Specialist programs can drive economic growth in regions
Government spending to develop regional economies must be invested through specialist funds that are separate to funding provided for general maintenance and upgrades of community infrastructure.
This is the headline finding of the Regional Australia Institute’s (RAI’s) review of Public Investment in Economic Development in Regional Australia, which was released today.
The report details the findings of a RAI review that looked at how $4.6 billion in regional development funding was invested between 2011-2016 by the Australian Government and State and Territory Governments.
The review found specialist funds invested up to 96 percent of their available expenditure into projects that can grow the economy – while for most generalist funds, only 23 percent of projects were likely to have catalysed long term economic impacts.
“Painting the local town hall is a valued community investment – but it leaves the economy the same as it was before,” Jack Archer said.
“This is very different to investing in infrastructure that underpins expansion of local industry or capacity of the local workforce,” Mr Archer said.
The RAI says a switch to specialist economic development funds will resolve the perceived confusion of objectives highlighted by the Productivity Commission in its recent review of regional development expenditure.
“It will also better enable the impacts of economic development investment to be measured,” Jack Archer said.
The report also challenges previous critiques by the Grattan Institute that these programs did not sufficiently invest in areas experiencing population growth showing that the majority of regional development funding since 2011 has been spent in the growth areas surrounding Australia’s major cities.
“There has been a tendency to dismiss the value of this area of public policy, based on limited evidence,” Mr Archer said.
“This new research shows how some simple policy changes can resolve longstanding concerns and encourage local leaders to focus on how to grow their economies in partnership with governments,” Mr Archer concluded.
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