A dangerous dream is taking hold in Australia: that government policy can divert population growth from our bulging capital cities into our destitute regions. It’s a fantasy because a century of Australian history shows it will not work. And it’s dangerous because it gives authorities an excuse to avoid the difficult decisions about planning and transport required to make housing cheaper and cities more liveable.
As federation, state and national authorities have tried to lure individuals, trade and business away from the capital cities. These attempts have mostly been costly policy failures.
Despite substantial government spending on regional growth geared toward promoting decentralisation, Grattan Institute’s State Orange Book 2018 indicates the tendency to city-centred expansion has accelerated in the past ten years. Less than a third people today live beyond the capital cities.
Regions, capital city markets more than ten years have grown faster than regional economies. That is mainly because their populations have grown faster.
About precisely the same pace. Employment participation for girls is similar too, although 25 to 64 year old men in regions are 7 percent less likely to work than men in towns.
Why Do Most Folks Decide To Live In Cities?
These are international tendencies. Large cities around the globe are typically growing much quicker than less densely populated areas.
The services companies often prefer to be close to other services businesses, typically in large cities.
Regional development programs in Australia have a poor record of attempting to push economic water uphill against these trends.
Take for instance the New South Wales home buyers grant of 7,000 for men and women who move from cities to regions. In reality, only 4,800 grants were made over three years. Many of these probably went to folks who would have moved anyway perhaps to retire to “the bush”.
The key problem is that people will merely move to areas if there are additional tasks and policies to encourage more jobs in regional areas too have a poor history. The money on offer from authorities is seldom enough to outweigh the financial advantages for a company of locating in a town instead.
Most of this time we do not even know whether regional growth programs work as they are so badly handled. Auditors-general in NSW, Victoria, Queensland and WA have all found considerable regional development money being spent without a business case, or bad instruction, or without reference to application guidelines, and with no evaluation of whether the applications achieved the promised outcomes.
Authorities don’t really want programs assessed because they know all too well what the answers will be.
Imagine If Regional People Policies Did Function?
In the unlikely event that government policy really succeeded in encouraging many more people and companies to move to regional areas, it would probably slow growth in earnings. Cities are more productive, which is reflected in higher wages.
Cities are significant for innovation and economic development. Cities provide more opportunities to discuss thoughts, which both attracts skilled people and raises their skills once they arrive. Regardless of the rise of the web and reduced telecommunication costs, innovation seems to rely on regular face-to-face connection between people in different businesses, which therefore tend to aggregate in massive cities.
So pushing additional people to regional areas runs the risk of reducing Australia’s productivity growth and per capita incomes.
What Exactly About Regional Dormitory Suburbs?
Another approach, much mentioned in Victoria because it heads to a state election effort, is to promote the rise of regional towns as dormitory suburbs for individuals working in towns. Clearly this only works for regional towns that are rather near capital cities, together with great transport links.
However, it is uncertain why regional dormitories must be considered better than construction suburbs on the city fringe. These fringe suburbs often offer access to more jobs in the other suburbs nearby.
In any instance, the transportation infrastructure needed to ferry people from homes in regional areas to jobs in town is not affordable. Much superior to relax planning laws to permit higher density residing where people want to reside and can be near a wide assortment of jobs that is, in the established centre and inner suburbs of the capital towns.
The Threat Of Jagged spending Priorities
The fantasy that authorities can divert population growth from towns to areas can also be dangerous because it distorts spending priorities in areas. Government services likely improve regional lives over government spending that’s supposed to promote business development.
Authorities spending per person on education and health is in fact already higher in areas than in cities, even if support levels tend to be lower because they cost more to send. However, if governments are going to invest more on regional services, the money might need to be spent otherwise.
Grattan institute evaluation demonstrates that poorer health and educational outcomes in some regional areas are primarily the result of socio economic status and other risk factors not remoteness. In health, as an instance, the substantial difference in mortality between cities and regions seems to result not from more distant hospitals but from people in regions tending to exercise and have poorer diets.
Advanced economies, expose the “repopulate the regions” push as needing thinking. As this series of articles based on Grattan Institute’s State Orange Book 2018 will reveal, there are far better ways for governments to promote an increasing Australia.