Regional centres a solution to Big Australia issue
Australia has many well performing regional centres close to major cities that could be developed to better manage our fast growing population. Similar levels of income and employment combined with stronger productivity in regional cities compared to outer suburbs suggests fostering growth in these places should be considered more thoroughly when planning for Australia’s future population.
Population growth has been at the centre of public attention recently, with concern about the major cities becoming costly, overcrowded and changing too quickly. With Australia set to increase its population by the equivalent of Melbourne every 12 years, we are at a key juncture in the settlement history of the country.
In grappling with this challenge, policy makers remain focused on the big cities and have not fully considered alternate settlement options. National and state infrastructure bodies have released plans detailing metropolitan growth and expect an increase of 8,850,000 people to the four major cities over the next 30 years[i].
The focus is on cities because of the positive effects that can occur when population is concentrated. They create faster growth in economic benefits through knowledge spillovers, input sharing, labour market pooling and enhanced consumption. Grouping people together is often good economics.
But there are downsides too. Diseconomies are costs which occur when population is concentrated. Congestion, increased housing prices, high costs of living and pollution are all consequences of a bigger, more concentrated city. Many resources don’t scale as a city grows and therefore become more costly, and these issues are clearly growing in Australia.
If we are not going to substantially curb population growth we need to look at options for managing population pressures and diseconomies while we have the time to make major changes to planning, migration, taxation and infrastructure policies that substantially shape Australia’s population growth.
Australia has 15 regional cities near to major metro areas with populations between 100,000 and 1 million that could be excellent candidates for additional growth without the substantial diseconomies. Additionally, there are about 40 regional centres with populations between 20,000 and 100,000 which also have growth potential.
Surprisingly little work has been done to explore the economic outcomes of alternative population growth scenarios that include faster growth in regional cities. The Regional Australia Institute (RAI) is filling this important gap by investigating the potential outcomes of shifting population growth from outer suburbs to nearby regional cities.
To initiate this major inquiry in the RAI’s new Shared Inquiry Program, we looked at some of the basic economic statistics (income, employment and productivity) for the inner and outer suburbs of Sydney, Melbourne, Brisbane, and Perth and compared them to regional centres with populations greater than 20,000, and grouped according to their nearest capital city.
Income
Looking at income, those living in the outer suburbs earn slightly more than those in regional centres, but this gap is less than 10 percent. The differential in house prices means that in practical terms, disposable income is likely to be equivalent or higher in regional centres for many residents.
|
Average Income ($) / Income Growth (%) |
||||||
| Capital City | Outer Suburbs | Regional Centres | Inner Suburbs | |||
| Sydney | $79,128 | 2.50% | $74,437 | 2.70% | $101,774 | 3.00% |
| Melbourne | $75,660 | 2.90% | $69,612 | 2.60% | $92,133 | 2.80% |
| Brisbane | $72,183 | 2.70% | $72,022 | 2.50% | $91,109 | 2.80% |
| Perth | $83,314 | 2.30% | $80,848 | 2.50% | $94,970 | 2.80% |
Between 2011-2016 the rate of growth in income has been essentially uniform. Regional centres are currently growing faster than outer suburbs in Sydney and Perth.
Employment
A worker in the outer suburbs has just as much likelihood of being employed as those in the regional centres around Sydney. In 2016 the employment rate was around 92% – 94% for the different areas.
| Outer Suburbs | Regional Centres | Inner Suburbs | |
| Brisbane | 92.2% | 92.0% | 93.7% |
| Melbourne | 93.2% | 93.0% | 93.5% |
| Perth | 91.6% | 92.7% | 92.4% |
| Sydney | 93.7% | 93.7% | 95.0% |
Productivity
Another key argument for the primacy of cities is that labour productivity is assumed to be higher in our largest cities. While the inner cities are clearly leaders in labour productivity, regional centres are just as productive as the outer suburbs when it comes to gross value added (GVA) per worker.
Across the three key economic criteria of income, employment and productivity, nearby regional centres are doing just as well as the outer suburbs of capital cities.
These results should challenge the assumption in our public debate about Big Australia that only growth within our largest cities can deliver high quality economic outcomes for the nation. The regional option so often dismissed is worth a long hard look in this most important public debate.
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[i] Future Cities: Planning for our growing population, Infrastructure Australia 2018 http://infrastructureaustralia.gov.au/policy-publications/publications/files/future-cities/Future-Cities-Paper-web.pdf
Population Estimates and Projections, Infrastructure Australia 2015 http://infrastructureaustralia.gov.au/policy-publications/publications/files/Background-paper-on-demographic-projections.pdf
