Working with regions is a step in the right direction: Grattan Institute report

Working with regions is a step in the right direction The Grattan Institute report on Investing in regions is timely as both Federal and Victorian governments grapple with challenges of a ‘two speed’ or ‘patchwork’ economy and metropolitan transport and planning problems arising from rapid population growth. The report takes an unapologetic economic stance, and implicitly accepts that the benefits of agglomeration economics (economic growth) outweigh the costs. Its findings suggest that market forces should be left to ‘get on with it’. Social, civic and environmental returns are key components of liveability. They are the reason people are moving to coastal cities and ‘bolting’ regions. It is up to governments to make sure that economics does not drown these out. Common sense confirms Grattan’s main conclusion: that government spending will not produce the same return regardless of where it is spent. The real question is one that the report did not answer: how do we design policy that takes account of the unique and complex mix of economic opportunities, social needs and natural, human and other resources that are present in each of our regions? Sadly, there has been a tendency in the past to adopt a ‘one size fits all’ set of policies. Regional university campuses have been expected to mimic big city campuses with minor fiddles to funding, but rarely have they had the freedom to develop to truly match their regional context. The interrelationships between universities such as James Cook, Southern Cross, Ballarat or Deakin and their home regions are rich and valuable to local government, communities and industry. The weight of the social and civic role of regional campuses is greater than those roles for metropolitan campuses where there are many other agencies and organisations to share the load. There would be economic as well as equity implications of not having regional campuses. Sending young people away to university takes an average of $20,000 in after-tax-dollars per family out of the region according to the Australian Scholarships Group. People who missed out on university straight after school and who have established families and jobs can’t easily pack and move for a university education. There are some additional questionable assumptions in the report. Patent applications per head of population are an imperfect measure of innovation in the context of both businesses and university research teams which may be geographically dispersed. Evidence of the impact of structural adjustment funding in the report includes a crude comparison of regional unemployment with the national average. Such comparisons ignore variables such as the size and diversity of the regional economy, its exposure to the global economy and the careful targeting of the structural adjustment to help displaced workers find new jobs. It’s not only the size of the package that counts. Such comparisons also fail to take account of regional interventions such as the Warrnambool Council’s transition assistance following the closure of the Fletcher Jones factory in 2005. Research coming from international bodies such as the OECD and a current international project on higher education institutions and regional development concludes that regions are the right geographic unit for looking at development. In Australia, local government – or coalitions of local governments – represent the regional level where there is local knowledge and some resourcing to understand opportunity and priorities. The answer to the question of how to invest in our regions lies in working with the regions, and building their capacity to plan for the future. We must consider not only the current assets and challenges in a region, but the bigger picture context and how a region fits with the Australian and global economies – always with social and environmental considerations in mind. The current Federal Regional Australia policy is attempting to inject a local component into priority setting, as is Victorian policy. It remains to be seen how successful this is, but it is a step in the right direction. Sue Kilpatrick is Professor of Regional Communities, Alfred Deakin Research Institute, at Deakin University and a member of the Regional Development Australia Committee, Barwon South West Victoria. She has a Master of economics and PhD in the economics of education. This piece first appeared in the Geelong Advertiser on 2 June 2011 (page 17).