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Is Regional Queensland’s Economy Beyond Repair?

Late last week we had Queensland’s regional unemployment rates released at the same time as a thought provoking Productivity Commission Report into Transitioning Regional Economies.

If there is any one State that can serve as an example of the challenges being experienced by Regional Australia, it is Queensland.

A combination of drought conditions, downturn in the resources sector and rationalisation of corporate Australia have been merciless on Regional Queensland across the past decade. 

The emerging gap between SEQ’s and Regional Queensland’s unemployment rates serves as a dramatic indicator of the two-speed nature of the Sunshine State’s economy. 

Many regional businesses are in supply chains to the resources and agriculture sectors and have in turn directly experienced an associated downturn and are now themselves spending less that reduces local economic activity.

At the same time their hardship has inevitably transferred to their employees with wages stagnating and unemployment rising resulting in further reduced spending across local communities. 

The third element that unfortunately compounds this cycle is population flows. It can be heart breaking for communities as job opportunities have dried up and their residents including their children have moved away in search of work that further reduces the economic base of their township or region.

Unfortunately population flows toward economic and employment opportunity and the correlation between employment and population growth in Regional Queensland has been very strong as is illustrated in the following table.

The challenge of transitioning regional Queensland’s economies is complex but I am pleased to see that the Productivity Commission capturing well this issue. In short they have developed a measure to highlight each region’s ability to adapt and in turn transition which is illustrated below. 

According to the Productivity Commission the factors shaping Queensland’s regional adaptive capacity include: people-related factors (educational achievement, employment rates, skill levels, personal incomes and community cohesion); the degree of remoteness and accessibility to infrastructure and services; natural endowments (such as agricultural land) and industry diversity.

There is no easy solution or ‘one size fits all’ approach that will facilitate economic transition of Regional Queensland. Each region is unique in its experiences, risks and opportunities and this means that regional strategies will vary.

Whilst this may be the case the Productivity Commission has identified policies to assist regional communities adjusting to changing economic circumstances.  They include:

  • Any solution must be identified and led by the regional community itself;
  • Remove barriers to people or businesses relocating and taking up opportunity particularly complex and costly regulatory processes;
  • Targeted investment in developing the capability of the people and the connectivity of the region to other regions and markets; and
  • Facilitate private economic activity that is not dependent on ongoing government financial support.

I wish to make two important points in relation to the Productivity Report. Firstly it is important to remember that a regional economy comprises the aggregation of all the businesses within it and it is important to understand individual business challenges and what is needed for them to transition.

The issues of importance to business do not vary dramatically between SEQ and Regional Queensland. For example cost of energy, cost and access to communications, a suitable transport network, and workforce issues such as WHS, industrial relations and finding the right employees are common to all parts of the State.

However a key and essential point to this issue is that the severity of these issues is significantly more acute for regional Queensland businesses than they are for SEQ businesses.

For example when asking Queensland businesses what influences most any decision to move to regional areas of the State the most important issue for them is connectivity either through the road network or connectivity through telecommunications infrastructure.

And their connectivity is directly impeded with either inferior or more costly telecommunications and the tyranny of distance which increases operational costs, decreases efficiency and productivity; and reduces access to existing markets and expansion into new and emerging markets.

So whilst we need regional specific recommendations the importance of having a underlying business operating environment across the State that allows them to take advantage of commercial opportunity is essential.

The second point I wish to make is that Local Government has a crucial role in building and sustaining regional economies and the role they play is considerably more important in Regional Queensland than in the South East corner

Quite simply there is a vital need for Local Government to be actively involved in diversifying their respective economies and leading the above Productivity Commission recommendations.

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