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Birrell, B., and O’Connor, K. 2000 Regional Australia and the ‘New Economy’, People and Place, 8:4, pp 52–62. Kotkin, K. 2001 The New Geography, p 11. See also Dicken, P. 1992 Global Shift: The Internationalization of Economic Activity, Paul Chapman, London, pp 377–78. O’Connor, K. 1996 Industrial Design as a Producer Service: A Framework for Analysis in Regional Science, Papers in Regional Science, 75, pp 237–52. Lynch, A. 2002 Broadband to Pump Jobs into the Bush, The Australian, 16 April. Budde, P. Communication 2002 Australia – Call Centres, Paul Budde Communication Pty Ltd, Bucketty, pp 2–3. Bristow, G., Munday, M. and Gripaios, P. 2000 Call Centre Growth and Location: Corporate Strategy and the Spatial Division of Labour, Environment and Planning A, 32, pp 519–38. Budde, P. Communication 2002 Australia – Call Centres, p 6. Bristow, G., Munday, M. and Gripaios, P. 2000 Call Centre Growth and Location; Paul Budde Communication (2002) Australia – Call Centres; Richardson, R., Belt, V. and Marshall, N. 2000 Taking Calls to Newcastle: The Regional Implications of the Growth in Call Centres, Regional Studies, 34, pp 357–69. Hall, P. and Markusen, A. 1985 Silicon Landscapes, Allen & Unwin, Boston; Storper, M. and Walker, R. 1989 The Capitalist Imperative: Territory, Technology, and Industrial Growth, Blackwell, Oxford. Marceau, J., Manley, K. and Sicklen, D. 1997 The High Road or the Low Road?, p 160. Biotechnology is not classified as a separate industry by the Australian Bureau of Statistics, and a lot of activity in the industry is in R&D, a service, rather than in manufacturing, demonstrating again the integration between services and manufacturing. In Table 6.4 the manufacturing side of the industry is probably best captured in the data for medicinal and pharmaceutical products. BioAccent 2002 Victorian Biotechnology and Bioscience Based Industry: Report Prepared for the State Government of Victoria, State Government of Victoria, Melbourne; Department of Industry, Science and Resources, and Ernst and Young and Freehills 2001 Australian Biotechnology Report 2001, Department of Industry, Science and Resources, Canberra; Thorburn, L. 1999 Ten Trends in Australian Biotech, Australasian Biotechnology, 9:3, pp 151–58. OECD 1998 Fostering Entrepreneurship, OECD Policy Brief No. 9. PriceWaterhouseCoopers 1999 National Review of Small Business Incubators: Final Report, Department of Employment, Workplace Relations and Small Business, Canberra, p 16. Centre for Strategy and Evaluation Services 2002 Benchmarking of Business Incubators: Final Report, Enterprise Directorate General, European Commission, Brussels, p 5. Centre for Strategy and Evaluation Services 2002 Benchmarking of Business Incubators, p 5. Baker, J., Bullock, G., Hefferan, M. and Kuchler, D. n.d. Development of Technology Incubators, Parks and Precincts in Queensland: A Review and Start-Up Guide for Proponents, Queensland Innovation Council, Brisbane (http://www.iie.qld.gov.au/corporate/technology.pdf); Centre for Strategy and Evaluation Services 2002 Benchmarking of Business

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Incubators; PriceWaterhouseCoopers 1999 National Review of Small Business Incubators, pp 30–31. See also Hansen, M., Chesbrough, H., Nohria, N. and Sull, D. 2000 Networked Incubators: Hothouses of the New Economy, Harvard Business Review, 78:5, pp 74–84. Nolan, A. n.d. Public Policy on Business Incubators: an OECD Perspective (http://www.smartlink.net.au/library/nolan/businessincubation.htm). Centre for Strategy and Evaluation Services 2002 Benchmarking of Business Incubators, p 86; Duff, A. n.d. Best Practice in Business Incubator Management (http://www.wantree.com.au/~aduff); PriceWaterhouse Coopers 1999 National Review of Small Business Incubators. Morse, G. and Loveridge, S. 1997 Business Retention and Expansion Visitation Program: Is It for Our Community? North East Regional Center for Rural Development Publication No. 72, Pennsylvania State University, University Park (BRandE Booklet 1, at http://www.cas.psu.edu/docs/casconf/nercrd/Publications/BRandE/ bre.html); Sorensen, M. 1996, How to Design and Manage a Business Retention and Expansion (BRandE) Program (http://unix.utb.edu/ ~msoren/chapter1.htm). For an Australian program see Bank of I.D.E.A.S. (www.bankofideas.com.au). Malizia, A. and Feser, J. 1999 Understanding Local Economic Development, pp 60–61 and 202–04. Marceau, J. 1999 The Disappearing Trick: Clusters in the Australian Economy. In OECD, Boosting Innovation: The Cluster Approach, OECD, Paris, p 157. Cooke, P. 2002 Knowledge Economies, p 121. Porter, M. 2000 Location, Competition, and Economic Development in a Global Economy, Economic Development Quarterly, 14:1, pp 16–17. Cooke, P. 2002 Knowledge Economies; Enright, M. and Roberts, B. 2001 Regional Clustering in Australia, Australian Journal of Management, 26 (Special Issue), pp 65–85; Finegold, D. 1999 Creating Self-Sustaining, High-Skill Ecosystems, Oxford Review of Economics, 15:1, pp 60–81; Porter, M. 1998 Clusters and the New Economics of Competition, Harvard Business Review, 76:6, pp 77–90. Porter, M. 1998 Clusters and the New Economics of Competition, p 80. — 2000 Location, Competition, and Economic Development in a Global Economy, p 32. Freestone, R. 1996 The Making of an Australian Technopark, Australian Geographical Studies, 34, pp 18–31; Blandy, R. 2001 Industry Clusters Program: A Review, South Australian Business Vision 2010, Adelaide; Marceau, J. 1999 The Disappearing Trick, p 162; Marsh, I. and Shaw, B. 2000 Australia’s Wine Industry: Collaboration and Learning as Causes of Competitive Success, Australian Business Foundation, Sydney (http://www.abfoundation.com.au); National Economics 2001 State of the Regions 2001, Australian Local Government Association, Canberra. Marceau, J. 1999 The Disappearing Trick, p 167. Brown, R. 1999 ‘Strangers in the Night’ – Some Perspectives on Regional Australia and the Potential of Clusters, Paper Presented to the Third National National Conference on Sustainable Economic Growth for Regional Australia, Sunshine Coast, Queensland (http://www.regional. org.au/articles/development/segra_strangers. htm); Enright, M. and Roberts, B. 2001 Regional Clustering in Australia; Marceau, J. 1999 The Disappearing Trick.

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Marceau, J. 1999 The Disappearing Trick, pp 170–71; Rosenfeld, S. 1995 Industrial-Strength Strategies: Regional Business Clusters and Public Policy, Aspen Institute, Washington; Rosenfeld, S. 2001 Networks and Clusters: The Yin and Yang of Rural Development (http://www.rtsinc. org/publications_text.html). Maskell, P. and others 1998 Competitiveness, Localised Learning and Regional Development: Specialisation and Prosperity in Small Open Economies, Routledge, London and New York. Goodwin, M. and Johnston, R. 1999 The Place of Absorptive Capacity in National Innovation Systems: The Case of Australia, Science and Public Policy, 26:2, pp 83–90. Marceau, J., Manley, K. and Sicklen, D. 1997 The High Road or the Low Road?; West, J. 2001 The Mystery of Innovation: Aligning the Triangle of Technology, Institutions and Organisation, Australian Journal of Management, pp 22–43. Porter, M. 2000 Location, Competition, and Economic Development in a Global Economy, p 26. See Cooke, P. 2002 Knowledge Economies; Craig, J. (2000) Developing a Regional Industry Cluster: A Possible Generic Process (http://troll.apana.org.au/~jcraig/Documents/Cluster/developing_in dustry_cluster.htm); Nolan, A. 2000 Regional Dimensions of Enterprise Development (http://www.smartlink.net.au/nolan/ regional dimensions. htm); OECD 1999 Boosting Innovation: The Cluster Approach; OECD 2001 Innovative Clusters: Drivers of National Innovation Systems, OECD, Paris; Porter, M. 2000 Location, Competition, and Economic Development in a Global Economy; Roberts, B. 2000 Facilitating Industry Cluster Development, Regional Policy and Practice, 9:1, pp 36–45; Rosenfeld 1995 Industrial-Strength Strategies; Rosenfeld, S. 2002 A Governor’s Guide to Cluster-Based Economic Development, National Governors Association, Washington (http://www.rtsinc.org/publications_text.html); Rosenfeld, S. 2002 A People’s Guide to Clusters (http://www.rtsinc.org/publications_text .html). Australia’s technology parks, like those elsewhere, have not been very successful at fostering linkages between firms, or between firms and universities. See Joseph, R. 1994 New Ways to Make Technology Parks More Relevant, Prometheus, 12:1, pp 46–61. Rosenfeld, S. 1995 Industrial-Strength Strategies, p 136. Blandy, R. 2001 Industry Clusters Program; Cooke, P. 2002 Knowledge Economies, p 196.

C H A P T E R 7 T H E P R AC T I C E O F L O C A L A N D R E G I O N A L E C O N O M I C DEVELOPMENT IN AUSTRALIA 1 2 3 4

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Imrie, R. and Thomas, H. 1993 British Urban Policy and the Urban Development Corporations, Paul Chapman Publishing, London. Blakely, E. 1994 Planning Local Economic Development, Theory and Practice, Sage, Thousand Oaks, p 70. —— 1994, p 72. For a fuller discussion see Beer, A. and Maude, A. 1997 Effectiveness of State Frameworks for Local Economic Development, Local Government Association of South Australia, Adelaide. ——1997 Effectiveness of State Frameworks.

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Collits, P. 1995 Balanced State Development in NSW Regional Policy Making — Past Glories and Future Prospects, Paper presented to the Australian and New Zealand Regional Science Association Annual Conference, Brisbane, December. Industry Commission 1996 State, Territory and Local Government Assistance to Industry, Productivity Commission, Melbourne. See, Maude, A. and Beer, A. 2000, Regional Development Agencies in Australia: A Comparative Evaluation of Institutional Strengths & Weaknesses, Town Planning Review, 71:1, pp 1–24. The Regional Development Boards in NSW were established in 1972 and some Regional Organisations of Councils have a history dating back to the Whitlam Labor Governments of 1972–75. Keating, D. 1994 Working Nation, The White Paper on Employment & Growth, AGPS, Canberra. Kenyon, P. and Black, A. 2001 (eds) Small Town Renewal, Overview and Case Studies, Rural Industries Research and Development Corporation, Publication No. 01/043. Real funding levels have risen since 1996. In the late 1990s the Queensland Government began to support some economic development agencies. The Queensland Government’s 2001–02 budget included the Queensland Regional Development Initiative. The Initiative supported regional economic development across Queensland through the provision of a total of $8.7 million to five Regional Economic Development Corporations, five Remote Area Boards, fifteen Regional Development Organisations to employ Regional Business Advisors, and to the Institute of Sustainable Regional Development (Central Queensland University). Beer, A. and Maude, A. 1997 Effectiveness of State Frameworks. Loveridge, S. 1996 On the Continuing Popularity of Industrial Recruitment, Economic Development Quarterly, 10:2, pp 151–58. Bartick, T. 1994 Better Evaluation is Needed for Economic Development to Thrive, Economic Development Quarterly, 8, pp 99–106. Axford, N. and Pinch, S. 1994 Growth Coalitions and Local Economic Development Strategies in Southern England, Political Geography, 13:4, pp 344–60; Dewar, M. 1998 Why State and Local Economic Development Programmes Cause So Little Economic Development, Economic Development Quarterly, 12, pp 68–87; Rubin, H. 1988 Shoot Anything that Flies, Claim Anything that Falls: Conversations with Economic Development Practitioners, Economic Development Quarterly, 21, pp 236–51. Kenyon, P. and Black, A. 2001 (eds) Small Town Renewal. Rubin, H. J. 1988 Shoot Anything that Flies; Claim Anything that Falls: Conversations with Economic Development Practitioners, Economic Development Quarterly, 2:3, pp 236–51. In the mid-1990s, for example, one of the Tasmanian economic development organisations had the establishment of an Australian Football League club in Tasmania as one of its highest priorities. Industry Commission 1996 State, Territory and Local Government Assistance to Industry, Productivity Commission, Melbourne. See, for example, Ross, D. and Friedman, R. 1990 The Emerging Third Wave: New Economic Development Strategies in the 1990s, The Entrepreneurial Economy Review, 9:1, pp 3–10. Loveridge, S. 1996 On the Continuing Popularity of Industrial Recruitment, p 151.

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Tietz, M. 1994 Changes in Economic Development Theory and Practice, International Regional Science Review, 1 and 2, pp 101–106. ——1994 Changes in Economic Development Theory and Practice. Karmatz, L., Labi, A. and Levinstein, J. 1998 Corporate Welfare, Time, pp 29–47, Nov 9. ——1998, p 34. Industry Commission 1996 State, Territory and Local Government Assistance to Industry, p 4. The Advertiser, Cost of Help to Firms hits $660 million, 26 July 2000, pp 1–2. SMH, Leaks and Spills as Big Wheels Meet Over Mitsubishi, Thursday 6 August, p 4. These measures have worked in large measure, though not entirely. Selective industry assistance is available within the European Union and is often presented in the guise of attracting firms into Europe rather than America or Asia. Between 1994 and 1999 the British government handed out £774 652 000 in Regional Selective Assistance grants in England alone. Robson et al 2000, p 6 noted that ‘Regional Selective Assistance is a discretionary grant awarded to firms located in Assisted Areas for investment projects that will create or safeguard jobs, and generate wider benefits for the regional economy’. Moreover, ‘RSA is an important tool in attracting and retaining internationally mobile investment’. Cabinet Office 1999 Sharing the nation’s prosperity: Variation in Economic and Social Conditions across the UK, Report to the Prime Minister by the Cabinet Office, London, December, p 84. Industry Commission 1996 State, Territory and Local Government Assistance to Industry, p 23. Loveridge, S. 1996 On the Continuing Popularity of Industrial Recruitment. John Hood, quoted in Karmatz, L. et al., p 36. Loveridge, S. 1996 On the Continuing Popularity of Industrial Recruitment, p 155. Industry Commission 1996 State, Territory and Local Government Assistance to Industry, p 21. The competition in the year 2000 between Victoria and South Australia for the General Motors new engine plant is one instance that comes to mind. Searle, G. and Cordeau, R. 2000 Planning, Economic Development and the Spatial Outcomes of Market Liberalization, Urban Policy and Research, 18:3, pp 355–76. Dept of State Development, 1990 Annual Report 1989–90 Department of State Development, Sydney. Searle, G. and Cordeau, R. 2000 Planning, Economic Development and the Spatial Outcomes of Market Liberalization, p 8. —— 2000, p 13.

CHAPTER 8 INDIGENOUS PEOPLE AND AUSTRALIA’S REGIONS 1 2 3

Crough, G. 1993 Visible and Invisible: Aboriginal People in Northern Australia, North Australia Research Unit, Darwin. ——1993 Visible and Invisible, p 42. Australian Bureau of Statistics 1995 National Aboriginal and Torres Strait Islander Survey, 1994, ABS, Canberra; cited in Hunter, B. 1999 Three

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Nations, Not One: Indigenous and Other Australian Poverty, Centre for Aboriginal Economic Policy Research Working Paper 1/1999, p 25. Hunter, B. 1998 Assessing the Validity of Intercensal Comparisons of Indigenous Australians, 1986–96, Journal of the Australian Population Association, 15:1, pp 51–66. Hunter argues that increased self-identification was not a major factor in contributing to measured population increase. Taylor, J. 1997 The Contemporary Demography of Indigenous Australians, Journal of the Australian Population Association, 14:1, pp 77–114. Sullivan, P. 1995 Beyond Native Title: Multiple Land Use Agreements and Aboriginal Governance in the Kimberley, Centre for Aboriginal Economic Policy Research Discussion Paper, 89/1995, p2. Warchivker, I., Tjapangati, T. and Wakerman, J. 2000 The Turmoil of Aboriginal Enumeration: Mobility and Service Population Analysis in a Central Australian Community, Australian and New Zealand Journal of Public Health, 24:4, pp 444–49. For definitions of these terms and concepts see Warchivker et al The Turmoil of Aboriginal Enumeration, p 446. Warchivker et al 2000, p 447. Woodward, J. 1974, Aboriginal Land Rights Commission Second Report, AGPS, Canberra, para. 3. Holmes, J. cited in Waitt, G. McGuirk, P. Dunn, K., Hartig, K. and Burnley, I. 2000 Introducing Human Geography, Longman, Melbourne, p 204. Australian National Audit Office 2000 Indigenous Land Corporation— Operations and Performance, Audit report 49, 1999–2000, Ausinfo, Canberra. p 30. Indigenous Land Corporation 2000 Annual Report 1998–99, Ausinfo, Canberra. Australian National Audit Office 2000 Indigenous Land Corporation, p 46. —— 2000, p 45. Altman J. and Nieuwenhuysen J. 1979 The Economic Status of Australian Aborigines, Cambridge University Press, Cambridge; Gale, F. and Wundersitz, J. 1982 Adelaide Aborigines: A Case Study of Urban Life 1966–81, The Aboriginal Component in the Australian Economy 4, Development Studies Centre, Australian National University, Canberra; Young, E. 1981 Tribal Communities in Rural Areas, The Aboriginal Component in the Australian Economy 1, Development Studies Centre, Australian National University, Canberra; Young, E. and Fisk, E. (eds) 1982a Town populations, The Aboriginal Component in the Australian Economy 2, Development Studies Centre, Australian National University, Canberra; Young, E. and Fisk, E. (eds), 1982b Small Rural Communities, The Aboriginal Component in the Australian Economy 3, Development Studies Centre, Australian National University, Canberra. Fisk, E. 1985 The Aboriginal Economy in Town and Country, Allen & Unwin/Australian Institute of Aboriginal Studies, Sydney. Crough, G. Howitt, R. and Pritchard, B. 1989 Aboriginal Economic Development in Central Australia, Combined Aboriginal Organisations, Alice Springs. Watson, J., cited in Crough, G. and Christophersen, C. 1993 Aboriginal People in the Economy of the Kimberley Region, North Australia Research Unit, Darwin, p ix.

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Pritchard, B. and Gibson, C. 1996. The Black Economy: Regional Development Strategies in the Northern Territory, North Australia Research Unit, Darwin. Pritchard, B. 2001 The Aboriginal Component of the Kimberley Economy, Kimberley Development Commission, Kununurra. This section is based on Pritchard, B. 2001 The Aboriginal Component of the Kimberley Economy. WA Department of Commerce and Trade, unpublished data available from the Kimberley Development Commission, Kununurra. Luker, B. 1997 The Public Sector and Sunbelt Development, Challenge, 40:4, pp 58–82. Financial statements were accessed with the permission of ATSIC. In all cases, the details of individual organisations remained anonymous in the course of the research. Data from Ausstats ‘ABS Themes: Regional Statistics, WA 1998 by SLA. Argyle Diamonds 2000 Ensuring a Sustainable Future into a New Century: The 1999 Social and Environmental Report, Argyle Diamonds, unpublished. Pritchard, B. and Gibson, C. 1996 The Black Economy: Regional Development Strategies in the Northern Territory, pp 51–53. This section is based closely on Pritchard, B. 2000 Indigenous Issues in Regional Australia, Regional Policy and Practice, 9:1, pp 9–12. Denniss, R. and Watts, M. 1999 Regional Labour Markets: Naturally Less Efficient?’ Unpublished paper presented to Australian and New Zealand Regional Science Association International Conference, Newcastle, 19–22 September. Smith, D. 1994 The Cross-cultural Validity of Labour Force Statistics about Indigenous Australians’, Centre for Aboriginal Economic Policy Research Discussion Paper 69/1994. Johnston, E. 1991 Royal Commission into Aboriginal Deaths in Custody, National Report, Volume 4, AGPS, Canberra, p 444. Junankar, P.N. and Liu, J. 1996 Estimating the Social Rate of Return to Education for Indigenous Australians, Centre for Aboriginal Economic Policy Research Discussion Paper, 123/1996. O’Faircheallaigh, C. 1991 Mining and Economic Development in the Northern Territory: What We Know, What We Need to Know. In Moffatt, I. and Webb, A. (eds) North Australia Research: Some Past Themes and New Directions, NARU, Darwin, p 64. Hollingsworth Dames and Moore 1992 McArthur River Draft EIS, HDM, Brisbane. East Arnhem Business Development Association 1995 Arnhem Region Economic Development Strategy, NT Government Printer, Darwin.

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Lush, J. 2002 In Far Away Sydney, Cruel Bank Bosses Deliver Blow to Quorn, Advertiser, 5 Apr, p 3. Ironically, by the middle of the following week NAB shares had fallen 70 cents because ‘the market’ believed the cuts announced by the NAB were not sufficiently far reaching. Badcock, B. 1994 ‘Stressed-out’ Communities: ‘Out-of-sight, Out-ofmind? Urban Policy and Research, 12, pp 191–97. Argent, N. and Rolley, F. 2000 Lopping the Branches.

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Adams, P. 2002 Prospects for Australian Regions, Sustaining Regions, 1:2, pp 4–16. Argent, N. and Rolley, F. 2000 Lopping the Branches: Bank Closure and Rural Australian Communities, pp 140–68 in Pritchard, B. and McManus, P. (eds) Land of Discontent, UNSW Press, Kensington. O’Neill, P. and McGuirk, P. 2002 Prosperity Along Australia’s Eastern Seaboard: Sydney and the Geopolitics of Urban Economic Change, Paper presented to the Institute of Australian Geographers Conference, 9–12 July, Canberra. Conway, K. 1995 Can Rural Communities Survive? The Case of Hopetoun, People and Place, 3:3, pp 11–16. Sorenson, T. 1992 The Australian Country Town: Present Trends and Future Prospects, Keynote Address to the Australian and New Zealand Regional Science Association, 7 December, Ballarat. Smailes, P. 1998 The Diverging Geographies of Social and Business Interaction Patterns: A Case Study of Rural South Australia, Australian Geographical Studies, 38:2, pp 158–81. Baker, R. and Marshall, D. 1998 The Hilmer Paradox: Evidence from the Australian Retail Grocery Industry, Urban Policy and Research, 16:4, pp 271–84. O’Neil, P. and McGuirk, P. 2002 Prosperity Along Australia’s Eastern Seaboard. Ref Butlin, N., Barnard, A. and Pincus, J. 1982 Government and Capitalism, Public and Private Choice in Twentieth Century Australia, George Allen & Unwin, Sydney. Quiggan, J. 1998 Regional and Socio-Economic Consequences of National Competition Policy, Paper presented to the Second National Conference on Sustainable Economic Growth for Regional Australia, 2–3 November, Beaudesert. See Hayward, D. 1997 The Privatised City: Urban Infrastructure, Planning and Service Provision in the Era of Privatisation, Urban Policy and Research, p 55; Arnold, R. 1996 Issues in Infrastructure Pricing – An Overview, pp 1–16 in Bureau of Industry Economics, Infrastructure Pricing: Policy Forum 1995; AGPS, Canberra. Anderson, J. and McDonald, I. 1999 Regional Australia: Meeting the Challenges, AGPS, Canberra. O’Neil, P. and McGuirk, P. 2002 Prosperity Along Australia’s Eastern Seaboard. See, for example, Beer, A. 1998 Economic Rationalism and the Decline of Local Economic Development in Australia, Local Economy, 13:2, pp 52–64. See, for example, Beer, A. 2000 Regional Policy and Development in Australia: Running Out of Solutions? pp 169–94 in Pritchard, B. and McManus, P. (eds) Land of Discontent, UNSW Press, Sydney. Also Anderson. J. and McDonald, I. 1999 Regional Australia. Anderson, J. 2001 The Foundations for Future Growth, Commonwealth Programs and Services in Regional Australia, 1996–2001, AGPS, Canberra. Department of Transport and Regional Services 1999 Spencer Gulf (SA) Trial, Summary of Proceedings, Department of Transport and Regional Services, Unpublished. McFarlane, D. 2002 Deputy PM Serves Up More Pork, The Australian, p 3, June 12. —— 2002

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Otto, G. and Voss, G. 1998 Is public capital efficient? Journal of Monetary Economics, 42, pp 47–66. Kearney, C. 1995 Public Infrastructure and Private Investment: Theory and Australian Evidence, pp 76–94, in Investing in Infrastructure, Australian Urban and Regional Development Review, Workshop Paper #5, AURDR, Melbourne. O’Connor, K. and Stimson, R. 1994, Economic Change and the Fortunes of Australian Cities, Urban Futures, 4:2, pp 1–12. Organisation for Economic Co-operation and Development 1997 Trends in Regional Policies in OECD Countries, June 1993–June 1996, OECD Paris, OCDE/GD (97) 135. North, D. 1990 Institutions, Institutional Change and Economic Performance, Cambridge University Press, NY. Linfield, M. 1996 Private Financing for Urban and Regional Infrastructure: A Comparative Analysis of Transaction Costs, Urban Futures, 21, pp 9–17. Nettle, R. 1998 A Fully Funded Future in Regional Development, Paper presented to the Australian and New Zealand Regional Science Association, 21–23 September, Tanunda. Nettle suggests that anywhere west of the Great Dividing Range is considered a remote location by the financial institutions. Beer, A.1999 Strategies and Structures to Encourage Private Sector Support for Regional Infrastructure, Paper prepared for the Eyre Regional Development Board, Unpublished, Pt Lincoln. Beer, A. and Maude, A. 2002 Local and Regional Economic Development Agencies in Australia, Local Government Association of South Australia, Adelaide. Western Australian Government, p 47 in House of Representatives Standing Committee on Primary Industries and Regional Services 2000 Time Running Out: Shaping Regional Australia’s Future, Parliament of Australia, Canberra. Regional Development Council quoted on p 45 of House of Representatives Standing Committee on Primary Industries and Regional Services 2000 Time Running Out. See also the discussion of Fred Argy’s comments to the Committee in the same chapter. Argent, N. and Rolley, F. 1998 Submission to the House of Representatives Standing Committee on Financial Institutions and Public Administration, June. The town of Keith in the Upper South East of South Australia has no bank branch and no regular ATM. There is, however, an ATM within the foyer of the Keith Hotel and the ATM is owned by a non-bank provider. Access to this cash point is important but we need to recognise that all transactions are likely to incur sizeable fees and that the only source of cash within the town is a venue for gambling. Ralston, D. 1998 Banks and Regional Services. Paper presented to the Second National Conference on Sustainable Economic Growth for Regional Australia, 2–3 November, Beaudesert. Lush, J. 2002 In Far Away Sydney. Ralston, D. 1998 Banks and Regional Services; Beal, D. and Ralston, D 1997 Economic and Social Impacts of the Closure of the Only Bank Branch in Rural Communities, Report Produced for Creditcare, University of Southern Queensland, Toowoomba. Warren Truss, Minister for Agriculture in The Advertiser, 5 April, p 3.

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www.communitybank.com.au Ralston, D. 1998 Banks and Regional Services. It is worth noting that a presence on the Internet does not guarantee success. Many Internet-based businesses collapsed in 2001 and even large retailers may struggle to generate significant revenues via the web. Businesses with an established mail order customer base tend to do well, and a physical presence ‘bricks and clicks’ is also considered an important determinant of viability. National Office of the Information Economy 2000 Ecommerce Across Australia, NOIE, Canberra. Cited in Castleman, T. and Coulthard, D. 2001 On the Fringe: Barriers to the Participation in the New Economy in Regional Areas, People and Place, 9:2, pp 29–40. Castleman, T. and Coulthard, D. 2001 On the Fringe. Chiron, D. 1998 Introducing BaCKBONE, Paper presented to the Sustainable Economic Growth for Regional Australia Conference, Brisbane. Gurstein, M. nd Flexible Networking, Information Communication Technology and Local Economic Development, First Monday, (www.firstmonday.dk/issues/issues4/gurstein/index.html). Centre for Rural Policy and Development 2000 Minnesota Rural Telecommunications Initiative, Final Report and Recommendations of the Rural Telecommunications Policy Panel, Mankato. Department of Telecommunications, Information Technology and the Arts 1999 National Bandwidth Inquiry: Discussion Paper, DTITA, Canberra. House of Representatives Standing Committee on Primary Industries and Regional Services 2000 Time Running Out, p 72. —— 2000, p 72. For more on the Universal Service Obligation see House of Representatives Standing Committee on Primary Industries and Regional Services 2000 Time Running Out, p 72 and Appendix E of that publication. —— 2000, p 79. Alston, R. 2002 Regional Telecommunications Inquiry, Press Release by the Minister for Communications, Information Technology and the Arts, Unpublished. Report of the Telecommunications Service Inquiry (Besley Inquiry) 2000 Connecting Australia: Report of the Telecommunications Service Inquiry, Dept of Communications, Information Technology and the Arts, Canberra. Besley Inquiry 2000 Connecting Australia, pp iv–vii. Human Rights and Equal Opportunity Commission 1999 Bushtalks in Port Augusta, HREOC, Sydney. House of Representatives Standing Committee on Primary Industries and Regional Services 2000 Time Running Out, p 79. Hellwig, O. and Lloyd, R. 2000 Sociodemographic Barriers to Utilisation and Participation in Telecommunication Services and Their Regional Distribution: A Quantitative Analysis, NATSEM, Canberra. ——2000, p 2. See, for example, Muellbauer, J. and Murphy, A. 1990 Regional Economic Disparities: The Role of Housing, pp 247–70 in Bowen, A. and Mayhew, K. Reducing Regional Inequalities, National Economic Development Office, London; Doogan, K. 1996 Labour Mobility and the Changing Housing Market, Urban Studies, 33:2, pp 199–221.

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Badcock, B. and Beer, A. 2000 Home Truths, Residential Property and Housing Wealth in Australia, Melbourne University Press, Melbourne. Saxenian, A. 1994 Regional Competitive Advantage, Harvard University Press, Harvard. Mac Sharry, R., White, P. and O’Malley, J. 2000 The Making of the Celtic Tiger, The Inside Story on Ireland’s Boom Economy, Mercier Press, Cork. Walmsley, J. Epps, W. and Duncan, J. 1995 The NSW North Coast, 1986–1991: Who Moved Where, Why and With What Effect, AGPS, Canberra. Cameron, F. 2002 Bonanza! There is Gold in the Nation’s Stellar Suburbs, Weekend Australian, 24 August, p 40. Beer, A. and Maude, A. 2002 Community Development and the Delivery of Housing Assistance in Non-Metropolitan South Australia: A Literature Review and Pilot Study, AHURI, Melbourne. Hillier, J., Tonts, M. and Fisher, C. Rural Housing, Regional Development and Policy Integration, An Evaluation of Alternative Policy Responses to Regional Disadvantage, AHURI, Melbourne. Technically, these areas are all part of the Limestone Coast wine region and the districts mentioned here are sub-regions. Beer, A. Maude, A. and Tesdorpf, P. 1998 The Shortage of Rental Accommodation in the Mid and Upper South East of South Australia, Unpublished Report prepared for the Upper South East Economic Development Board, July. ——1998 Conventionally local governments and many of the major institutions— such as the banks—have owned accommodation in non-metropolitan areas which was then rented out to senior staff who moved into the region. The drive to ‘economic rationalism’ that swept through both the public and private sectors in the 1990s resulted in the sale of this stock. These corporate entities now also rely on the private rental market. They have added to demand while effectively reducing rental supply. Technically they are homeless where homelessness is defined as a state in which ‘people have no access to secure housing, and/or shelter of a standard that does not damage their health or further marginalise them through failing to provide either cooking facilities, or facilities sufficient to permit adequate hygiene. This includes those living on the street, in squats, in refuges and shelters. It also includes those moving about between relatives and friends, since ‘such accommodation is necessarily temporary, usually insecure and fails to offer protection and support’ (Human Rights and Equal Opportunity Commission 1987: 7). Cited in http://server.infoxchange.net.au/pp/jargon/definitions.htm Randolph, B. 1991 Housing Markets, Labour Markets and Discontinuity Theory, pp 16–51 in Allen, J. and Hamnett, C. Housing and Labour Markets: Building the Connections, Unwin Hyman, London. Beer, A. 2001 Labour Market Change and Housing Market Segmentation in South Australia’s Non-Metropolitan Private Rental Market, Urban Policy and Research, 19:4, pp 441–66. Beer, A. 1999 Housing Investment and the Private Rental Sector in Australia, Urban Studies, 36:2, pp 255–69. Paris, C. 1985 Public Renting: Private Issues, AIUS, Canberra. Department of Commerce and Trade 1996 Housing and Regional Development, Regional and Infrastructure Division, Unpublished, p 2. —1996, p 3.

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—1996, p 29. South Australian Regional Development Taskforce 1999 Report, South Australian Government Printer, Adelaide. Hassell Pty Ltd 2002 Regional Workforce Accommodation Shortages – Issues and Solutions, Office of Regional Development, Adelaide. Australian Institute of Health and Welfare 2001 Australia’s Welfare 2001: The 5th Biennial Review of the Australian Institute of Health and Welfare, AIHW, Canberra.

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Dryzek, J. 1997 The Politics of the Earth: Environmental Discourses, Oxford University Press, Oxford, p 129. — 1997 The Politics of the Earth, pp 126–28; Jacobs, M. 1991 The Green Economy: Environment, Sustainable Development and the Politics of the Future, Pluto Press, London, Chapter 5 and pp 74–77. Doyle, T. 1998 Sustainable Development and Agenda 21: The Secular Bible of Global Free Markets and Pluralist Democracy, Third World Quarterly, 19, pp 771–86. Jacobs writes: ‘It is impossible to impute interests to future generations without specifying what those interests are, and the choice cannot but express the chooser’s view of what level of environmental protection is morally right.’ (Jacobs 1991 The Green Economy, p 78). Ekins, P. 2000 Economic Growth and Environmental Sustainability: The Prospects for Green Growth, Routledge, London and New York, pp 53–54; Jacobs 1991 The Green Economy, pp 86–96. A significant difference between global and regional sustainability is that most non-renewable resources can be imported if they are, or become, unavailable locally, which reduces the incentive to conserve at the regional level. Non-renewable resources also have a long history of substitution. Dobson, A. 1996 Environmental Sustainabilities: An Analysis and a Typology’, Environmental Politics, 5, pp 401–428; Selman, P. 1996 Local Sustainability: Managing and Planning Ecologically Sound Places, St. Martin’s Press, New York, pp 11–15. Selman, P. 1996 Local Sustainability, p 11. Australia State of the Environment Committee 2001 Australia State of the Environment 2001, Independent Report to the Commonwealth Minister for the Environment and Heritage, CSIRO, Canberra, pp 5, 9 and 106. Picton, T. and Daniels, P. 1998 Ecological Restructuring and the Australian Economy, Australian Journal of Environmental Management, 5, pp 200–212. Yencken, D. and Wilkinson, D. 2000 Resetting the Compass: Australia’s Journey Towards Sustainability, CSIRO Publishing, Melbourne, pp 137–38. Fullerton, T. 2001 Watershed: Deciding Our Water Future, ABC Books, Sydney, pp 8–9. Australia State of the Environment Committee 2001 Australia State of the Environment 2001, pp 6, 53 and 74. For examples see National Land and Water Resources Audit 2001 Australian Agriculture Assessment 2001 (http://audit.ea.gov.au/anra/). Standing Committee on Agriculture and Resource Management (SCARM) 1998 Sustainable Agriculture: Assessing Australia’s Recent

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Performance, SCARM Technical Report 70, CSIRO Publishing, Melbourne, p 48. Australia State of the Environment Committee 2001 Australia State of the Environment 2001, p 11. Williams, J. 1999 Biophysical Aspects of Natural Resource Management. In Proceedings of the National Agricultural and Resources Outlook Conference, Vol. 1, Commodity Markets and Resource Management, ABARE, Canberra. National Land and Water Resources Audit 2001 Australian Water Resources Audit 2000 (http://audit.ea.gov.au/anra/). Australia State of the Environment Committee 2001 Australia State of the Environment 2001, pp 68–69. See also Ball, J. and others 2001 Inland Waters, Australia State of the Environment Report 2001, CSIRO. OECD, 1998 Environmental Performance Reviews: Australia, OECD, Paris, p 23. Australia State of the Environment Committee 2001 Australia State of the Environment 2001, pp 6 and 41. See also Preston, N. and Rothlisberg, P. 2000 Aquaculture: Environmental Impacts. In Proceedings of the National Outlook Conference, Vol. 1, Natural Resources, ABARE, Canberra, p 259. They conclude that ‘despite the comparatively low level of aquaculture production in coastal areas, Australia faces significant challenges to maintain environmentally sustainable production’. Australia State of the Environment Committee 2001 Australia State of the Environment 2001, p 6. OECD 1998 Environmental Performance Reviews: Australia, p 72. Lawn, P. 2002 Full Employment in a Low-Growth or Steady-State Economy: A Consideration of the Issues, Australian Bulletin of Labour, 28:1, pp 20–37. Yencken, D. and Wilkinson, D. 2000 Resetting the Compass, pp 314–15. The economic significance of irrigation, and the consequent difficulties faced in reducing the volume of water extracted from rivers and groundwater, is shown in the estimate from the National Land and Water Resources Audit that half the profit at full equity in Australian agriculture comes from irrigated production systems. See Edwards, G. and Byron, N. 2001 Land Degradation and Rehabilitation: A Policy Framework, Connections — Food, Farm and Resource Issues, September (http://agribusiness.asn.au/Connections). Note that it is not technically or economically feasible to reduce these costs to zero, and in many areas it may not be economically or environmentally sensible to spend money on land rehabilitation. See, for example, Edwards, G. and Byron N. 2001 Land Degradation and Rehabilitation, and Pannell, D. 2002 Loving, Losing and Living with Our Environment, Connections — Farm, Food and Resource Issues, Autumn (http://www.agribusiness.asn.au/Connections). The latter argues that living with and adapting to some environmental degradation may be the best strategy for many locations. Madden, B., Hayes, G. and Duggan, K. 2000 National Investment in Rural Landscapes, An Investment Scenario for NFF and ACF with the Assistance of LWRRDC, Virtual Consulting Group and Griffin nrm Pty Ltd, Canberra, pp v and 11–12 (http://www.nff.org.au). For an estimate of costs for Western Australia, see Conacher, A. and Conacher, J. 2000 Environmental Planning and Land Management in Australia, Oxford University Press, Melbourne, pp 82–83.

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Williams, J. and others 2001 Biodiversity, Australia State of the Environment Report 2001, CSIRO Publishing on behalf of the Department of Environment and Heritage, Canberra, p 146. Goss, K., Chisholm, T., Noble, I. and Barson, M. 1995 Sustaining the Agricultural Resource Base. Paper Prepared by an Independent Working Group for the Prime Minister’s Science and Engineering Council, 23 June 1995, Department of the Prime Minister and Cabinet, Canberra. Australia State of the Environment Committee 2001 Coasts and Oceans, Australia State of the Environment Report 2001, CSIRO Publishing on behalf of the Department of Environment and Heritage, Canberra, p 95. The National Land and Water Resources Audit estimates that 13.66 million hectares of agricultural land will be at risk from shallow water tables or high salinity in 2050. The National Land and Water Resources Audit estimates that the economic impact of soil acidity is five to six times greater than that of dryland salinity, and that national output could be increased by $1.5 billion a year if soil acidity could be rectified. National Land and Water Resources Audit 2002 has more recent estimates for some of these items. Madden, G., Hayes, D. and Duggan, K. 2000 National Investment in Rural Landscapes, p 11. Land and Water Resources Research and Development Corporation and the Murray–Darling Basin Commission 2000 The Cost of Algal Blooms (http://www.lwrrdc.gov.au/other/products.asp). Pearce, S. 1999 NRM Policy Statement: Its Development and Significance. In Proceedings of the National Agricultural and Resources Outlook Conference, Vol. 1, Commodity Markets and Resource Management, ABARE, Canberra, p 108. Beresford, Q., Bekle, H., Phillips, H. and Mulcock, J. 2001 The Salinity Crisis: Landscapes, Communities and Politics, University of Western Australia Press, Perth, p 27. The National Land and Water Resources Audit estimates that by 2050 about 67 000 kms of roads, 5100 kms of rail and 2190 towns are likely to be at high risk from shallow saline water tables (National Land and Water Resources Audit 2001 Australian Dryland Salinity Assessment 2000, http://audit.ea.gov.au/anra/). The Audit reports that damage to infrastructure, if left unchecked, will become a major burden on local government finances. For attempts at costing see Costanza, R. and others 1997 The Value of the World’s Ecosystem Services and Natural Capital, Nature, 387, pp 253–59, and Daily, G.C. 1997 Nature’s Services: Societal Dependence on Natural Ecosystems, Island Press, Washington. Daily, G.C. 1997 Nature’s Services, pp 3–4; Perrings, C. and others 1995 Biodiversity Loss: Economic and Ecological Issues, Cambridge University Press, Cambridge; Williams, J. and others 2000 Biodiversity, p 152. See also Ball, J. and others 2001 Inland Waters, p 99, for a description of the services provided by wetlands in Australia. See Industry Commission 1998 A Full Repairing Lease: Inquiry into Ecologically Sustainable Land Management, Report No. 60, Industry Commission, Canberra, pp 57–65. Manins, P. and others 2001 Atmosphere, Australia State of the Environment Report 2001, CSIRO Publishing on behalf of the Department of Environment and Heritage, Canberra, pp 97–98.

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Newton, P. and others 2001 Human Settlements, Australia State of the Environment Report 2001, CSIRO Publishing on behalf of the Department of Environment and Heritage, Canberra. CSIRO 2001 Climate Change Impacts for Australia (www.marine.csiro.au/ iawg/impacts2001.pdf). Australia, House of Representatives Standing Committee on Environment, Recreation and the Arts 1994 Working with the Environment: Opportunities for Job Growth, Commonwealth of Australia, Canberra. See also Crowley, K. 1996 Environmental Employment Opportunities: How Green are Australia’s Green Job Credentials? Environmental Politics, 5, pp 607–31. OECD 1997 Environmental Policies and Employment, OECD, Paris; OECD 2001, Policies to Enhance Sustainable Development, OECD, Paris, pp 92–93. OECD 1997 Environmental Policies and Employment. ——1997 Environmental Policies and Employment. See also ACF-ACTU Green Jobs in Industry Research Project 1994 Green Jobs in Industry, Australian Conservation Foundation and Australian Council of Trade Unions, Melbourne, p 13; Goodstein, E. 1999 The Trade-Off Myth: Fact and Fiction About Jobs and the Environment, Island Press, Washington. Hamilton, C., Pears, A. and Pollard, P. 2001 Regional Employment and Greenhouse Policies, Australia Institute, Discussion Paper No. 41, Canberra. ——2001 Regional Employment and Greenhouse Policies, pp 31–32. For an example from New South Wales, see Bailey, J. 2001 Organic Converts Sold on the Idea, Australian Farm Journal, 10:1, p 20. Gray, I. and Lawrence, G. 2001 A Future for Regional Australia: Escaping Global Misfortune, Cambridge University Press, Cambridge, p 156. Goodstein, E. 1999 The Trade-Off Myth, Chapter 4. Power, T. 1996 Lost Landscapes and Failed Economies: The Search for a Value of Place, Island Press, Washington. Commonwealth of Australia 1995 Regional Forest Agreements: The Commonwealth Position (http://www.rfa.gov.au/rfa/national/rfa/rfa.html). The only data available at the time of writing (mid-2002) are projections for Western Australia by ABARE. See Connell, P. and Yainshet, A. 1999 Western Australia: Measuring the Economywide Effects of RFAs, Australian Forest Product Statistics, March Quarter 1999, ABARE, Canberra, pp 1–8. National Forest Inventory 1998 Australia’s State of the Forests Report 1998, Bureau of Rural Sciences, Canberra, p 145. For an estimate of the effects of mill closure on one of these towns, see Bull, L. and Bren, L. 2001 The Socio-economic Contribution of a Timber Mill to a Small Country Town, Australian Forestry, 64:2, pp 102–105. Quoted in Mercer, D. 2000 ‘A Question of Balance’: Natural Resource Conflict Issues in Australia, Federation Press, Sydney, p 113. Connell, P. and Yainshet, A. 1999 Western Australia, p 6. Adapted from Gibbs, A. 2002 Local Economic Development and the Environment, pp 88–93; OECD 2001 Sustainable Development: Critical Issues, OECD, Paris, p 469; and Selman, P. 1996 Local Sustainability, p 48, with additions by the author. OECD 2001 Sustainable Development, p 462. Gibbs, A. 2002 Local Economic Development and the Environment, Chapters 4 and 5.

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For an Australian example see Roberts, B.H. 2001 Industrial Ecology: A New Approach to Planning for Sustainability. In B.H. Roberts and D. Wadley (eds) 2001 Planning for Sustainable Industry, Royal Australian Planning Institute (Queensland Division), Brisbane. Jennings, S. and Moore, S. 2000 The Rhetoric Behind Regionalization in Australian Natural Resource Management: Myth, Reality and Moving Forward, Journal of Environmental Policy and Planning, 2, pp 180–82. Selman, P. 1996 Local Sustainability, p 21. Agriculture, Fisheries and Forestry Australia 1999 Managing Natural Resources in Rural Australia for a Sustainable Future: A Discussion Paper for Developing a National Policy, AFFA, Canberra. AFFA 2000 Steering Committee Report to the Australian Governments on the Public Response to Managing Natural Resources in Rural Australia for a Sustainable Future, AFFA, Canberra, p 13. Mueller, H. 1995 Local Government and the Environmental Policy Process, Australian Planner, 32:2, pp 79–81. See also Binning, C., Young, M. and Cripps, E. 1999 Beyond Roads, Rates and Rubbish: Opportunities for Local Government to Conserve Native Vegetation. See Crowley, K. 1998 ‘Glocalisation’ and Ecological Modernity: Challenges for Local Environmental Governance in Australia, Local Environment, 3, pp 91–97; Gray, I. and Lawrence, G. 2001 A Future for Regional Australia, pp 197–98; Mercer, D. and Jotkowitz, B. 2000, Local Agenda 21 and Barriers to Sustainability at the Local Government Level in Victoria, Australia, Australian Geographer, 31:2, pp 163–81; Vardon, C. 2000, The Role of Local Government in Natural Resource Management, Local Government Law Journal, 5:4, pp 221–25. Dovers, S. and Wild River, S. 2002 Institutions for Sustainable Development, paper presented to the International Local Agenda 21 Conference, Sustaining Our Communities (http://www.adelaide.sa.gov.au/soc). Daly, M. 2001 The Challenges for Local Government in the 21st Century. In B. Pritchard and P. McManus (eds), Land of Discontent: The Dynamics of Change in Rural and Regional Australia, UNSW Press, Sydney. Gray, I. and Lawrence, G. 2001 A Future for Regional Australia, pp 188–205. The House of Representatives Standing Committee on Environment and Heritage, in their report on Co-ordinating Catchment Management (p 70), notes that: ‘there are currently 127 natural resource management and catchment groups in NSW alone. Many of these do not operate in conjunction with other groups in their area, resulting in a poorly coordinated management approach.’ House of Representatives, Standing Committee on Environment and Heritage 2001 Co-ordinating Catchment Management, p 69. For a list of measures see OECD, 1997 Environmental Policies and Employment, p 69. OECD 2001 Policies to Enhance Sustainable Development, OECD, Paris, p 65. Hamilton, C., Denniss, R. and Turton, H. 2002 Environmental Protection, Australia Institute, Discussion Paper No. 46; OECD 2001 Policies to Enhance Sustainable Development, pp 76–78. Centre for International Economics 1997 Sustainable Natural Resource Management in the Rangelands, Centre for International Economics, Canberra and Sydney, p 48. Beresford, Q. 2001 Developmentalism and its Environmental Legacy: The Western Australia Wheatbelt, 1900–1990s, Australian Journal of Politics and History, 47, pp 403–14.

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Boyd, D. 1998 The On-farm and Industry Consequences of Environmentally Driven Land and Water Regulations. In Proceedings of the National Agricultural and Resources Outlook Conference, Vol. 1, Commodity Markets and Resource Management, ABARE, Canberra. Trigger, D. 1999 Nature, Work and the ‘Environment’: Contesting Sentiments and Identities in the Southwest of Western Australia, Australian Journal of Anthropology, 10:2, pp 163–76. Kingsford, R. 1999 Social and Economic Costs and Benefits of Taking Water From Our Rivers: The Macquarie Marshes as a Test Case. In A. Robertson and R. Watts (eds), Preserving Rural Australia, CSIRO Publishing, Melbourne. Lothian, A. 2002 Australian Attitudes Towards the Environment: 1991 to 2001, Australian Journal of Environmental Management, 9:1, p 49. Curtis, A., Lockwood, M. and MacKay, J. 2001 Exploring Landholder Willingness and Capacity to Manage Dryland Salinity in the Goulburn Broken Catchment, Australian Journal of Environmental Management, 8:2, pp 79–90. William, J. 1999 Biophysical Aspects of Natural Resource Management, pp 117–18. Hamblin, A. 2001 Land, Australia State of the Environment Report 2001, CSIRO Publishing on behalf of the Department of Environment and Heritage, Canberra, p 78. See Pannell, D. 2001 Dryland Salinity: Economic, Scientific, Social and Policy Dimensions, Australian Journal of Agricultural and Resource Economics, 45, pp 517–46, and Pannell, D. 2001 Salinity Policy: A Tale of Fallacies, Misconceptions and Hidden Assumptions, Agricultural Science, 14:1, pp 35–37 on the multidisciplinary complexities of dryland salinity. Maguire, K. 2000 Fisheries for the Future: Achieving both Sustainable Fishing and Conservation. In Proceedings of the National Outlook Conference, Vol 1, Natural Resources, ABARE, Canberra. Dovers, S. 2001 Informing Institutions and Policies. In J. Venning and J. Higgins (eds), Towards Sustainability: Emerging Systems for Informing Sustainable Development, UNSW Press, Sydney. Barr, N. and Cary, J. 2000 Influencing Improved Natural Resource Management on Farms: A Guide to Understanding Factors Influencing the Adoption of Sustainable Resource Practices, Bureau of Rural Sciences, Canberra, p 3. See also Boully, L. 1999 Sustainability: The Farm Economic Aspects; Curtis, A., Lockwood, M. and MacKay, J. 2000 Exploring Landholder Willingness and Capacity to Manage Dryland Salinity, p 88. See Diesendorf, M. and Hamilton, C. 1997 The Ecologically Sustainable Development Process in Australia. In M. Diesendorf and C. Hamilton (eds) Human Ecology, Human Economy; Howes, M. 2000 A Brief History of Commonwealth Sustainable Development Policy Discourse, Policy, Organisation and Society, 19, pp 65–85. Yencken, D. and Wilkinson, D. 2000 Resetting the Compass, pp 313–14. Industry Commission 1998 A Full Repairing Lease, p 110. Dovers, S. 1999 Institutionalising Ecologically Sustainable Development: Promises, Problems and Prospects. In K. Walker and K. Crowley (eds), Australian Environmental Policy 2: Studies in Decline + Devolution, UNSW Press, Sydney. See also Buhrs, T. and Aplin, G. 1999 Pathways Towards Sustainability: The Australian Approach, Journal of

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Environmental Planning and Management, 42:3, pp 315–40; Mitchell, P. 1999 Sustainable Development: Comparison of Australian and International Best Practice, Australian Planner, 36:3, pp 150–54. For ideas on a framework for the governance of sustainable development see OECD 2002, Governance for Sustainable Development: Five OECD Case Studies, OECD, Paris. House of Representatives, Standing Committee on Environment and Heritage 2001 Co-ordinating Catchment Management, p 54. Curtis, A. and Lockwood, M. 2000 Landcare and Catchment Management in Australia: Lessons for State-sponsored Community Participation, Society and Natural Resources, 13:1, p 69. Cary, J. and Webb, T. 2001 Landcare in Australia: Community Participation and Land Management, Journal of Soil and Water Conservation, 56:4, pp 274–78; Lockie, S. 2000 Crisis and Conflict: Shifting Discourses of Rural and Regional Australia. In B. Pritchard and P. McManus 2000 Land of Discontent. Crowley, K. 2001 Effective Environmental Federalism? Australia’s Natural Heritage Trust, Journal of Environmental Policy and Planning, 3, p 267. Byron, I. and Curtis, A. 2001 Landcare in Australia: Burned Out and Browned Off, Local Environment, 6, pp 311–26; Cary, J. and Webb, T. 2001 Landcare in Australia; Conacher, A. and Conacher, J. 2000 Environmental Planning and Land Management in Australia, pp 294–306; Curtis, A. and Lockwood, M. 2000 Landcare and Catchment Management in Australia, p 66; House of Representatives, Standing Committee on Environment and Heritage 2001 Co-ordinating Catchment Management, pp 74–79; Pannell, D. 2001 Economic Dimensions of Landcare, UWA, Sustainability and Economics in Agriculture Project, Working Paper 01/08. Dovers, S. and Wild River, S. 2002 Institutions for Sustainable Development, p 2. Barr, N. and Cary, J. 2000 Influencing Improved Natural Resource Management on Farms, p 34. OECD 1998 Environmental Performance Reviews: Australia, p 28. McManus, P. and Albrecht, G. 2000 Environmental and Aboriginal Issues: The Emergence of New Tensions in Rural and Regional Politics. In B. Pritchard and P. McManus, Land of Discontent. Lane, M. 1999 Regional Forest Agreements: Resolving Resource Conflicts or Managing Resource Politics, Australian Geographical Studies, 37, pp 142–53. Dargavel, J. 1998 Politics, Policy and Process in the Forests, Australian Journal of Environmental Management, 5, p 28. See also Coakes, S. 1998 Valuing the Social Dimension: Social Assessment in the Regional Forest Agreement Process, Australian Journal of Environmental Management, 5, pp 47–54. Kirkpatrick, J. 1998 Nature Conservation and the Regional Forest Agreement Process, Australian Journal of Environmental Management, 5, p 36. Horowitz, P. and Calver, M. 1998 Credible Science? Evaluating the Regional Forest Agreement Process in Western Australia, Australian Journal of Environmental Management, 5, pp 213–25. Lane, M. 1999 Regional Forest Agreements; McDonald, J. 1999 Regional Forest (Dis) Agreements: The RFA Process and Sustainable Forest Management, Bond Law Review, 11, pp 295–335.

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Bernadini, O. and Galli, R. 1993 Dematerialization: Long-term Trends in the Intensity of Use of Materials and Energy, Futures, 25, pp 431–48. It is also the approach advocated by Hawken, P., Lovins, A. and Lovins, L. 1999 Natural Capitalism: Creating the Next Industrial Revolution, Little, Brown and Company, Boston. Mitchell, P. 1999 Sustainable Development, p 154. Brown, V. 1997 Managing for Local Sustainability: Policy, Problem-solving, Practice and Place, National Office of Local Government, Canberra; Cotter, B. and Hannan, K. 1999 Our Community Our Future: A Guide to Local Agenda 21, Commonwealth of Australia, Canberra (http://www.ea.gov.au/esd/local/manual.htm.); Dore, J., Keating, C., Woodhill, J. and Ellis, K. 2000 Sustainable Regional Development Kit: A Resource for Improving the Community, Economy and Environment of Your Region, Greening Australia, Canberra; Dore, J. and Woodhill, J. 1999 Sustainable Regional Development: Final Report, Greening Australia, Canberra; Environs Australia 2000 Localising Agenda 21: A Guide to Sustainable Development for the APEC Region (http://www.ea.gov.au/esd/local/agenda21/index.html); South Australia, Department for Environment, Heritage and Aboriginal Affairs 1999 Local Agenda 21: The South Australian Expertience (http://www.environment.sa.gov.au/sustainability/pub.html). Dore, J. and Woodhill, J. 1999 Sustainable Regional Development, p 374. Gray, I. and Lawrence, G. 2001 A Future for Regional Australia, pp 154–55. Haughton and Hunter define a sustainable city as ‘one in which its people and businesses continuously endeavour to improve their natural, built and cultural environments at neighbourhood and regional levels, whilst working in ways which always support the goal of global sustainable development.’ (Haughton, G. and Hunter, C. 1994 Sustainable Cities, Jessica Kingsley, London, p 27) Dovers, S. 2001 Informing Institutions and Policies, p 204. Dore, J. and Woodhill, J. 1999 Sustainable Regional Development, pp 372–74. ——1999, p 372. Australia State of the Environment Committee 2001 Australia State of the Environment 2001, p 11.

CHAPTER 11 A LOCAL AND REGIONAL DEVELOPMENT POLICY FOR AUSTRALIA 1 2 3 4

5 6 7

Beck, U. 2000 The Brave New World of Work, Polity Press, Frankfurt. Beer, A. and Cutler, C. 1995 Atlas of the Australian People, 1991 Census, South Australia, AGPS, Canberra. In 2000 and 2001 the Commonwealth Grants Commission reviewed the funding formula for the distribution of local government grants. Davidson, B. 2000 Will Reducing Wages in Rural Regions of Australia Reduce the Regional Divide? Paper presented to the Australian and New Zealand Regional Science Association Conference, Hobart, December. Industry Commission 1993 Impediments to Regional Industry Adjustment, Industry Commission, Canberra. Lloyd, R., Harding, A. and Hellwig, O. 2001 Regional Divide? A Study of Income Inequality in Australia, Sustaining Regions, 1:1, pp 17–31. Senator Brian Harradine has been particularly effective in securing special funding for Tasmania in the areas of telecommunications and education.

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13

14 15

16 17

18 19

20 21

22

23

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National Commission of Audit 1996 Report to the Federal Government, AGPS, Canberra. Hilmer, F., Rayner, M. and Taprell, G. 1993 National Competition Policy: Report by the Independent Committee of Inquiry, AGPS, Canberra. National Economics 2000 State of the Nation, Australian Local Government Association, Canberra. Madden, J. 2000 The Regional Impact of National Competition Policy, Regional Policy and Practice, 9:1, pp 3–9. Statutory planning in Australia is a regulatory activity and governments have not played a substantial pro-active role in determining the shape of our cities and regions. The policies and programs of the late 1960s and early 1970s are an exception, as are the rural development projects such as the development of irrigated agriculture and soldier settlers. See McManus, P. and Pritchard, B. 2001 Regional Policy: Towards the Triple Bottom Line, Australasian Journal of Regional Studies, 7:3, pp 249-60. Also, Gleeson, B. 2001 Towards a National Planning Framework for Australia, Issues Paper No. 8, Urban Frontiers Program, University of Western Sydney, Sydney. ——2001 Beer, A. 2000 Regional Policy in Australia: Running out of Solutions? pp 169–94 in Pritchard, B. and McManus, P. (ed) Land of Discontent, UNSW Press, Sydney. Logan, M. 1978 Regional Policy in Scott, P. (ed) Australian Cities & Public Policy, Georgia House, Melbourne. Peter Bacon and Associates in Association with Fergal McCabe, 2000 The Housing Market in Ireland: An Economic Evaluation of Trends and Prospects, Department of the Environment and Local Government, Dublin. http://www.environ.ie/search/searchindex.html Peter Bacon and Associates et al. 2000 The Housing Market in Ireland. See also Department of Environment and Local Government 2000 The National Spatial Strategy – What are the Issues?, Department of the Environment and Local Government, Dublin. Cooke, P. and Morgan, K. 1998 The Associational Economy, Oxford University Press, Oxford. It is worth noting that while the government changes in the Irish Dáil, the two major political parties – Fianna Fáil and Fianna Gáil – are very similar in their political philosophies and an Australian observer would find little to distinguish them. Lloyd, C. and Troy, P. 1984 Duck Creek Revisited? The Case for National Urban & Regional Policies, pp 45–58 in Halligan, J. and Paris, C. (eds) Australian Urban Politics, Longman Cheshire, Melbourne. This assumes that the Federal Government could come to a single position in the first instance. Political history suggests this is a very brave assumption. The Hawke and Keating Labor Governments sought to reduce housing costs in the large cities in the 1990s by releasing surplus land, both as part of the National Housing Summit and the Better Cities program. The Department of Defence took a strong view on the definition and identification of ‘surplus’ land, effectively blocking the housing and urban planning aspirations of other departments. Burgess, R. and Coker, P. 2001 How to Help Regions Help Themselves…The Capital Region Agribusiness Fund, Sustaining Regions, 1:1, pp 43–48.

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25 26 27

28

29

30 31 32 33

34 35 36

37 38 39 40 41

42

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——2001, p 3. Eyre Peninsula Local Government Association 2001 Strategic Directions, Unpublished. Some have questioned the effectiveness of economic development initiatives. The true impact of local economic development initiatives is often both unknown and unknowable. It is unknowable because a systematic policy evaluation would often cost more and take longer than the programs to be studied. Sorenson, A. and Epps, R. 1996 Local Leadership and Local Development: Dimensions of Leadership in Four Central Queensland Towns, Journal of Rural Studies, 12:2, pp 113–25; Sorenson, A. 1998 Interfacing Regional Development Theory and Practice, Australasian Journal of Regional Studies, 4:1, pp 5–14. The Federal Government placed a considerable emphasis on leadership during the Regional Australia Summit held in Canberra in October 1999. South Australia’s Office of Regional Development and the Queensland Government both have sponsored regional leadership programs. National Committee into Higher Education (Dearing Committee) 1997 Haughton, G. 1999 Community Economic Development. The Stationery Office, London. Blakely, E. 1994 Planning Local Economic Development, Sage, Thousand Oaks, p 54. See Beer, A and Maude, A 1997 Effectiveness of State Frameworks for Local Economic Development, Local Government Association of South Australia, Adelaide. Section 54 of the Constitution does not list regional development as one of the Commonwealth’s roles. See Beer, A and Maude, A 1997 Effectiveness of State Frameworks for Local Economic Development. Sorenson, T. 2000 Regional Development: Some Issues for Policy Makers, Parliamentary Library, Research Paper No. 26, http://www.aph.gov.au/ library/pubs/rp/1999–2000/2000rp26.htm. p 20. National Commission of Audit 1996 Report to the Federal Government. Many of these programs were developed in response to voter backlash in non-metropolitan seats. Haughton, G. 1999 Community Economic Development. Kenyon, P. and Black, A. 2001 Small Town Renewal: Overview and Case Studies, RIRDC, Canberra. Through 2001 members of the Protestant community on Ardoyne Rd in North Belfast protested against Catholic children walking up ‘their’ road to school. The primary age students and their parents were subject to verbal and physical abuse and eventually the students had to be escorted by the Royal Ulster Constabulary and the British Army. Spokespersons for the protestors, usually identified as ‘community workers’, justified their actions as part of the defence of their community. Cox, E. and Caldwell, P. 2000 Making Policy Social, pp 43–73 in Winter, I. (ed) Social Capital and Public Policy in Australia, Australian Institute of Family Studies, Melbourne. Daly, M. 2000 The Challenges for Local Government in the 21st century, pp 195–217 in Pritchard, B. and McManus, P. Land of Discontent. Gerritson, R. 2000 The Management of Government and its Consequences for Service Delivery in Regional Australia, pp 123–40 in Pritchard, B. and McManus, P. Land of Discontent.

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Department of Transport and Regional Services 2000 The Foundations for Future Growth, DOTRS, Canberra. Sorenson, T. 2000 Regional Development: Some Issues for Policy Makers.

INDEX

ABC 47, 48–49 Aboriginal and Torres Strait Islander Commission (ATSIC) 172, 176, 181, 186 Aboriginal economic development 171–191 Aboriginals 42, 171–191, 207 ACT (60), 258 Adelaide 5, 8, 33, 46, 51, 59, 63, (75), 110, 111, 112, 113, 123, 125, 127, 131, 138, 164, 203, 209, 252 Adjacency principle 102 Ageing 65 Agglomeration 123, 125 Agriculture 2, 4, 11, 29, 65, 79, 80, 84–106, (89), 246 Aquaculture 8, 65, 258 Area Consultative Committees 17, 24, 34, 145, 146, 147, 224, 250, 259 Area Registration Programs 35 Assistance – hands on 18 Austrade 19 Australian Bureau of Statistics (ABS) 44, 47, 51, 92, 95 Conservation Foundation 225 environments, sustainability 221–225 Technology Precinct 8 Wheat board 104 Automotive industry 111–113 Back offices 126–128 Backward linkages 94, 99–100

Banks 61, 62, 202–203 Bendigo Bank 203 Besley Inquiry 206–207 Biotechnology 130–131, 136 Blair (Labour government) 31, 254 Brisbane 3, 51, (75), 102, 110, 111, 113, 123, 165, 201, 206, 251 Build Own Operate Transfer (BOOT) 200 Bulk commodity trade 104–105 Bushcare 240 Business capacity-building 31 development, regional strategies 131–142 Enterprise Centres 17, 26, 27, 47, 134, 145, 146, 150, 259 incubator 18, 24, 31, 132–134, 135, 164, 259 retention and expansion programs 134–136, 159 start ups 10, 15, 17, 31 Cairns 4, 77, 118 Call Centre 126–128 Canberra 222 Capacity-building 31, 81, 97 Capital cities 1, 25, 43, 73–75, 97, 116, 125, 126, 252 Car industry 64–65 Centralisation of activities 111, 113, 116, 123–124, 126, 128 Centrelink 76 Chamber of Commerce 28 Cities Commission 254

304 •

DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

Clusters 40, 72, 123, 136–142, 163 building 139–141 industry 131, 136–142 CO2 222 Coalmining 99 Coasts 224, 226, 240 Cold spot 72–73 Commonwealth Grants Commission 8, 10, 66–67, 184 Communication technology 114 Community banking 203 combat group 28 development 32, 34, 81–83 groups 27, 134 leaders 82 Support Framework Programs 30 volunteers 134 Competition 137 Competitive advantage 12, 21, 39, 138 Components industry 113 Compulsory Competitive Tendering 9, 253 Consumer services 112–123 Contract catering 102 employers 102 farming 99 Contract services 102 Co-operatives 33, 35, 39, 105 Corporate welfare 159, 160 Crean 196 Credit Union 35, 202 Critical natural capital 221 CSIRO 126, 228 Decentralisation 25, 52–53, 116, 125–126 Delors 2 30 Demographic change 46 Deregulation 250 dairy sector 96 Development Commission 47, 146 Development Corporations 25, 27 Differentiation 67 Domestic markets 19 Downstream linkages 80 processing 19 Ecological footprint 222 E-commerce 97, 204–205

Economic advantage 39 change 7, 46 development agencies 144, 150–170 Development Unit 27, 145, 147 diversity 91 downturn 60–64 gardening 31 growth 10, 15 Ecotourism 8 Electricity generation 16, 99 Emerging industry 107–108 Employment 15, 90 Endogenous development/growth 16, 21, 26 Enterprise Zones 22 Entrepreneur 144 Entrepreneurial model 257–260 Environmental degradation 218–245, 246, 225–228 Impact Statement 101 Environmental sustainability, Australian environments 221–225 Environmental sustainability, see also sustainable development Europe 27, 32, 35, 36, 37, 38, 43 Export Access/Trade Start 20,24 Advisory Group 252 Exports 11, 53, 104, 194 External economies 40 Eyre Peninsula 5, 6, 28 Farm consolidation 80, 97–98 expenditure 96–99 gate value 96 government role 23 Firm recruitment 160–165 Fiscal crisis 61 Fisheries 29, 251 Fly-in Fly-out (FIFO) 85, 101, 102, 118 Foreign investment 20 Forestry 210–221, 231, 251 Forests, Regional Forest Agreement 242–243 Forward linkages 94, 99, 100 Funding 154–157, 159, 195–196, 248–249 GDP 59, (60) Gentrification 74 Global warming 228

INDEX

Global workers (75) Globalisation 2, 11, 39, 41 Goods and Services tax (GST) 248 Government, regional 51, 236, 245 GPs 5, 6 Green region 218–245 Greenhouse policies 228 Gross Regional Product (69–70) Growth pole 25 Hands on assistance 18 Hanson, Pauline 6, 196 High-tech industries 107–108 Hilmer report 251 Hobart 4, 66, 123 Hot spots 72–73 Household income 74 Housing 32, 82, 208–216 Associations 35 cost – impact 208 Howard 19, 23, 81, 147, 177, 179, 181, 195, 207, 261, 262 Incentive 22, 159 cost 27 Income 3, 73–75 differentials 10 support policies 81 Indigenous demography 173–177 agencies 172 Australians 6, 171–191, 246, 262 Land Corporation (ILC) 172, 180–181 population growth 173–177 service delivery 1, 76–177, 207 Industrial innovation 128 recruitment 145, 151, 160–170 Industry 4, 8 attraction 21 clusters 12, 18 Commission 159, 161, 164, 250 protection 112 recruitment 22, 159 subsidy 64 Inequality 7 Informal sector 34 Information economy 107–108, 114 Information services 107 Infrastructure 16, 27, 192–217 Infrastructure Borrowings Tax Offset Scheme 200 Innovation 40

• 305

Innovation and change 4 Input-output analysis (IO) 91–95, 101 Instability 146 Institutional approach 16 Investor Information Service (IIIS) 200 thickness 21, 147 Intellectual capital 8 Inter-community mobility 175–176 Intermediate Labour Market Organisations 82 Internet 5, 204–206 Service Provider (ISP) 206 Intra-community mobility 175–176 Intra-industry trade 104 Investment 3 Ireland 29 Just-in-time 217 Keating 12, 16, 17, 23, 30, 144, 177, 178, 180, 261 Kennett 9, 25, 111, 146, 253, 261 Kimberley 183–188 Kimberley Land Council 182 Knowledge industry 107–108, 111, 114, 118, 131 Kyoto 230 Labour 6, 30, 96 force 75 Land Acquisition and Management Program 181 Land clearance 222–223 Fund 180 rights 177 Landcare 237, 240–241 Leakage 18, 135 Leakage 120–121 Learning region 12, 39 Liberal Party 6, 195 Lifestyle 46, 78 Linkage 43, 53, 54, 142 Local Agenda 21, 235 Employment Initiative 83, 148 government and sustainable regional development 235, 245 Government role 27, 51, 146–147 focussed initiatives 15 Locational paradox 137

306 •

DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

London Docklands Authority 31 Long Boom 193 Mabo 178, 180 Main Street Program 20, 26, 97, 145 Major events 19 Mandatory Renewable Energy Target 236 Manufacturing 1, 2, 4, 43, 62, 64, 80, 108–115, 128–131, 193 ,249–250 advanced 128–131 and service industries 109 automobile industry 111–113 change 110 employment 108–115 its continuing importance 108–111 restructuring 109–111, 113 Marketing 19, 26 Meat processing 210, 211, 213 Melbourne 2, 3, 11, 38, 51, 61, 66, 75, (75), 76, 78, 108, 110, 111, 112, 113, 123, 127, 130, 138, 164, 165, 199, 201, 206, 251, 252 Mentor 18 Micro-business 81 Migration 62, 63, 65, 78 Migration, Indigenous 175 Mining 43, 63–64, 79, 92, 99–103, 250, 252 economic input 99–103 outsourcing 103 restructuring 99 unemployment 100 Mirriuwung-Gaejjerong 179 Mission Australia 81, 82 Multi Function Polis 8, 144 Multiplier effects 113 Multiplier effects, analysis 164 Murrumbidgee Irrigation Area 80 National Australia Bank 192, 203 Bandwidth Inquiry 206 Competition Policy 195, 251 Economics 50 Farmers Federation 86, 91, 225 Heritage Trust 24, 197, 240, 241 Indigenous Land Strategy 181 industry policy 113 Native Title Tribunal 178 Office of the Information Economy (NOIE) 204

Party 6, 195, 231 Spatial Strategy 254, 255 Strategy for Environmentally Sustainable Development 239 Urban and Regional Development Agency 254, 255–257 Native title 172, 177–181 Natural resources 15 Network 18, 21, 31 Networking the Nation 24, 197, 217 New economy 107 New Enterprise Incentive Scheme 82 New Institutions Economics 199 New Mediterranean 105 New regionalism 39, 51 New South Wales 6, 9, 11, 20, 26, 27, 34, 38, 42, 43, 45, 46, 48, 49, 51, 53, 59, 60, 62, 65, 79, 88, 90, 95, 97, 99, 105, 111, 119, 125, 126, 128, 130, 138, 144, 146, 168, 197, 198, 209, 210, 222, 248, 257, 258 NGO 145 Non-metropolitan role 73–75 North America 42 Northern Territory 46, (60), 79, 95, 101, 116, 119, 120, 176, 183, 184, 190–191, 248 NSW Country Mayors’ Association 25, 254 OECD 2, 7, 8, 33, 34, 44, 86, 110–111, 128, 131, 199, 223, 224, 229, 242 Office of Labour Market Adjustment 24 One Nation Party 6, 196 Opportunity clusters (72–73) Outsourcing 103, 124 Perth 2, 11, 46, 49, 51, 59, (75), 102, 103, 110, 111, 119, 123, 125, 251 Planning Commission 49 Polarisation 67 Policy 9 Political payoff 163 Population 11, 26, 66, 73, (75), (77), 82, 249 growth 3, 59, (60), 61–64, (69–71), 74–75, 194 Primary industry 79–80, 82, 84–98 Private sector role 27, 256

INDEX

Privatisation 2, 195, 198 Producer services 122–126, 136 Product differential 104–105 Productivity 109 Project team approach 123 property income (75) protection 2 Quarry 79–80 Queensland 6, 19, 25, 27, 28, 37, 38, 42, 46, 48, 49, 59, 60, 61, 62, 65, (77), 77, 95, 111, 118, 117, 128, 130, 136, 148, 150, 184, 202, 203, 205, 222, 237, 256, 260 Recession 61 Reform economic 1 political 11 social 1 Region administrative 44, 47 bio 41 climatic 41 economic 42 functional 43, 49, 50 homogenous 41, 47, 49, 52 institutional 44 labour market 44 nodal 43, 52 planning 44, 49 social 42, 44 Regional Australia Summit 54 Business Strategy 131–132 cities and service industries 125–128 Development Agency 31, 35, 49–50, 52 Development Boards 25, 49 Development body – funding 148–149 Size 148–149 Development Commissions 25, 49 Development Council 215 development model 23 Development Organisations 25, 49, 54 development 13, 14, 39, 41–47 Development Program 53 development programs 7, 16, 19, 20, 23, 30 development resources for 8, 41–47 Development Taskforce 215

• 307

development theory 12, 14, 41–47, 50 economic development boards 10 expenditure leakage 97 Forest Agreement 231, 236, 242–243 government 51 regional identity 41 Regional leadership 258 regional planning 31 Regional policy perspective 85, 86, 96–97 Regional purchasing 96–99 regional radio 47, 48–49 Regional Solutions Program 24, 30, 261 space 58 Regional Telecommunications Inquiry 207 Regions core metropolitan 50 defining and delimiting 51–54 dispersed metropolitan 50 industrial production 50 lifestyle 50, 76 National Economics 50 resource based 50 rural based 50 and competitive advantage 39–40 as social constructs 46 Australian examples 47–51 delimiting 39–41 significance 39–41 types 41–47 Rental accommodation 210–216 Research and Development 108, 111, 112, 122, 128, 137, 138, 139, 142, 257, 258 Resource Assessment Commission 249 Restructuring 80, 99, 110–111 Retirees 67 Retirement 46, 47 belt 61 migration 77 Rock belt 64 Rural development 29 Telecommunications Panel 206 Transaction Centres 197, 202 Rust belt 57, 60–64, 67 Salinity 246 Sectorial diversification 86

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DEVELOPING AUSTRALIA’S REGIONS: THEORY AND PRACTICE

Seed merchants 99 Selective assistance 159 Self-employment 34 Semipublic activity 185 Service industries back offices 127 call centres 126–127 producer services 122–126 Services 5, 16, 32, 62, 66, 79, 82, 103, 108, 122–126, 184, 186, 192–217 closure 192–193, 196–198 Shipbuilding 4, 110 Silicon Valley 8, 18, 21, 41, 128, 209 Singapore 11 Sister city 20 Skills 31 Smokestack chasing 22, 159–160, 169 Social capital 12, 40 Social economy 35 Socio-economic well being 68, 78 Source, sink, service 220 South Australia 4, 2, 6, 8, 17, 18, 22, 25, 28, 38, 42, 46, 49, 50, 51, 60, 61, 64, 65, 79, 82, 84, 112, 116, 119, 130, 144, 147, 148, 162, 165, 192, 207, 209, 210–211, 213, 214, 215, 216, 248, 256, 261 Spatial differentiation 68 inequality 68 Planning Unit 252 restructuring 69 Special events (19), 27 Specialist providers 103 Sponge centre 97 Standard Geographical Clarification 47, 48 State government role 24 State Housing Authority 214–216 Statistical Division 45, 48, 49, 51 Statistical Local Area 48, 71 Statistical Subdivision 48 Strategic Economic Development Package 168 Stronger Communities 81 Stronger Regions Program 261 Structural Adjustment 30 Subsidiarity 260 Subsidies 252

Sun belt 57, 60–64, 67 Sunrise industries 107–142, 208 defined 108, 114–115 Supermarket 79–80 Supermarket to Asia 19 Supply side 16 Sustainability 218–245 Sustainable development, barriers 237–243 defined 218–221 effects on regional economies 225–232 national policies 239–240, 242–243 principles 220–221 strategies 232–234 Sustainable regional development implementation 243–245 institutions 244–245 responsibility 234–236 Sustainable resource management 238–239 Sydney 2, 3, 8, 11, 26, 33, 46, 50, 51, 58, 59, 61, 62, 63, 74, 78, 108, 110, 111, 113, 116, 123, 126, 138, 165, 167, 168, 199, 201 Symbolic capital 165 Tariffs 2, 110, 193, 249 Tasmania 9, 10, 11, 42, 59, 60, 61, 64, 65, 66, 76, 113, 127, 148, 165, 248, 249, 250 Telecommunication policy 197 Telecommunications 126–128, 204–208 Top End 3 Torres Strait Islanders 171–191 Regional Authority 177 Tourism 4, 29, 43, 77–79, 114, 115–122, 251 development strategy 121–122 employment (119) expenditure 115–117 flow on effect 118, 120 impact on regional economies 118–122 policy 120–122 Transaction tables 91 Transfer payment 76 Transport 17 Treaty of Rome 162

INDEX

Unemployment 3, 7, 32, 34, 46, 61, (69–71), 76, 81, 83, 86, 101, 110, 194 Uncoupling thesis 90 Understanding Rural Australia Program 261 Unemployment 209, 225 United Kingdom 30, 34 United States 31, 32, 37, 60–61 Universal Services Obligation (USO) 206 Urban Development Corporation 31, 144 Urban environments 221–222 form 78 households 222 planning 298 sustainability 232–233 rural dichotomy 73 Value adding 105–106 Victoria 9, 11, 16, 19, 22, 25, 27, 28, 37, 42, 43, 51, 53, 56, 60, 61, 65, 82, 105, 112, 117, 125, 126, 127, 128, 138, 144, 146, 147, 196, 198, 203, 210, 238, 246, 248, 253, 261 Virtual clusters 140

• 309

Visitors domestic 115–117, (116–117), 120 international 115–117, (116–117), 120 Viticulture 34, 65, 80, 138, 210–213, 251 Voluntary labour 28 Vulnerability clusters (73–73) Wages (69–74), (75) Wage differential 127 Water 80 coastal 224 inland 223–224 quality 223 Well being 219 Western Australia 11, 19, 25, 38, 43, 44, 46, 48, 49, 50, 59, 60, 62, 63, 64, 82, 110, 111, 124, 125, 128, 130, 146, 149, 150, 155, 176, 177, 179, 184, 197, 201, 216, 231, 237, 246 Whitlam 23, 54, 254 Wik 178 Workforce – skills 17 World Wide Web 5 Yuppie belt 74–75

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