Beyond City Limits: Unveiling Income Premiums in Regional Australia

Overview

The report "Beyond City Limits: Unveiling Income Premiums in Regional Australia" by the Regional Australia Institute explores income disparities between metropolitan and regional areas across Australia. Using integrated data from the ABS Census and ATO, the study controls for variables such as age, gender, education, occupation, and industry to isolate the impact of geographic location on income.

Key findings reveal that Remote and Very Remote areas offer significant income premiums, with median incomes 12.8% and 13.6% higher than those in Major Cities after housing costs are deducted. In contrast, Inner Regional areas show slightly lower incomes, while Outer Regional areas are comparable to metropolitan incomes.

The report identifies over 80 occupations with higher incomes in regional areas, particularly in Machinery Operators and Drivers, Technicians and Trades Workers, and Community and Personal Service Workers. For example, Machinery Operators in Very Remote areas earn 50.4% more than their city counterparts.

Income premiums are also linked to liveability factors. Regions with low economic diversity and high industry specialisation (e.g., mining or agriculture) show a 25.9% income premium, while areas far from the coast offer a 5.2% premium. Conversely, coastal areas with low housing affordability tend to have lower incomes.

The report challenges the assumption that city jobs always pay more, highlighting that regional roles in education, health, construction, and hospitality can be financially advantageous. It also offers policy recommendations to support regional migration, improve digital connectivity, and invest in infrastructure to sustain regional growth.

Overall, the study provides a nuanced view of Australia's evolving labour market, emphasizing that regional Australia presents viable and often lucrative employment opportunities.

Key Findings

Income premiums by remoteness area 
After controlling for known factors that impact income, the median income in remote Australia after housing costs is higher than in Major Cities: 

• 13.5% higher in Very Remote Australia 
• 12.8% higher in Remote Australia 
• The median income in Outer Regional Australia is comparable with Major cities
• Median income in Inner Regional Australia is 2.4% lower than in Major Cities

Income premiums by Liveability factors
High paying roles in Regional Australia across as wide range of occupations are available now for those wanting to live beyond the city limits. Indicative results from modelling show: 

• 5.2% Median income is 5.2% higher in areas Far from the Coast 
• 25.9% Median income is 25.9% higher in areas with Low Economic Diversity/High industry Specialisation 
• Median income in coastal areas with Low Housing Affordability were 7.1% lower than Major Cities

Income Premium by occupation;
In Remote and Very Remote Local Government Areas (LGAs) an income premium exits across all occupation categories (except Mangers and Sales Workers) with the largest premiums for: 

• Machinery Operators and Drivers: 50.4% Very remote, 42.9% Remote
• Technicians and Trades Workers: 35.9% Very remote, 34.7% Remote
• Labourers: 21.4% Very remote, 19.2% Remote
• The income premium is partly due to the presence of specialised industries in some Remote and Very Remote LGAs, for example, mining

Incomes in Inner and Outer Regional areas are higher in half of the eight major occupation groups:

• Machinery Operators and Drivers: 15.6% Higher in Outer Regional, 10.4% Higher in Inner Regional.

• Community and Personal Service Workers: 7.7% higher in Outer Regional. 3.7% higher in Inner Regional;
• Technicians and Trades Workers: 6.8% Higher in Outer Regional, 2.8% Higher in Inner Regional;
• Labourers: 4.1% Higher in Outer Regional, 2.6% Higher in Inner Regional;

This research found numerous occupations with median incomes higher than Major Cities across all four regional Remoteness Areas, including:

• Managers: Chief Executives and Managing Directors, and Managers in the Farming, Hospitality and Retail sectors
• Professionals: Engineers, General Practitioners, Dental Practitioners and Counsellors
• Technicians and Trades Workers: Science Technicians, Mechanics, Welders, Metal Fitters and Machinists, Chefs and Bakers
• Community and Personal Service Workers: Ambulance Officers and Paramedics, Childcare, Aged Care and Disability Workers, and Hospitality Workers
• Sales Workers: Retail Supervisors, Checkout Operators and Office Cashiers
• Machinery Operators and Drivers: Truck Drivers, and Mining, Agriculture and Forestry Plant Operators
• Labourers: Construction, Mining, Agriculture, Factory and Hospitality Labourers

For other key worker occupations experiencing national skills shortages, higher incomes were available for:

• Early Childhood, Primary and Vocational Education Teachers in Outer Regional, Remote and Very Remote areas
• Registered Nurses in Remote and Very Remote areas

Policy Recommendations

Recommendation 1
Provide information:

• Provide job seekers with information about regional job vacancies that offer comparable or higher incomes than the major cities, and promote the many benefits of regional living, including income, lifestyle and housing affordability.
• Promote the existence of regional income premiums throughout regional Australia.
• Encourage jobseekers to use the RAI’s Regional Jobs Guide and the Jobs and Skills Australia (JSA), Jobs and Skills Atlas, along with job vacancy websites, to identify and apply for job opportunities in the regions.
• Use case studies of successful moves to the regions to demonstrate the benefits of regional living for people interested in making a change.
• Encourage jobseekers to use the RAI’s Good Life Guide and Move to More platforms to identify housing, schooling and other services available in regional locations.

Recommendation 2
Make it easy - Make it easier for Australians to move to the regions to fill skilled job vacancies by addressing barriers in the tax system (e.g. stamp duty) and regulatory frameworks (e.g. jurisdictional occupational licensing restrictions).

Recommendation 3
Encourage skilled migrants Encourage more skilled migrants to settle and work in regional Australia including through:

• Dedicated regional visa programs.
• A substantial regional allocation in annual migration planning.
• Reducing time and cost of visa applications and processing.
• Amending regional definitions to stop regional visas being allocated to capital cities.
• Investing in migrant settlement services and working with local Communities.

Recommendation 4
Improve digital connectivity Improve digital connectivity in regional, rural and remote Australia by setting a minimum standard for connectivity in all regions that enables full participation by regional individuals and businesses in the digital economy and the ability for skilled workers to work in knowledge jobs anywhere in Australia.

Recommendation 5
Invest in regional Australia Invest in regional housing, infrastructure, health and education services to ensure living standards keep pace with population growth and allow the regions to remain as attractive locations to start a new job and settle.

Acknowledgment of Funding

The RAI acknowledges our funding partner: Australian Government Department of Infrastructure, Transport, Regional Development, Communications, Sports and the Arts.

The views expressed in this report are those of the Regional Australia Institute and are not necessarily those of the Australian Government or the Department.