Latest Economic Performance Indicators Show Regional Australia Continues to Lag Cities

The latest Australian economic performance indicators show that regional areas continue to lag behind the cities in wealth, gross domestic product (GDP) and educational services. These are the conclusions drawn from two recently released reports from SGS Economics and Planning and the Regional Australia Institute.

“Australia needs a national regional and rural education policy that incorporates its thriving adult and community (“ACE”) sector,” said Dr Don Perlgut, CEO of Community Colleges Australia (CCA). “That must be an important element of dealing with Australia’s regional and rural challenges shown by the recent reports.”

Economic Performance of Australia’s Cities and Regions, a report by SGS Economics and Planning, includes data on the level of GDP per capita. It shows that regional Western Australia had by far the highest GDP per capita ($234,900), which is driven by iron ore and other mineral production. In terms of the major capital cities, Sydney’s GDP per capita of $81,300 was the highest, followed by Perth ($69,000), Melbourne ($66,800), Brisbane ($65,400), Adelaide ($58,400) and Tasmania ($55,100). By comparison, regional New South Wales ($51,100) and regional Victoria ($50,200) had much lower GDP per capita than their respective capital cities.

A second report, by the Regional Australia Institute, tracks the number of police, teachers, doctors, nurses, paramedics, dentists, psychologists and social workers in towns with 5,000 people or less over a 30 year period. Not surprisingly, the report Pillars of Communities: Service Delivery in Small Australian Towns and its supporting Small Towns Report Card found many people in Australia’s small towns are unable to access basic services.

The Small Towns Report card shows that:

  • The number of preschool teachers in small towns has dropped dramatically, with only 16% having access to one, compared to 25% three decades ago.
  • While numbers of primary school teachers has dipped slightly, it is encouraging to see that more than 73% of all small towns still have them.
  • Across the board, small towns are less likely to have a secondary school teacher than a primary school teacher, with numbers dropping in this category from 66% to 62% in 2011.
  • Only 11% of “remote and very remote towns” had access to a social welfare professional in 2011, compared to 24% in 1989.

“Both of these reports reinforce what Community Colleges Australia – CCA – has known for some time: our regions need help in economic development and basic services, especially education. That’s why CCA has commenced a series of action research projects on how Australia’s community education providers can contribute to economic development in regional and rural areas,” said Dr Don Perlgut, CCA’s CEO.

“The decline in education and welfare services in Australia’s small communities is a national challenge that Australia’s wide network of not-for-profit – ‘for purpose’ – community education providers – more than 2,500 of them – are particularly well-placed to meet,” said Dr Perlgut.

More detail from the SGS Economics and Planning Report: Hypothetical Interest Rates

The SGS report shows that “the economy of Regional New South Wales contracted in 2013-14 (-0.7%) and experienced very weak growth in 2014-15 (0.6%), particularly due to a decline in manufacturing – although the last two years have seen stronger growth in GDP of 3.6% and 1.5%.

Tables in the report showing how much various regions contributed to Australia’s overall GDP growth over the last 30 years demonstrate the importance of Australia’s two largest cities, Sydney and Melbourne, with Sydney traditionally being the most important driver of Australia’s economy,

The SGS report estimates “hypothetical interest rates”, based on economic performance of Australia’s cities and regions to highlight the economic divergence between regions with each region having its own “central bank” that can set its own rate:

Interest rates are used as a tool to help manage short term economic movements. As the economy grows at a faster rate, interest rates are increased to ensure that the rate of growth does not become unmanageable. Conversely, a slowing economy would see interest rates cut to stimulate growth. However, as shown above, the rates of growth across the country vary greatly, so setting a single interest rate for all regions is challenging. (p. 6)

On this basis, the hypothetical 2016/17 interest rates were:

  • Sydney 3.5%
  • Regional NSW 0.5%
  • Melbourne 2.25%
  • Regional Victoria 0.5%
  • Brisbane 0.25%
  • Regional QLD 0.25%
  • Adelaide 0.25%
  • Regional SA 1.0%
  • Perth 0.25%
  • Regional WA 0.25%
  • Tasmania 0.25%
  • Northern Territory 3.25%
  • Canberra 2.0%
  • Australia nationally 1.5%

CCA CEO Dr Don Perlgut comments: “These hypothetical interest rates sharply delineate the economic situation facing much of regional and rural Australia: how they differ from Sydney and Melbourne in particular. More work needs to be done, especially to counter the impact on the vulnerable and disadvantaged groups living in regional areas. The community education sector over-performs in delivering formal adult education and training services to regional residents, older Australians, Indigenous Australians, lower socio-economic groups and people with disabilities.”

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