CRACKS APPEAR IN AUSTRALIA’S BIG CITY ECONOMIC MIRACLE
The big cities’ cheer squad has told Australians that the miracle of continued national growth is assured if our big cities do well.
But, as the end of the housing boom looms large and GDP growth slows to a mere 0.3 per cent and the economic outlook remains dicey this conclusion has to be questioned.
“What the big city boosters misunderstand is that Sydney is not Singapore and Melbourne is not Hong Kong. Australia is not a city-state where cities can make their own way,” says Jack Archer CEO of the Regional Australia Institute (RAI). “The long term growth of our big cities relies on the success of the Australian economy as a whole,” he said.
Mr Archer’s comments come as the Regional Australia Institute releases two new reports documenting the recent performance of Australia’s small cities, providing a blueprint for their future growth.
“Analysis shows that if we get small city policy right we can capture an additional $378 billion in economic output to 2031. Putting this output in today’s terms, regional cities in 2031 will produce twice as much as all the new economy industries produce in today’s metropolitan cities.”
“These reports provide the most comprehensive look Australia has ever had at the performance of our 31 small cities” says Dr Leonie Pearson, Leader of the RAI’s Great Small Cities Program.
“Our data demonstrates Australian small cities have done remarkably well. We find no statistical differences between the economic performance of Australia’s big five metropolitan cities and its 31 regional cities in terms of historical output, productivity and participation rate.”
The RAI’s new reports forecast the expected future performance of Australia’s small cities. While no two cities have the same strengths and capabilities, regional cities fall into four economic performance groups (gaining, expanding, slipping, slow and steady).
Gaining cities like the Gold Coast and Sunshine Coast Noosa are fuelled by high population growth rates (2.6 to 4.2 per cent annually), while others including Darwin have mining specialisations and are expected to return to an average of 3.3 per cent annual output growth to 2031. Expanding cities, such as Cairns, Central Coast and Toowoomba are also forecast for improved growth (3.3 to 3.9 per cent annually until 2031) building on strong foundations of business entries, but they will need to create more high-income jobs.
But some cities have slipping projected growth rates, like Newcastle, Gladstone and Bendigo, with an average of only 2.2 per cent output per annum until 2031. Geelong and Ballarat have low population growth rates of around 1.2 to 1.5 per cent annually and are expected to be slow and steady cities. They will need to stimulate growth in local businesses to achieve stronger outcomes.
“In the big cities it’s all about big licks of cash to try to reduce congestion; in small cities it’s all about smart investment to enable new business and population growth. As a result we can get an enormous return on investment from our policy effort in small cities” Mr Archer said.
The Australian Government has previously announced their intention to create a regional City Deals stream to tap into the small city opportunity. Deals are in place for Townsville and Launceston but the process for further deals is yet to be detailed.
“Small Cities are just one example of the economic opportunities Australia is missing out on through its obsession with big city priorities. It’s time for some genuine balance and I suspect the next period of economic results led by a housing downturn will force that upon us” he concluded.