GROWING REGIONS Reports from an International Conference

Rural Industries Research and Development Corporation GROWING REGIONS Reports from an international conference

ISBN 1 74151 381 2 ISSN 1321 2656

Growing Regions: Reports from an international conference held in Brisbane, Queensland, Australia on 25–27 July, 2006 Edited by the Rural Industries Research and Development Corporation

RIRDC Publication Number 06/118

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Printed in February 2007 Editor – Heather Briggs Front cover photos – DOTARS; Middle photo: John Ferrier, Birchip Cropping Group Design, layout and typesetting by the RIRDC Publications Unit Printed by Union Offset Printing, Canberra Contents

Foreword v

Executive Summary vi

REGIONAL POLICY DIRECTIONS 1–22 1. Regional policy in the European Union, Danuta Hübner 1 2. Regional policy and competitiveness in OECD countries, Odile Sallard and Andrew Davies 3 3. The new role for entrepreneurs in regional development, Mark Drabenstott 6 4. CENTROPE: A central European case study, Edward Bergman 9 5. Regional innovation and public policy: Ireland’s medical technology cluster, Roy Green and Johanna Fahy 12 6. Regional development in China: public policy and market influences, Ligang Song 15 7. Competition policy and regions: the Australian example, Allan Fels 18 8. The case against regional subsidies, John Freebairn 20 REGIONAL ECONOMIC GROWTH: ISSUES AND DRIVERS 23–58 9. Developing rural economies in England, Margaret Clark, OBE 23 10. Economic growth in South and East Asian countries, Edwin Mills 26 11. Rural Canada: drivers and riders, Ray D Bollman 29 12. Sea change issues and regional development in New Zealand, Ken Tremaine 32 13. The role of arts and culture in regional development, Ann Markusen 35 14. Growth through opportunity: Indigenous regional economic development, Joe Procter 37 15. Creating opportunities in desert Australia, Fred Chaney 40 16. Drivers of endogenous growth in Australia’s regions, Robert J Stimson 43 17. Impacts of environmental change on Australian agriculture, Andrew Johnson 46 18. Population trends and economic development: the role of government, Graeme Hugo 48 19. Population change and its impacts on local economic development, Ann Bennison 50 20. Tourism in regional development, Andrew McEvoy 53 21. Growing regions: the place for new industries, Peter O’Brien 56 INFRASTRUCTURE AND REGIONAL DEVELOPMENT 59–67 22. Regional development and infrastructure: the Queensland approach, Bob McCarthy 59 23. Transport infrastructure: AusLink’s contribution to growing regions, Leslie Riggs 61 24. Water management in Australia, Ken Matthews 64 25. Broadband infrastructure for regional Australia, Simon Bryant 66 MANAGING STRUCTURAL AND SOCIAL CHANGE 68–92 26. Being young in growing regions, Maria Helena Henriques Meuller and Deidre Debruyn 68 27. Growing regional communities: women, young people and migrants, Margaret Alston 71 28. Innovation in youth servicing: capacity building in regional Australia, Lisa Shreeve 74 29. Social policy, service delivery and needs-based planning at the local level, Ann Harding 77 30. Service delivery to lightly populated areas, Rob Hunt 80 31. Adjustment to change amongst Australia’s regional cities, Andrew Beer and Terry Clower 83 32. Innovations in regional governance, Yehudi Blacher 87 33. Community cohesion and resilience in regional Australia, Rhonda Galbally 90

Contents iii iv Deputy Prime Minister’s Foreword

Australia is going through the longest period of economic expansion in our history, thanks to the Government’s economic policies, and we are making sure that regional Australia shares in the country’s prosperity.

The Government is funding better roads and railways across regional Australia through our $15 billion land transport plan, AusLink.

We are standing by regional Australia through the drought and have announced a 10 year plan to secure Australia’s water supplies.

We are also working in partnership with regional communities to help them find new economic opportunities, build up better services, and become more competitive.

Through the Sustainable Regions Programme, we have allocated up to $131 million to create new opportunities in ten regions facing economic, social and environmental change. For example, the programme helped Austchilli in Bundaberg to expand its production of processed chilli, herb and vegetable purees. Austchilli now exports to Asia, the Middle East and Europe.

Meanwhile, our Regional Partnerships programme has funded more than 1,100 local projects across regional Australia, ranging from medical centres to factory expansions. Every dollar that we invest attracts more than three dollars in partnership funding, so it’s great value for money.

The Growing Regions conference in 2006 confirmed that our partnership approach is in line with the best regional policies in the world.

This report summarises the presentations that were made at the conference and highlights the challenges and opportunities that are faced by regional areas. The report will become an important resource for everyone involved in the development of regional policy, and I commend it to you.

MARK VAILE

Foreword Executive Summary

Benchmark on regional how best to grow our regions and development issues communities to improve the lives of the people who live in them. This report captures the discussion and debate on issues Over three days from July 25 affecting regions in Australia to 27 the Conference heard and around the world including from more than 20 speakers Europe, North America, Asia who delivered presentations and New Zealand, experienced on a diverse range of regional by participants at the Growing development topics. Participants Regions Conference, hosted by at the Conference gained valuable the Australian Government learning from the various Department of Transport and international approaches and Regional Services in Brisbane, 25- the innovative initiatives being 27 July 2006. implemented in Australia.

The Growing Regions Conference Conference papers was an important benchmark in Australian thinking on regional This report, put together by development issues. the Department of Transport and Regional Services and the Participants Rural Industries Research and Development Corporation, The Conference provided provides an insightful overview of participants with a valuable the presentations delivered at the opportunity to hear from Conference. leading regional development practitioners, researchers and The report provides the policy makers from around reader with the opportunity Australia and across the world on to understand and learn about issues faced by many countries – different approaches to regional development and will help to inform those with an interest in developing and implementing regional policy about international and Australian best practice in the field of regional development.

The presentations delivered at the Conference have been grouped into four common themes:

• Regional Policy Directions; • Regional Economic Growth: Issues and Drivers; • Infrastructure and Regional Development; and • Managing Structural Change. vi Executive Summary Regional issues

Regional Australia contributes significantly to our national economic prosperity.

This publication will help people to understand the issues affecting growth in our regions and some of the challenges and opportunities that confront governments, businesses and ordinary Australians in developing regional Australia.

Delegates

The Growing Regions Conference was attended by over 300 delegates from across Australia • Locally led and inspired is best and around the world. practice; The Conference continues the • It is important to recognise leadership role of the Australian the diversity of voices from Government in promoting regional Australia, such as thinking and the exchange of young people, who have ideas on issues affecting Australia’s important insights into regions. upcoming opportunities; • Climate variability is a Key messages constant factor in doing business in regional Australia; Some of the key messages from • Smaller communities in the Conference included: particular face real challenges; • People are moving to new areas • New economic opportunities of regional Australia for both and industries are emerging in economic and lifestyle reasons. regional Australia; • There are untapped national Presentations delivered at the resources in regional Australia Conference are available on – in the people, the land, and request from the Department of in new ways to do business; Transport and Regional Services.

Executive Summary vii

1. Regional policy in the European Union

Danuta Hübner

KEY MESSAGES • The EU’s regional policy goal is to reduce economic and social disparities between states and regions. • Regional development programs are funded on a 7-year basis in partnership with national, regional and local bodies. • In 2007-2013, 308 billion euros (0.4% of EU GDP) is available. • Interventions are aimed at promoting sustainable growth and creating new jobs. • Current funding priorities

encourage innovation and CYPRUS knowledge economies, MALTA provide basic infrastructure, and increase human capital and to reduce regional and social European GDP. The greater part investments. imbalances across the Union. of this investment goes to regions where GDP is less than 75% of the average. In this chapter the European Union’s Policy framework Regional Policy Commissioner The main financial instrument Initially funding was given outlines the aims of the EU’s regional to single projects which were policy, the challenges facing the of the policy is the European managed by the Commission. expanded EU, and the key strategies Regional Development Fund Regional policy is now governed of the next generation of policy (ERDF), established in 1975. by its own objectives, criteria and programs. In the mid-1980s a hierarchy of structural funds was introduced to rules which are laid out in the The legal basis of the EU’s regional invest in economic infrastructure legal regulations for the funds and policy is enshrined in article 158 of in disadvantaged regions; social adopted by the Commission and the European Community Treaty capital (youth and long-term Member States at the beginning of signed by all Member States. unemployment reduction); and each 7-year financial cycle. It states that ‘the Community modernisation and restructuring of shall aim at reducing disparities farm practices. At the same time As part of the new policy between the levels of development the important feature of 7-year framework, programs are now of the various regions and the funding periods was introduced. funded on the principle of backwardness of the least favoured partnership with the regions regions or islands, including rural The regional policy has grown and Member States. Regional areas’. from about 4% of the EU’s budget and local public authorities and in 1975 to around 40% in 2007. other stakeholders now become The objective of regional policy The available funds have increased deeply involved in the design, is therefore to enable regions to to 308 billion euros (almost 350 implementation and follow- attain a permanently higher and billion in current prices) for the up of regional development sustainable level of development period 2007−2013, almost 0.4% of interventions.

Regional policy in the European Union Today’s policy renewed growth and new jobs. For stimulating interaction between challenges the period 2007−2013, regional the producers, users and mediators policy investments in the new of innovation, for gearing all these In common with the rest of the Member States (the ten that joined resources towards the objective of world, the EU is facing challenges the EU in 2004 plus Bulgaria and an innovative regional economy. from market globalisation, Romania) could create up to 2.5 − rapid advances in technology, million extra jobs and raise their The second priority for 2007 2013 environmental degradation, ageing GDP by between 10 and 16%. To is in provision of adequate basic populations, and unprecedented back up these forecasts there is infrastructure (such�� as transport, rates of social change. In addition, evidence that 250,000 jobs were telecoms and energy networks, the EU faces particular challenges created or maintained in Poland water supply and environmental from the last enlargement of the over the last two years due to EU facilities).�� Investors will simply Union, which added 20% to its regional policy investments. not come to areas lacking basic population but only 5% to its GDP. infrastructure or hampered by low- All new programs are drawn up in quality public services. The number of people living in strong partnership with national, regions where GDP is less than regional and local partners, in The third priority is linked to 75% of the average is 118 million recognition of the importance of creating more and better jobs in the EU of 25, compared with the region in the face of global by attracting more people into only 69 million in the EU of 15. At competition. employment or entrepreneurial the extreme of regional disparity, activity, improving the adaptability the area of inner London has GDP Priorities for 2007−2013 of workers and enterprises, and per capita almost 10 times higher increasing investment in human than that of the poorest region in The first regional priority for capital. It is also promoting social eastern Poland. 2007−2013 is encouraging inclusion to create new sustainable innovation, entrepreneurship jobs in disadvantaged regions, cities Globalisation is not a new and the growth of the knowledge and rural areas. phenomenon, but the rate and economy, including new extent of economic change is information and communication Regional policy funding is available unprecedented and it impacts on technologies. Europe’s businesses to every EU region. This is because most remote regional communities need innovation and the ability to it is about local leadership and in the EU. In an open economy apply innovation to stay ahead in creating new jobs from local ideas competitiveness no longer the globalisation game. Regions to produce successful, vibrant, self- relates just to costs or natural lend themselves to development reliant regions. A significant share or geographical advantages, but strategies incorporating value-add of EU regional policy resources to the capacity to create new and innovation. This is because goes to regions that may not be the goods and services in response to most of the resources essential for poorest, but where there is scope quickly changing market needs. innovation — regional technology for improving the performance Building this capacity requires centres, research institutes, of the regional economy more sophisticated and complex innovative small and medium — for example, in areas that have approaches to development. enterprises, bodies providing undergone substantial industrial financing — are located within restructuring. In response to these challenges the a region. Short distances make The ultimate goal of regional EU is implementing strategies for the regional level appropriate for development funding interventions About the author is to foster the idea of European solidarity and give people belief Dr Danuta Hübner is currently the EU’s that they themselves can find Regional Policy Commissioner. Before an answer to the impact of joining the European Commission she had a globalisation on their lives and distinguished academic career in economics businesses. and international trade relations, and served the Polish government in the Ministry of Industry For more information and Trade and as Head of Chancellery. ec.europa.eu/regional_policy/ index_en.htm.

Regional policy directions 2. Regional policy and competitiveness in OECD countries Odile Sallard and Andrew Davies Identifying opportunities KEY MESSAGES A region’s competitive advantage • The publicly funded production subsidies and incentives of the may be conceptualised as how the 1970s and 1980s generally failed to deliver sustainable regional bundle of attributes of a region development. help or hinder economic activity in • New regional policies in OECD countries emphasise principles of an open economic system. opportunity, endogenous assets and competitiveness. • Integrated cross-ministerial policy frameworks support clusters and The location and nature of regional innovation systems. economic activity is emerging as • Cooperative rather than hierarchical governance structures and a major issue for policy-makers at partnership working arrangements underpin the new regional both national and regional level. As strategies. the share of manufacturing in total economic activity has fallen, many • These approaches are now being incorporated into rural regional production centres are development policy and initiatives in a number of OECD moving away from manufacturing countries. towards new specialisations and niche activities. Drawing on a series of recent reviews of regional policies in OECD member countries, the authors outline trends in regional policy across the OECD, and The evolution is particularly provide examples of strategies and governance arrangements being used to rapid in high tech industries, implement the policies. but these industries represent only a small fraction of most Evolution of regional the 1980s and 1990s. regional economies. Globalisation policy also creates opportunities in In recent years regional policy has ‘mature’ industries. Traditional Regional policy began in most re-emerged with new emphases. car producers like Turin or OECD countries in the 1950s Although change is not uniform, Gothenburg, for example, are still and 1960s, a period of relatively the general policy shift is involved in the automotive sector, strong economic growth, fiscal characterised by: but their areas of expertise are expansion and low unemployment. increasingly in non-manufacturing The policies aimed to introduce 1 an emphasis on opportunity or niche activities (transport- greater equity through wealth rather than on disadvantage, related GPS technology or safety redistribution and large-scale involving a shift away equipment respectively). public investments. from redistribution and subsidies for lagging regions Small and medium-sized During the 1970s and early 1980s, towards measures to increase enterprises (SMEs) can also successive economic shocks and productivity of enterprises and capitalise on their regional changes in the global economy encourage private investment in environment to create new led to regional concentrations of all regions; opportunities that take advantage unemployment in many countries. 2 a focus on making better use of of niche markets. For example, Regional policies that favoured endogenous assets, rather than the cluster initiatives of the UK production subsidies and incentives on trying to attract investment Regional Development Agency evolved to meet these challenges. from outside; and Yorkshire Forward have upgraded However, these large allocations of 3 strategies that enhance the region’s fishing and bakery public funding generally failed to competitiveness through industries to develop higher value- help individual sectors or lagging interventions in a wide range added products, then enhanced regions to catch up, and regional of direct and indirect factors transport links to get the products policy initiatives declined during affecting regional performance. to market quickly.

Regional policy and competitiveness in OECD countries Enhancing These are typically smaller Clusters and related competitiveness city regions that traditionally policies specialised in a now- With the new emphasis on Leaving aside input factors that declining sector. They need innovation and better use of are either national or a function competitiveness policies that local knowledge and technology, of location, OECD work suggests emphasise transformation of two basic groups of factors that attention has focused on regional labour force skills and industrial assets, and especially on the can be influenced by policy: (1) specialisations. those directly related to economic industrial, research and skill 3 Specialised (light) strengths of regions and how these activities (principally related to manufacturing regions. Other can be better exploited. economies of agglomeration) and regions, often with moderate (2) those that have an indirect population densities but dense The place of clusters in global influence on economic activities infrastructure networks, achieve value chains is not yet fully (principally related to economies of understood. To date, most if critical mass in a limited ‘urbanisation’). not all of the highly coveted number of economic sectors. innovative clusters, such as those in OECD’s recent regional They need to maintain and information and communication reviews highlighted at least four enhance the regional assets that technologies or biotechnology, types of regions with different support their relatively high have emerged without specific characteristics with respect to these productivity. policies to promote networking or factors, resulting in related but 4 Rural regions. Finally there cluster behaviour. different policy needs. are regions where neither A new OECD report on national population and infrastructure cluster policies shows changes in 1 Knowledge activity oriented nor particular forms of city regions. Examples where three important policy areas from corporate structure offer a top-down, single-sector approach an innovation-oriented strategy opportunities for external towards cooperative, multi-actor has been a key element in their economies or above-average and often more place-based success include the Helsinki, rents. Growth for these regions approaches (Table 1). These trends Oresund, Seoul and Montreal may depend primarily on the support regional specialisation and regions. value of their environmental cluster development policies and 2 City regions in transition. assets. programs.

Table 1: Policy trends supporting clusters and regional innovation systems Policy stream Old approach New approach Cluster program focus Regional policy Redistribution from Building competitive • Target or often include lagging regions leading to lagging regions by bringing • Focus on smaller firms as opposed to larger firms, if regions local actors and assets not explicitly then de facto together • Broad approach to sector and innovation targets • Emphasis on engagement of actors

Science and Financing of individual, Financing of • Usually high technology focus technology policy single sector projects collaborative research • Both take advantage of and reinforce the spatial in basic research involving networks with impacts of R&D investment industry and links with • Promote collaborative R&D instruments to support commercialisation commercialisation • Include both large and small firms; can emphasise support for spin-off start ups

Industrial and Subsidies to firms; Supporting common • Target the ‘drivers’ of national growth enterprise policy national champions needs of firm groups • Support industries undergoing transition and thus and technology shedding jobs absorption (especially • Help small firms overcome obstacles to technology SMEs) absorption and growth • Create competitive advantages to attract inward investment and brand for exports

Regional policy directions Governance structures opposed to hierarchical structures and economies of scale available in require approaches that promote the private sector. The regional environment in synergies between different which firms are located plays an economic players; encourage important role in influencing their Integrated rural regions to be proactive, while development approaches productivity. This includes a range maintaining coherence in national of factors that either encourage or policy; bring together different The new approach to regional inhibit business activity: quality funding sources; and expand policy has impacted on how rural of transport and communications cooperation across jurisdictions to development is approached in infrastructure, local tax rates, build ‘critical mass’ in regions. OECD countries. Designing rural efficient provision of public development policy for different services, availability of land and Some countries are using closer communities or territories involves affordable housing, the standard of cooperation and mergers among pooling the knowledge held by a educational institutions, and so on. municipalities to support regional wide variety of public and private strategies. Public−private actors across a large geographical Cooperative governance partnerships are also being used to area. The accompanying box structures are being used to split the costs and risks of projects gives examples of initiatives that enhance local and regional between the public and private illustrate this integrated approach competitiveness. Cooperative as sectors, tapping into the expertise to rural policy. Examples of integrated rural development policy For more information approaches in OECD countries email: [email protected]

• Canada's decision to apply a ‘rural lens’ to its policies, programs and services About aims to ensure that rural priorities are taken into account in developing the government policy, and that there is policy coherence between ministries on rural objectives. The Community Futures Program promotes bottom-up authors economic development in rural areas. Odile • Finland’s multi-year Rural Policy Program seeks to draw attention to the Sallard is specific needs of rural areas with ‘broad’ policies that integrate these needs a French into central government decision-making in different sectors, and ‘narrow’ national policies that specifically target rural areas. who holds • The Mexican Micro-regions strategy adopts a holistic approach to rural degrees in economics, business development by coordinating policy initiatives directed to 263 rural micro- administration and accounting. regions with a high level of marginalisation. Every micro-region contains Mrs Sallard worked in the a Strategic Community Centre around which actions are focused based French Ministry of Finance on priorities established through a highly participatory community-based process. before joining the OECD. She is currently Director of • The Netherlands ‘Agenda for a Vital Countryside’ introduced important the Directorate for Public changes in the Dutch approach to rural development. While this Agenda details the national policy targets and budgets for the countryside, the Governance and Territorial regional and local authorities translate these policies into action and Development, and previously integrate them into local and regional development plans. occupied senior positions • The LEADER Community Initiative, one of the better known European in several other OECD rural development programs, was conceived as an integrated and Directorates. endogenous approach to rural development. The innovative program Andrew Davies is a specialist on delivered results in many rural areas despite a relatively limited budget. regional policy in the OECD’s KEY REFERENCES regional competitiveness and governance division. • OECD 2005, Building competitive regions: strategies and governance, Since joining OECD he has OECD Publishing (www.oecdbookshop.org) contributed to a wide range of • OECD 2006, The new rural paradigm: policies and governance, OECD projects relating to regional, Publishing (www.oecdbookshop.org) rural and urban development, • OECD 2006, ‘National cluster policies: why are they popular again?’, including innovation and cluster unpublished report. policies.

Regional policy and competitiveness in OECD countries 3. The new role for entrepreneurs in regional development Mark Drabenstott

KEY MESSAGES able to reinvent a region’s economy in tune with the rapid shifts in • Entrepreneurial activity has a strong impact on regional economic global markets. growth, especially in the long run. • Entrepreneurial activity has the greatest impact locally, but there Entrepreneurship, the second key are significant spillovers at the regional level. ingredient, involves taking new discoveries to the marketplace. As • Entrepreneurial activity has a bigger economic impact where old products reach a mature phase agglomeration is strongest. and competition intensifies, regions • Entrepreneurship policy needs an enduring home as part of need more than the fuel of new regional development policy. technologies and fresh ideas. They • Regional entrepreneurship support systems appear to be a also need entrepreneurial engines to promising way forward. drive new growth. Locally grown • In addition to creating conditions that support regional innovation, companies tend to provide more policy-makers must also create conditions in which entrepreneurs sustained economic impact, since the can flourish. wealth and control of the companies lies mostly in the region itself. This chapter summarises empirical evidence for the link between entrepreneurial activity and regional economic development, and discusses The two factors are inter- why policy-makers should be emphasising entrepreneurship as a regional dependent. Entrepreneurs need development strategy. new product ideas from the innovators, while innovators need New frontiers for 1 understanding the region’s the entrepreneurs to get their regional development critical economic assets; products to the marketplace. The policy 2 identifying the best market quest for regional competitive opportunities for the region; and advantage may be all about a more Throughout much of the twentieth 3 crafting a strategy that exploits purposeful, organised approach to century, regional development was innovation at the regional level. equated with industrialisation. the first to tap into the second. Public policies focused on The two critical ingredients in But while there are growing signs industrial recruitment strategies, this process are innovation and of a focus on innovation in three with governments and regional entrepreneurship. separate policy spheres (regional, administrators offering financial science & technology, and industrial incentives to attract firms to In a global market, where the cost or sectoral), there are relatively particular places. of producing basic products is few signs of a new emphasis on often several times lower in other entrepreneurship, at any level. Now that globalisation has opened countries, the key is to find the up trade with legions of new next new product, not compete on Entrepreneurial activity regions, often with much lower the old one. Innovation is the fuel and regional growth cost structures, this approach is to create the new products. problematic. There is strong agreement among A lot of innovation flows from economists that innovation, In future, every region on the basic research, but that is not entrepreneurship and regional planet must meet one basic enough. Each region needs to development are powerfully linked, challenge: the vigorous pursuit identify the strands of innovation but no one is sure exactly how. of a competitive edge in rapidly that work best in that particular changing global markets. region. Successful regions must be As yet there is no commonly Building and retaining that edge willing to invent and build new accepted definition of will involve: economic engines. The key is being entrepreneurship. In the eighteenth

Regional policy directions century entrepreneurship was developed to help understand counties. Thus, it is important to defined as self-employment with how entrepreneurial activity take a regional perspective that an uncertain return. Two hundred affects regional economic growth transcends individual counties years later Schumpeter described after controlling for other factors. when framing policy to grow more it as the process of creating With county employment entrepreneurs. new combinations of products, growth as the dependent variable, Thirdly, entrepreneurial activity processes, markets, or organisational the analysis investigated the has a bigger economic impact in forms, thus highlighting the link effects of independent variables regions with more agglomeration. with innovation. Most simply, such as entrepreneurial density, Policy efforts to foster more entrepreneurship can be regarded as entrepreneurial growth, labor entrepreneurs must therefore take the creation of a business. force quality, transportation into account a region’s level of infrastructure, agglomeration Recently, researchers have used critical mass, a finding of particular (density, metro designation, and data based on self-employment importance to rural regions, where adjacency to a metro), and local and new business starts to measure agglomeration is weak. entrepreneurship. Measures based taxes. on proprietors seem appropriate, The analyses showed three Implications for regional as they identify the self-employed important connections between development policy and are the simplest form of entrepreneurship and regional entrepreneurship. economic growth. Each has an There has been some previous When measures of entrepreneurial important implication for regional research on how to grow activity are plotted against development policy. entrepreneurs, but recognition of the direct link to regional measures of economic growth Firstly, entrepreneurial activity has development is much newer. Based it is clear that places that grow a significant impact on regional on these findings, three separate more entrepreneurs have stronger economic growth, and the impact aspects of entrepreneurship economic growth, and that this is greatest in the long run. This need new attention in regional occurs at national, state and suggests that entrepreneurship development policy: regional or county levels. Figure 1 must be an important feature of 1 Creating a home for shows one such plot of data for US regional development policy, but counties. that policy-makers must persevere entrepreneurship in regional if they want to capture the benefits. development policy. Empirical results 2 Developing a regional support Secondly, entrepreneurial activity system for entrepreneurs. Using a sample of data from has the biggest impact at the 3035 US counties for the county level, but there are critical 3 Building a regional bridge period 1991–2001, models were spillovers to neighbouring between innovation and entrepreneurs. Creating a policy home for Employment Growth (Wage and Salary: 1991-2004) entrepreneurship 20 If entrepreneurial activity has 15 a strong impact on regional economic growth, especially in the 10 long run, then entrepreneurship 5 needs to find a home in regional development policy. To date it has 0 largely fallen through the cracks of economic development policy. -5 At the federal level in the United -10 States, there has been a Small -15 -10 -5 0 5 10 15 20 Business Administration (SBA) for County Proprietor Growth (1970-1990) more than a half century, but most Calculations based on BEA, Regional Economic Information System data experts agree that entrepreneurship is a much broader concept than just Figure 1: County entrepreneurial growth and employment growth supporting small business.

2 The new role for entrepreneurs in regional development There are many ways to build must give attention to fostering innovation systems than in a home for entrepreneurship entrepreneurs at the regional level, fostering entrepreneurship. in federal economic policy. but this effort is complicated by There are virtually no policy One would be to expand the how much agglomeration is found links between innovation and scope of the SBA, giving it in a given region. entrepreneurship much broader scope to focus on The Entrepreneurial League Yet Audretsch & Keilbach’s entrepreneurs and the life cycle System is one approach that is recent work suggests that of small businesses, with special currently being developed in three entrepreneurship ‘not only triggers emphasis on fostering high growth regions of the US. It envisions a industrial restructuring, but entrepreneurs. support system that is systematic also supplies the missing link in Another possibility would in approach and regional in scope, economic growth’. Their analysis be to create an inter-agency created by philanthropies or public suggests that entrepreneurs are entrepreneurship policy group, agencies. Being systematic means important beyond the sheer recognising that supporting giving entrepreneurs access to the wealth and jobs they create. They entrepreneurs cuts across many full range of support they may point to Europe’s lower than federal agencies. Under this need to succeed: business plans, expected economic returns on what view, the principal issue is one accounting, legal, marketing, have been sizeable investments of coordinating what the federal production, and financial and in innovative research as one government is already doing. management skills. example of what can be termed an A third alternative would be to Financial capital is another ‘innovation paradox’. focus federal efforts on research key ingredient in fostering In short, entrepreneurship appears and resources, putting most of the entrepreneurs at the regional to be a critical policy complement programmatic emphasis at the level. Community development to the renewed interest in regional level, where some research venture capital funds, which may innovation. Regions understand suggests it belongs. be especially well suited to being that they must innovate in order Developing regional linked to regional competitiveness to compete in the new global strategies, are now found in more support systems economy. What they may only than 100 locations in the US. now be learning is that they must The empirical findings show Building a bridge also create conditions that help that entrepreneurial activity between innovation and entrepreneurs to flourish. has spillover effects that can be entrepreneurship For more information captured at the regional level. Moreover, the economic impacts Despite the strong link between www.kansascityfed.org/ of entrepreneurial activity are entrepreneurial activity and PUBLICAT/ECONREV/PDF/ greater in regions with more regional growth, a scan of 1q06drab.pdf and www.dotars.gov. agglomeration. It follows that recent developments indicates au/regional/forum/growing/index. regional development policy more policy interest in regional aspx KEY REFERENCES About the author • DB Audretsch & M Keilbach 2006, Mark Drabenstott (MS, PhD ‘Entrepreneurship, growth and restructuring’, Iowa State) is Director of the Rural Max Plank Institute Discussion Papers on Entrepreneurship, Growth, and Public Policy, Policy Research Institute’s Center #1306. for Regional Competitiveness • M Drabenstott 2005, A review of the federal role (University of Missouri-Columbia). in regional economic development, Federal Reserve This Center helps regions Bank of Kansas City, Kansas City, MO. throughout the United States develop • TS Lyons 2002, ‘The Entrepreneurial League strategies to compete in the global economic race. He System: transforming your community’s economy formerly served as Director of the Center for the Study through enterprise development’, Appalachian of Rural America at the Kansas City Federal Reserve. Regional Commission, August. During his 25-year career at the bank, Mark published • TS Lyons 2003, ‘Policies for creating an more than 150 articles on issues related to regional entrepreneurial region’, in Main streets of tomorrow: development. He currently serves as chairman of the growing and financing rural entrepreneurs, Federal Reserve Bank of Kansas City, pp97–105. OECD’s Territorial Development Policy Committee.

Regional policy directions 4. CENTROPE: A central European case study

Edward Bergman

KEY MESSAGES Prague Brno • Before 2000, the EU had successfully integrated 15 countries but generally failed to convert research results to wealth-generating Vienna Bratislava innovations, causing growth to lag that of the US. Linz • The so-called Lisbon reforms aimed at creating new jobs through .. Gyor Budapest innovation, entrepreneurship and sustainable development. Graz • Interactions at a regional level may be the key to successful implementation of these reforms. Source: www.centrope.com • CENTROPE is a cross-border multinational region that promises existing regions as legitimate, mutual benefits for all partners. quasi-independent policy agents. In the largest, most centralised This chapter summarises some key policy shifts within the EU, the paradox of nations the shifts required the stalled EU economy, and the Lisbon-led innovation reforms, then discusses establishment of an entirely new how CENTROPE reflects and builds on these reforms. layer of regional governance institutions. In extreme form, the CENTROPE (the Central EU nations and regions: key policy shifts EU has been seen by some as a European Development Region) ‘Europe of Regions’ rather than is a multinational region consisting simply a union of nations. of the three eastern Austrian In addition to enjoying economic provinces of Vienna, Lower benefits brought about by a large Austria and Burgenland, and common market and reduced tariff Lisbon strategy: 10 closely proximate regions in barriers, a primary objective of innovation-led reform the neighbouring countries of the EU was ever closer union of the Czech Republic, Slovakia member states to avoid another Despite the potential of the and Hungary. Included in these European war and promote peace world’s largest consumer market four countries and 13 regions are and prosperity. Cohesiveness to stimulate EU growth and the twin capital cities of Vienna policy measures reflect this prosperity, locally valued GDP and Bratislava, and a combined objective. Convergence is a related, per capita remained stalled in population of approximately 7 longer-term objective that aims the 1990s at around 70% of the million. at narrowing economic and social US, while growth rates in the differentials among EU member EU remained about two-thirds The region has a long common states and regions. the US, and the EU ‘growth gap’ history and heritage as part of relative to world growth expanded the former Austro-Hungarian Convergence among nations steadily from minus 1 to minus 4 empire. The regional development is far more difficult to produce percentage points. alliance was brokered by provincial than convergence among regions. leaders two years before the 2004 This fact is reflected in the The term European paradox expansion of the European Union establishment of EU Structural was used to refer ‘to the fact that (EU), without significant assistance Fund programs that work down Europe plays a leading world role or hindrance from any of their through national administrations in terms of scientific excellence respective national capitols. to regional bodies. Regional and the provision of highly skilled competitiveness has recently been human capital. But it largely fails But why would such a regionally- added to the earlier objectives to convert science-based findings based initiative, which links a of advancing cohesiveness and into wealth-generating innovations’ western nation with three former convergence. (Gassler et al., 2005). Soviet eastern European republics, come about in an era of growing These policy shifts have greatly In 2000, European leaders European national union? strengthened the importance of committed the EU to become

CENTROPE: a central European case study by 2010 ‘the most dynamic and Its lesser axes connect nodes of Neighbouring ‘idea bank’ competitive knowledge-based the neighbouring subregions, effects represent a stock of economy in the world capable of across which there are highly measures that remain available sustainable economic growth with heterogeneous conditions. to constituent CENTROPE more and better jobs and greater regions that observe over time social cohesion, and respect for the CENTROPE logically extends how neighbouring regions environment’. The Lisbon strategy, a range of important political arrange basic institutions to solve as it has come to be known, was a sentiments and historical problems and engage in effective comprehensive but interdependent linkages. Its founders foresaw a practices. series of reforms. variety of potentially beneficial economic effects of close regional A good example of delayed The Lisbon strategy covered cooperation in development. innovation practices among the a broad spectrum of areas EU-10 countries is the continued including innovation, continued Mass effects could result reliance on Academies of Science liberalisation, entrepreneurship, from changes made possible as principal agents to promote employment and social inclusion, by the gradual integration of interaction between research sustainable development and common key components of the institutions and businesses. Over environment. CENTROPE economy. time this may change, as the ex- Soviet CENTROPE partners Successful implementation of The potential division of recognise the advantages of Lisbon reforms may depend labour/market scenario would be Austria’s decentralised university heavily on interactions at augmented by a range of EU-type research model. the regional level. Innovative trade spillovers among intra- interactions frequently involve industry supply chains, strategic Regional innovation: cross-border interactions. Those cross-border foreign direct another paradox? who research local knowledge investment, and scalar efficiencies spillovers, industrial districts, of common services and The extraordinary importance clusters, regional innovation infrastructure within a proximate placed on innovation as a Lisbon systems and the like, are now daily regional system. keystone is also reflected in starting to replace concepts of regional development policy Cross-border interaction national innovation systems with thinking. Some have argued effects arising from initial more scalar-relevant regional that funds made available to the innovation systems. complementarities and less-developed regions where specialisations within innovation lags and is needed Why CENTROPE? CENTROPE seem likely most are the same regions least to propel further change and able to absorb or use funds Austria’s western and northern development through routine productively. regions have historically benefited processes of organisational (lower unemployment, higher benchmarking and upgrading. Others argue this is less a paradox incomes) from their proximity to than a reflection of the fact that Germany and Switzerland. Since While often driven by best innovation is based more on much of pre-1989 eastern Austria practices deployed by the locally favorable preconditions, was effectively cut off by its closed most advanced neighbour, including knowledge-intensity borders from Europe’s vigorous transition partners sometimes of basic business practices, or post-WWII recovery, strong ‘leap-frog’ ahead. For example, the local capacity to spend interests and pressures have come expenditures on information and development funds effectively for together to take fullest advantage communication technologies any purpose. of economic relations with its are now moving ahead among new-EU-member neighbours. the CENTROPE new member Sometimes, more basic countries. And Slovakia is leading development preconditions must CENTROPE can be considered the region in new science and be tackled first. For example, a twin or polycentric city engineering graduates, which in Slovakia essential taxation region, its main axis positioned may be a key to its successful reforms, pension systems, fiscal between Vienna and Bratislava. transition. decentralisation, and liberalisation

10 Regional policy directions of business environments and complementary capacities KEY REFERENCES labour markets must be initiated to diffuse and commercialise before funding of R&D and innovations arising at various • EM Bergman, G Maier & innovation will be successful. points throughout the region. M Vyborny 2006, ‘Venturing jointly: Vienna’s innovation This means that CENTROPE’s economy’, Transition Studies various subregions will have An ongoing experiment Review 13(2). different priorities, which imply At this stage, CENTROPE • Cordis 2005, ‘Regions: varying stages of innovation represents simultaneously a major the building blocks of a readiness and resources. At the experiment in integration of EU- “European Innovation Area”’, same time, key differences will 10 regions and of regional-level Cordis News, 2005-06-09. remain a permanent feature Lisbon initiatives. Developments • H Gassler, A Havas, W Polt, of CENTROPE because underway there may provide useful A Schibany & F Steyer 2005, innovation knowledge is contrasts with other cross-border New frontiers in European generated disproportionately in regions within EU-15 countries. RTD policy: a response to some subregions and deployed Scholars and EU policy analysts Europe’s disappointing growth disproportionately in others. will be paying close attention performance? Joanneum Research, Vienna. This is true within the east to its progress for evidence of Austrian regions as well as development paths. CENTROPE • W Kok 2004, ‘Facing the CENTROPE as a whole. As is worth observing, both as a challenges: The Lisbon it would make little sense to functioning laboratory and as an strategy for growth and replicate costly innovation ongoing case study of what may employment’, EC Report capacities in all its subregions, work, why, and to what degrees. of High Level Group, Luxemburg. Vienna is destined to continue For more information as CENTROPE’s primary innovation node, with www.centrope.com

Vienna About the author Professor Bergman chairs the Institute for Regional and Environmental Economy in the Vienna University of Economics and Business Administration. He maintains an active research program, ranging from basic research to policy studies for organisational clients and partners. Recent research and publications focus on technological diffusion, industrial clusters, regional innovation systems, and

infrastructure. Bratislavia

CENTROPE: a central European case study 11 5. Regional innovation and public policy: Ireland’s medical technology cluster

Roy Green and Johanna Fahy

KEY MESSAGES

• Galway's medical technology sector illustrates Ireland's remarkable success in attracting foreign investors to create jobs and a vibrant economy. • However, this success has been built on imported technologies rather than local innovation. • To transition to a competitive knowledge- based economy Ireland must Galway Bay, Ireland build its regional innovative capacity. High-technology and knowledge- This is a direct result of a national • It can do this through intensive sectors are the primary strategy to encourage regional increased public investment source of this economic success. investment by granting more in higher education and The growth of these industries favourable packages to FDI firms R&D, and promotion of was driven by a strong export locating outside Dublin. university–government– orientation, led by a high level of industry partnerships. inward foreign direct investment Galway, the west of Ireland’s largest (FDI) and the dominant role of city and one of the fastest growing This chapter examines the recent multinational companies (MNCs) population centres in Europe, emergence of the highly successful in the key knowledge-intensive is now also described as ‘one of medical technology cluster in Galway, industries of information and Europe’s leading industrial clusters’ Ireland, in the context of the growing communication technology (ICT), (J Murray Brown, ‘Galway gets to literature on industrial clusters, pharmaceuticals and medical the heart of the matter’, Financial its further evolution as systems of technology. Times, 10 February 2005), as it innovation, and the related emphasis is home to three of the top four A significant proportion of this on the role of FDI in these systems at companies in the field of stent- FDI has gone towards establishing a regional level. making with support from rapidly a world competitive medical evolving supply chains of small to technology sector. Ireland now medium enterprises (SMEs). Ireland: an OECD has the biggest concentration of success story medical technology employment in Initially, MNCs locating in the Europe, with the sector as a whole Over the past 20 years, Ireland has west of Ireland were attracted by employing approximately 20,000 a low corporate tax rate and other transformed from a predominantly people in over 100 companies. agrarian society to an emerging special incentives, and established knowledge-based economy, Galway’s medical low-tech manufacturing sites. Once performing exceptionally well technology sector established, they were encouraged by historical standards and by the policy agencies, particularly international comparisons. Between There are clusters of medical IDA Ireland and Enterprise 1993 and 2003, Ireland experienced technology employers throughout Ireland, to ‘move up the value chain’ the fastest employment growth in the country, but especially in to encompass more knowledge- the OECD. Galway in the west of Ireland. intensive activities.

12 Regional policy directions A ‘technology-taker’ Is Ireland’s growth a range of initiatives to make economy sustainable? Ireland an attractive environment for world-class research; provide The heavy reliance on FDI for the Can Ireland sustain the momentum a strong intellectual property development of a knowledge-based of its remarkable economic management framework; realign economy has meant that, while transformation into the next enterprise support budgets and Irish exports embody a relatively decade? Or are the foundations services towards R&D; introduce high technological and R&D- of this success too narrow and tax credits for R&D investment; intensity, these technologies are precarious to respond effectively and develop a pro-innovation largely generated elsewhere, at the to changing patterns of global culture. home base of the FDI companies. competition? These are the crucial questions as Ireland embarks on The government has commenced Ireland has been promoted its next transition: from a low-cost the process of building Ireland’s consistently as a platform for low- magnet for foreign investment in research and innovation capacity cost manufacturing, especially for Europe’s evolving single market with the introduction of a host of the European market, and has only to a more self-confident and strategic funding initiatives and the recently begun to prioritise R&D diversified knowledge-based appointment of a Chief Science activity and content. economy, where competitive Adviser. However, its universities advantage has its source in local have suffered from decades of Similarly, in the services sector research and innovation. underfunding and neglect. Ireland’s Ireland has been used by FDI R&D expenditure is well below the companies as a site for duplication Ireland’s remarkable economic EU’s ‘Lisbon target’ and OECD and localisation of software for success has been traced to a averages. Its policy-makers now global markets, with the paradoxical number of strategic factors, face three major challenges in outcome that it has become the including the targeting of FDI, transitioning to a competitive biggest ‘exporter’ of software in the the associated growth in global knowledge-based economy. world. markets and favourable framework conditions such as the corporate tax Firstly, greater policy coherence In other words, Ireland has become regime, social partnership policy, is required across the myriad a ‘technology taker’ through net development of the skills base government departments and imports of R&D as opposed to and demographic profile, and the agencies concerned with research a ‘technology maker’, with an effective deployment of European funding and performance. This is emphasis on products and services Union (EU) Structural Funds. more than a tidying-up exercise, as embodying local R&D. This it implies setting clear, consistent However, the fact that its success characteristic of Ireland’s recent objectives and related delivery has been founded on technologies economic development reflects low mechanisms in close cooperation invented elsewhere rather than levels of investment in knowledge, with the universities and other on locally generated innovation public institutions. as measured by expenditure threatens to undermine its on R&D, software usage and achievements. The Irish economy Secondly, immediate action is higher education, compared with is vulnerable because control of the needed to address the serious other aspiring knowledge-based key technology drivers is outside infrastructure deficit in Ireland’s economies such as Finland. domestic influence. higher education institutions, which have not performed credibly Irish research funding agencies have Policy implications and in recent world rankings. now begun to address the problem responses of under-funding of research, and Thirdly, even with substantially the National University of Ireland Framework conditions in Ireland increased funding for research at Galway has recently received have traditionally focused on and infrastructure, there is a several large awards for medical encouragement of employment further challenge: effective technology research, and support growth and the reduction of intellectual property protection for intellectual property protection unemployment. In recognition of and the development of world best and commercialisation of research the threats facing the economy, the practice in technology transfer and findings, in partnership with policy emphasis is now changing commercialisation, to link research industry. towards an innovation focus, with to the market.

Ireland’s medical technology cluster 13 The literature on industrial clusters KEY REFERENCES About and national and regional systems the • Department of Enterprise, of innovation provides pointers authors for Ireland’s policy-makers. Trade and Employment In particular, Michael Porter’s 2003, Review of industrial Professor national innovative framework performance and policy, Green is relevant in this context. The DETE, Dublin. (BComm concept is built around three • Enterprise Strategy Group Adel., PhD strands: the theory of endogenous 2004, Ahead of the curve: Camb) is knowledge and ideas-driven Ireland’s place in the global Dean of growth, microeconomic models economy, Forfás, Dublin. Macquarie of national competitive advantage • R Green et al. 2001, Graduate School of based on an understanding of ‘The boundaryless Management. He has worked in industry clusters, and the rich cluster: information and universities and government in national innovation systems communications technology Australia, the UK and Ireland, literature. in Ireland’, in E Bergman, D published widely in the areas Charles & P den Hartog eds, of innovation, industry policy The argument presented here, Innovation clusters: drivers of and regional development, evidenced by the development national innovation systems, and served on public bodies of an outward-looking medical OECD, Paris. and undertaken projects with technology sector, is that Ireland’s industry and organisations • R Green & R Hilliard 2004, future competitiveness and such as the OECD, European ‘Governance and institutional prosperity will depend on building Commission and Enterprise change in Ireland’ (Paper national and regional innovative Ireland. Most recently he for OECD Innovation capacity. was Dean of the Faculty of Systems Project), Centre Commerce at the National For more information for Innovation & Structural University of Ireland, Galway, Change, Galway. mail [email protected] where he established the Centre • M Porter 1990, The for Innovation & Structural competitive advantage of Change (CISC) and J E nations, Macmillan, London. Cairnes Graduate School of • M Porter 1998, ‘Clusters Business & Public Policy. and the new economics of competition’, Harvard Ms Fahy works in the CISC, Business Review, Nov-Dec, National University of Ireland, pp77–90. Galway. • M Porter & S Stern 2001, ‘Location matters’, MIT Sloan Management Review, Summer, pp28–36.

Traffic to Galway Bay

14 Regional policy directions 6. Regional development in China: public policy and market influences Ligang Song

KEY MESSAGES Determinants of The policy reforms of the post- regional disparities 1978 period were aimed at • China's central and transforming the country into a western regions are lagging The Chinese government’s ‘socialist market economy’. significantly behind the economic and strategic objectives eastern coastal provinces have always given significant There were two regional in market-oriented priority to regional development. dimensions of this strategy: development. firstly, marketisation has freed up During the three decades of Soviet- • Accelerated development of prices, opened up the economy style central planning there was a the western region requires to the outside world, and allowed shift in economic focus from coastal government investment factors of production to move areas to the interior, followed by in both communications more freely across sectors and infrastructure (transport and a shift back towards coastal areas regions. Secondly, progressive telecommunications) and from the late 1970s when the decentralisation has increasingly human capital (education). economic reform era began. skewed the decision-making process towards provincial (local) • Additional reforms to The growth pattern of China’s governments, firms and individuals. commercialise agriculture, provinces over the past two and a reduce barriers to rural– half decades may be understood As efficiency considerations took urban migration and in the context of reform, structural priority over equity concerns, the promote an integrated labour changes taking place in the Government promoted most rapid market are also needed. economy and, importantly, the development of China’s coastal • A stronger private sector and underlying thinking of the region, with its better access to improved fiscal capabilities leadership about the trade-off international trade. The Chinese will also be critical in between efficiency and equity. leadership felt that allowing some reducing local protectionism regions to develop first would and promoting SOE reform. Reform and regional increase the size of the total This chapter presents the latest development economic pie, enabling other regions to catch up later. pattern of regional growth in China, During China’s central planning reviews the determinants of regional period resources were allocated Growth, poverty reduction income disparities, and examines the predominantly according and regional inequality effectiveness of government strategies to planning and strategic in reducing these disparities in China. The rapid post-reform economic considerations. This led to growth contributed greatly to Starting from a very low level inefficiencies in the use of resources, an overall reduction of poverty of per capita income, China has especially for projects established in incidence in both rural and urban grown exceptionally rapidly over inland regions with little reference areas of China. The greatest the past two and a half decades, to economic viability. concentration of poor people is now with average incomes growing in China’s remote western provinces. faster than anywhere else in the The high concentration of state- However, other significant regional world. However, the economic owned enterprises (SOEs) in income inequalities persist. benefits of that growth have not some inland provinces made it been distributed equally among more difficult to restructure local Rural–urban inequality has been China's regions, with development widening, despite the large-scale economies after that period. In of the eastern region outstripping migration of labour from rural that of both the central and western addition, institutional barriers to urban areas during the 1990s. regions. These inequalities raise such as the household registration Urban poverty is also on the rise a number of questions about the (hukou) system restricted the as a result of economic reform and patterns of regional growth, the cross-regional mobility of factors increased openness to foreign trade underlying determinants of regional of production, especially labour, and investment. Income inequality disparities, and approaches to preventing regional integration has also widened within rural areas, reducing these regional disparities. from taking place. in part due to the unfair burden of

Regional development in China 15 Marketisation, local protection and regional disparity Despite more than two decades of economic reform, China has not yet achieved the goal of forming an integrated market and releasing the free flow of goods, capital, labour and other factors of production to their most efficient uses, thereby maximising the country’s potential for growth and development. The relative share of the state and non-state sectors in the total economy is one indicator of progress of market-oriented reform. In contrast with the eastern provinces, the western region has a high concentration of SOEs, making it agricultural taxes on poor farmers, western regions is an important part more difficult to restructure the state which are being progressively of the strategy to narrow regional sector. Its lack of a well developed abolished. In addition, the excess income disparities. private economy exacerbates its supply of labour in rural areas acute problem of re-employment of has hampered agricultural labour However, if China continues to workers laid off from SOEs. productivity and led to slow growth urbanise at the current pace, its Decentralisation, local in agricultural incomes. urban population will increase protection and regional Geography, transport and by 300 million over the next 20 inequality spatial development years. This scale of urbanisation is unprecedented in human China’s fiscal system is highly The advantage of location history. An enormous amount decentralised, with five levels constitutes an important driving of investment will be required to corresponding to the governmental force underlying the agglomeration accommodate the increase in the structure of central, provincial of economic activities in the eastern urban population, ensure continued (municipality), prefectural, county region. Western provinces are economic growth, and manage the and township governments. Under disadvantaged by their distance the tax-sharing system introduced social problems caused by large, from the major industrial and in 1994, all taxes are assigned to floating populations of migrants in commercial centres and seaports either the central or local level of the cities. of the east coast. Except for a few government, or are shared. provinces like Sichuan that have Regional structural Fiscal decentralisation can have access to major river systems, the differences western provinces have to rely on both positive and negative effects poorly developed railways and roads Cross-regional differences in on growth and development. for trade and market access. industrial structure reflect regional One consequence has been the differences in per capita income and widespread practice of local Population, migration and protectionism as local governments capital per worker. A region’s per seek to increase their tax base urbanisation capita income increases when its under the tax-sharing-system by industrial structure shifts away from Economic reform and the associated protecting local industries. institutional changes have led agriculture towards manufactured Regional public finance and to a scale of migration that is and service-based industries. unprecedented in recent history, And an increase in capital per fiscal capability especially from the interior to the worker through either market or Public finance plays an important coastal provinces and from rural to government channels will enhance role in regional development urban areas. Accelerating the pace a region’s structural change towards because it covers expenditures of urbanisation for the central and high value-added industries. in areas that contribute greatly

16 Regional policy directions to regional disparity, such as in education, and within regions, regional wage disparities, abolishing infrastructure, public utilities, health, in urban over rural education. This the household registration system unemployment benefits, social lack of investment in human capital to increase labour mobility; curbing security and welfare, and education. has undoubtedly hampered the local protectionism to reduce labour There are huge differences across capability of inland provinces to market segregation; and eliminating regions in fiscal capability, both conduct technological diffusion, rural–urban discrepancies in social at central and lower levels of transfer and imitation. A more security protection would all make government, which are constraining balanced investment in both human positive contributions. development, especially in the west. and physical capital is needed. The fiscal system is already Openness to trade and Market-oriented versus characterised by very large foreign direct investment public policy approaches revenue flows between all levels Both foreign trade and foreign direct of government. Many problems investment (FDI) are closely linked It is clear that China needs an remain in current intergovernmental to regional growth and development. institutional and policy environment relations and sub-national finance Export growth causes economic in which a more equitable and that need to be addressed, but it is growth in two ways: by increasing balanced pattern of regional growth also essential that local governments investment (capital accumulation) can be achieved and sustained. become more efficient and and by enhancing efficiency. Government policy measures accountable. are needed to help overcome At present, the central and western the geographical obstacles to However, Government’s role in regions’ shares of trade and FDI trade, through investment in reducing regional income disparities are falling relative to the eastern communications infrastructure cannot be treated as a substitute for provinces. To overcome this they such as roads, railways, waterways the functioning of market forces. will need to review their economic and telephones, and to improve The private sector should be allowed structure, degree of openness and human capital through increased to play a more important role in policy environment. investment in education in the restructuring regional economies in western region. areas such as SOE reform, reducing Education, skills and regional local protectionism and inducing inequality Agricultural sector reforms, structural adjustment in industry. especially grain market reform, There are considerable regional The challenge is to distinguish what have begun to produce positive differences in the stock of human government should and should not outcomes for farmers’ incomes. capital, with the distribution of do. The ongoing market-oriented education increasingly skewed across China also needs to further reduce reform process and associated regions. This is largely because barriers to migration and enhance institutional changes should current policies favour investment the development of an integrated help China make the necessary in physical capital over investment labour market. Eliminating distinctions. KEY REFERENCES About the author • Fang Cai, Dewen Wang & Yang Du 2002, Associate Professor Ligang Song is Senior ‘Regional disparity and economic growth in China’, China Economic Review, 13(2–3), Fellow and Director of China Economy and 197–212. Business Program in Crawford School of • Ross Garnaut, Ligang Song, Yang Yao & Economics and Government at Australian Xiaolu Wang 2001, Private enterprise in National University. He teaches graduate China, Asia Pacific Press, Canberra. courses in trade, development and the Chinese • Ross Garnaut & Ligang Song (eds) 2003, China: new engine of world growth, Asia Pacific economy. Research interests include international trade studies, Press, Canberra. the Chinese economy and regional economic integration. He has • James J Heckman 2005, ‘China’s human published widely and consulted on several projects concerning capital investment’, China Economic Review, the development of the private sector and privatisation of SOEs 16(1) 50–70. • World Bank 2002, China national development in recent years. and sub-national finance: A review of Acknowledgments: provincial expenditures, Report No. 22951- CHA, Poverty Reduction and Economic This is an adapted version of a paper in a forthcoming book titled Management Unit, East Asia and Pacific The dynamics of regional development: The Philippines in East Asia, Region, World Bank, Washington DC. A M Baliscan & H Hill (eds), Edward Elgar, 2006.

Regional development in China 17 7. Competition policy and regions: the Australian example

Allan Fels

KEY MESSAGES This principle applies to regional mergers, abuse of market power, as well as national markets, though and misleading or deceptive . Australia's National there may be particular issues that conduct. Competition Policy aims need to be taken into account in to increase productivity, applying national competition Authorisation is a process innovation and economic policy to regions. whereby the ACCC has the power growth by promoting to grant immunity from court competition that is in the Competition policy is about action for certain practices that public interest. ensuring that a country’s legislative would otherwise be in breach of . The public interest and trade practices environment the Act. The authorised agreement provisions are used to allows free trade in goods and or conduct must result in a benefit authorise practices that services, and that restrictions on to the public that outweighs might otherwise breach competition that are not in the any anticompetitive effect. The NCP, and to grant public interest are removed. The ACCC must look at the effect on competing companies access national focus is likely to be on competition in the market overall, to essential infrastructure removal of anticompetitive laws not at the effect on individual facilities. and anticompetitive monopoly competitors. An example is authorisation of collective . The removal of cross- structures. Minimisation of bargaining by farmers. subsidies and monopolies anticompetitive state aids is a rather than trade major feature of competition law in Europe. In general, the vigorous application liberalisation has been of competition law in Australia widely blamed for adverse Australia has been hailed for brings significant benefits to rural effects of structural change the success of its National and regional Australians. and adjustment in rural and Competition Policy, but there regional areas. As part of their commitments has been a considerable rural . under NCP, all Commonwealth, Innovative applications backlash against it. The impact of competition law can State and Territory governments of competition law and policy on help rural and regional undertook to review and Australia’s regions is discussed here. Australia make the necessary change legislation that restricts adjustments and become competition, unless those more competitive. Australia’s National restrictions were found to be in the Competition Policy public interest. This chapter discusses reasons for The National Competition Policy the rural backlash against National The reviews must be open and (NCP) was established in 1995 Competition Policy, and presents some transparent, and apply to all sectors to enhance Australia’s innovation of the benefits of competition policy and all levels of government. While and economic growth and to for rural and regional Australia. the reviews have brought general raise productivity by promoting economic benefits, there has been Competition and the competition that is in the public resistance to some, such as those global economy interest. It is applied through an of rural marketing boards. There extension of the Trade Practices have also been impacts on cross- In today’s world of the global Act. subsidies, which are discussed economy, virtually every country below. relies on markets. This Act, administered by the Australian Competition and As part of the reforms, Australia Competition policy is needed to Consumer Commission (ACCC), adopted access laws regarding make markets work efficiently. prohibits cartels, anticompetitive ‘essential facilities’. These rules

18 Regional policy directions establish a legal right of third services has followed, based on to the relatively small population parties to share the use of legislated access to the underlying and large distances between certain infrastructure services on infrastructure. In general, rural and population centres. reasonable terms and conditions regional businesses and individuals where it would be uneconomic have benefited from these changes National competition policy rather to develop another facility, and in the longer term. than trade liberalisation has been where access is needed to promote blamed for some structural change, competition in another market. In Supporting rural and even though the changes are not some instances the access rules can regional change caused primarily by competition threaten cross-subsidies. policy. Some monopoly providers Like all regions, rural and regional have been particularly active in Before the introduction of NCP, Australia has undergone massive stirring up opposition to the policy. cross-subsidies were a common structural change in recent decades, feature of the pricing of delivery arising from demographic changes, In contrast, competition law can of telecommunications, postal, gas, changing patterns of demand, and be applied to assist the typically water, electricity and other essential changes in supply factors such less competitive rural and services to rural and regional as energy prices and technology. regional markets in making the customers by mainly government- The agricultural sector in necessary adjustments to structural owned monopoly providers. particular has been affected by low change. Other issues that need income, elasticity of demand and to be explored include the role In some instances a service may be technological improvements. of education, the encouragement most efficiently provided to a given of clusters and the dynamics of area by a single enterprise. In other Adjustments to structural changes economic growth. instances competition policy has can be particularly difficult for For more information broken up anticompetitive markets regions that have few resources and limited anticompetitive or service opportunities to drive www.accc.gov.au behaviour. Widespread growth. Services are relatively poor privatisation of delivery of essential in rural and regional Australia, due www.ncc.gov.au

About the author Professor Fels was Chairman of the Australian Competition and Consumer Commission from 1995 until 30 June 2003. Prior to that he was Chairman of the Trade Practices Commission from 1991 to 1995 and Chairman of the Prices Surveillance Authority from 1989 to 1992. Previously he was Dean of the Graduate School of Management at Monash University, and currently holds honorary professorial appointments at Monash University and the University of Melbourne.

Competition policy and regions: the Australian example 19 8. The case against regional subsidies

John Freebairn

Market forces and KEY MESSAGES changing preferences

• Individuals and businesses base locational choices on assessments Changes over time in tastes, of net benefits after considering the comparative advantages and technology, relative input costs disadvantages of different options. and international trade alter the • National economic efficiency is maximised when these decisions comparative advantages of different are market-based. regions over time. As a result, • Government interventions are needed to correct for market marginal social benefits by activity failures, but regional subsidies distort location/relocation decisions and region also evolve, and with and reduce economic efficiency. the passage of time businesses and • The social equity objectives of government are more efficiently met households need to relocate for through tax and social security systems. economic efficiency. Some regions become more attractive and others This chapter argues that specific regional subsidies are seldom more cost effective become less attractive, and this is than direct policy interventions to overcome market failures, and that social a normal characteristic of a well equity goals are more effectively met through tax and social security systems that target individual family needs directly. functioning economy. Locational choices and and there are scale economies in These private sector choices market forces providing many of the good things inevitably involve trade-offs and of life. compensating differentials. For All economies have to make example, businesses will locate choices about the location of Regional differences in remote areas which have residential housing and businesses advantages of closeness to key in the different capital cities, Different regions have different raw materials but which at the suburbs, regional cities and towns, advantages and disadvantages same time have higher costs for and rural and remote areas. These for different businesses and transport, labour, communications choices are similar to economic households. These differences and sophisticated repairs services choices that are required on what stem from differences in natural relative to a city location only if products to produce and consume, endowments and from different the cost disadvantages are more and on what mixes of labour, patterns of investment and than compensated by the cost capital and natural resources to use economic activity over history. advantages. in producing the different products in different regions. These predetermined differences Scarce land in choice city locations, constrain the realistic choices for both businesses and houses, While individuals have different available across the different commands much higher returns preferences, most of us would like regions, and they affect the and utility as compensating values to locate where the environment is comparative advantage of than does location in remote areas clean and green with scenic views, different location choices facing where land is relatively cheaper. where good schools and medical not only individual households The compensating differentials services are nearby, interesting high and businesses, but also society represent the social opportunity paying jobs are available, there is as a whole. National economic costs of alternative locations. no congestion, all amenities are available, and it is cheap. efficiency, or the size of the economic pie, is maximised with The issue of market At the same time there are a pattern of location choices that failures limitations on the available great equates the net marginal social locations and jobs, there are benefits of locating different In the absence of market failures, resource costs in providing schools, businesses and households across private benefits and costs as medical services and amenities, the regional choice options. measured in market prices equal

20 Regional policy directions marginal social benefits and costs. In more indirect ways, government of the market failure, and seldom This assumption breaks down subsidies (or taxes) for products or will these interventions have a with the exercise of monopoly inputs with a particular regional specific region assistance focus. power, with external benefits and focus, for example subsidies for For example, the Australian costs, with public goods which the dairy or tourist industries, and Competition and Consumer have the properties of non-rival tax breaks for primary production Commission is responsible for consumption and high costs of or employees in remote regions, monitoring use of monopoly exclusion, with common property can have a strong regional focus in power, and determining where it resources, and in some cases their incidence. is appropriate to permit a natural with information asymmetry monopoly to operate. More subtly, governments affect between the two sides of a market the relative attractiveness of Market failures associated with transaction. different regions to households external costs such as pollution Clearly such market failures and businesses through regulations and congestion are also best are endemic in any modern requiring uniform pricing of some tackled by focusing on the economy, and governments play services across all regions regardless externality creating production of relative costs of supply, and key roles in economic decisions. and consumption activities, rather through the policies applied in For these market failure reasons, than the more indirect and less distributing commonwealth and governments provide defence, effective options of taxing all state monies to state and local law and order, information and businesses and households in cities governments respectively. basic research; they impose or subsidising those in regional regulations, taxes and subsidies Most forms of market failure cities and towns regardless of how for education, health, pollution where government intervention much or how little their individual and protection of biodiversity; and can improve economic efficiency activities contribute to pollution governments employ a number are best met directly at the source and congestion. of anti-monopoly interventions. Governments also intervene to redistribute to achieve more socially desirable equity objectives.

Government involvement in location decisions

So the key question becomes what role, if any, should governments play in influencing the choices of households and businesses on where to locate?

Governments can and do directly and indirectly influence such decisions. Direct measures include location choices for public servants and the place of production of government-supplied goods and services, development planning rules and conditions, and investment in physical infrastructure such as transport, communications, water and sewage, and even direct grants for decentralisation.

The case against regional subsidies 21 In contrast, subsidies to Market forces and social specific regions, particularly equity KEY REFERENCE when based on arguments of This paper argues that the • J Freebairn 2003, offsetting disadvantages, or to ‘Economic policy for offset declining markets and decisions of individual households and businesses in response to rural and regional populations, or even to promote Australia’, Australian decentralisation, almost certainly market prices for outputs and inputs, along with government Journal of Agricultural and involve distortions to the location Resource Economics 47(3), interventions to correct for market decisions of households and 389–414. businesses and a loss of national failures, result in an efficient economic efficiency. A subsidy to allocation of economic activities one region has the opportunity cost across different capital cities, of a tax on other regions, whether suburbs, regional cities, and rural this is the result of higher tax rates and remote locations. About than otherwise, or as a result of less the expenditure generally on education, Society and its governments clearly author defence or roads for example. are interested in the distribution of the economic pie as well as in John Freebairn Regional subsidies therefore tilt its size, but of course it is easier is a location choices of households and to redistribute from a larger and professor of businesses from the taxed regions growing economy. economics to the subsidised regions. Regional and director disadvantages associated with, for In Australia, a well developed of the example, higher transport costs and comprehensive redistributive Melbourne Institute of Applied (because of distance or congestion), system based on progressive Economic and Social Research higher wages (to compensate for income taxation, a means-tested at the University of Melbourne. remoteness and/or other factors) social security system, and the He gravitated from a farm and lack of scale economies and universal provision of health, boy in central NSW, to an closeness to related upstream and education and some other services agricultural economist and then downstream industries, are real cost either free or at below-price costs, to a general economist living in disadvantages to society as well as provides an effective safety net a big city. His current research to particular regions. To provide and ladder of opportunity for interests include the analysis of subsidies to the affected regions all Australians in all regions. By taxation reform options, labour simply encourages households and contrast, subsidies to particular markets and unemployment businesses to move from less costly regions represent a much blunter policy, and water allocation regions to higher cost regions with and less effective instrument for institutions. a loss of national welfare. meeting social equity objectives.

Evedon Park Bush Resort. The Jenour family have farmed the property at Evedon Park since the late 1960s. The property supported beef cattle, fat lambs and dairy cattle over the years. In 1984 they diversified into a bush resort and since then have gradually grown the development so that it is now a popular venue for conferences, seminars and meetings as well as bush holidays. Source: Options for Change-New Ideas for Australian farmers, RIRDC Publication 03/030

22 Regional policy directions 9. Developing rural economies in England

Margaret Clark, OBE

KEY MESSAGES 18.9%

* Delivery of regional 49.5% 20.00% economic development 31.5% 49.2% strategies in the UK has 12.2% 30.8% been devolved to regional,

subregional and local level for 29.8% 58.0% the past 7 years.

* While many non-farming 29.6% 26.5% rural businesses are flourishing, their particular 43.9% needs and circumstances are often overlooked by central 15.7%

policy- and decision-makers. 27.7% 56.6% 13.1% * To overcome rural 31.0% disadvantage, representatives

of rural communities and 55.9% businesses will increasingly need to join with their urban counterparts to emphasise 18.4% 22.4% 28.7% agendas that are both urban 34.1%

N and rural. 47.4% 48.9% W E

This map is based upon Ordnance Survey material with the permission of Ordnance Survey on behalf of the S This chapter outlines changes in Controller of Her Majesty’s Stationery Office Crown copyright. Unauthorised reproduction infringes Crown copyright and may lead to prosecution or civil proceedings. Commission for Rural Communities. John Dower House, Crescent Place, Cheltenham Cpa. Gloucester. CLB 011C. regional and rural policy and Licence Number: 100048389 delivery in England and some recent Proportion living in settlement types: experiences of regional governance Rural settlements and economic development from an Urban - between 10,000 and 250,000 people Urban - above 250,000 English rural perspective. 0 62.5 125 250 Kilometers Source: ONS, 2001. Census Map scale 1:5,000,000 Characteristics of rural England Figure 1 Regional distribution of residents in England by type of settlement

The stereotypical view of rural Nearly 12 million people live in largest single employing sector England is of an idyllic country rural areas, defined on the basis in rural England), health and landscape dotted with small farms of population (generally less than education, through to research and picturesque villages amid 10,000), settlement size, form and and manufacturing companies function (see Figure 1). While the pleasant natural scenery—the at the leading edge of nano- and majority of rural residents have ‘green and pleasant land’ of William biotechnology, clean room and jobs, the proportion of low-income Blake’s Jerusalem. The perception environmental technologies. people in rural areas is increasing. Many rural residents commute to is that rural economies remain One of the most pressing issues England’s towns and cities. dominated by farming, food and facing many of these people is tourism. access to affordable housing. In a handful of rural local authority The reality is that rural England is The types of businesses in rural areas, farms still constitute up physically, socially and economically areas range from traditional to 20% of businesses, but in diverse and supports an expanding and overtly rural activities, such general farming makes only a and ageing population and an as farming and forestry, to key modest contribution to most rural enterprising base of businesses. services, such as retailing (the economies.

Developing rural economies in England 23 In contrast, non-farming rural develop and implement Regional ‘rural proofed’ and takes account businesses are making a substantial Economic Strategies, aimed at of the rural dimension, based contribution to England’s economy. improving economic performance on sound evidence, and to hold Across rural England, rates of by raising productivity. government and others to account employment, of self employment, for its delivery. The CRC is a of women running businesses and The RDAs and Government statutory body with a particular growth in the stock of businesses Offices are jointly responsible for focus on rural disadvantage have all outstripped that of delivering government programs in and areas of poor economic England’s towns and cities in the regions. performance. It has three main recent years. roles: Local services and priorities are Such indicators are well embedded delivered through three tiers of • rural advocate, acting as in government economic policies, local government: upper tier the voice for rural people, but significant intra-regional authorities (unitary authorities businesses and communities; variations are often overlooked in most large cities, and • expert adviser, providing by national policy-makers. The predominantly urban areas, and evidence-based objective advice general healthy state of rural shire county councils in the more to government and others; and rural areas); district or borough businesses and employment is authorities; and, at the most local • independent watchdog, disguising deep-seated weaknesses level, parish and town councils. monitoring and reporting on in some areas. Their resources are derived from the delivery of policies and local taxation and direct grant from programs nationally, regionally Modernising rural central government. and locally, and holding the delivery through government and others to devolution These tiers of local government account on whether they have deliver local education, transport successfully ‘rural proofed’ As part of its overall strategy, and and infrastructure, safety and policy and delivery. also in response to the impact of policing, housing, environment, Is devolution working Foot and Mouth Disease in rural spatial planning and development, England, the UK Government, neighbourhood and community for rural communities? in its Rural Strategy published development, social services, etc. The separation of policy in 2004, has sought to make a development and delivery has The RDAs’ successful delivery clearer distinction between policy led to unforeseen consequences of regional and local economic development and delivery and, for delivery of some central improvements requires close increasingly, to devolve policy government policy commitments alignment with local government implementation to the regional to rural communities. and subregional level. This builds and other agencies, which is on three parallel structures, which achieved through Local Public The RDAs and GOs are generally operate across the nine English Service Agreements, Local delivering designated regional regions (including the Greater Strategic Partnerships and Local economic development priorities in London area). Area Agreements. Other economic a well-coordinated way. However, agencies fund and/or deliver not all functions, including some Government Offices (GOs) Further and Higher Education, agricultural and training initiatives were established in 1994 to bring workplace training, business advice with clear economic contributions, together previously separate and support, many of which are are channeled through the RDAs. government programs. They increasingly aligned with regional remain part of central government, priorities. Rural interests are addressed but operate at regional, sub- through the activities, interest and regional, local and neighbourhood The Commission for roles of dedicated teams of rural levels. They comprise staff Rural Communities specialists; by rural forums and and programs from 10 central partnerships; and by rural targets government departments. The role of the recently and agreements. But attention to formed Commission for Rural rural economic interests seems to Regional Development Agencies Communities (CRC) is to ensure be weaker and narrower overall (RDAs) were created in 1999 to that policy and practice is properly than their scale and contribution

24 Regional economic growth: issues and drivers to regional and national economic Challenges for the The main challenge for rural health would merit. future economies is to promote to key economic non-rural decision- Each RDA and GO has a small There are now proposals to devolve makers a real understanding of the rural team, but, to date, these teams decision-making further on service depth of the contribution made have focused mainly on delivery provision, beyond the town hall to regional and national economic of specific programs relating to to a community level. This is health by hundreds of thousands of farming, rural tourism and local potentially good news for rural rurally-based businesses, employees food production. Rural communities businesses and rural communities, and their communities. seem to be missing out, when it but there are risks that the agenda comes to key activities of RDAs, will be dominated by the urban This will be further tested with such as Regional Innovation neighbourhoods debate and that the the emergence of a City Region Strategies, cluster development particular circumstances and needs agenda at the heart of government. programs, inward investment of rural areas will be overlooked. To meet this challenge, rural voices programs, the work of RDAs’ will need to stress the connectivity enterprise teams to boost business On the one hand, the growing and interdependencies of cities starts and performance, Regional devolution agenda offers and rural areas, emphasising Skills Partnerships and programs, opportunities to recognise the priorities that are both urban and and business funds and strategies. diversity of rural areas and their rural, rather than focusing on the contribution to regional economies distinctiveness of rural economies Local strategic partnerships and and quality of life. and communities. sub-regional economic partnerships For more information are often poorly staffed and On the other hand, the needs and resourced and many lack evidence circumstances of rural businesses, www.ruralcommunities.gov.uk, of their rural economies. Too people and communities are or contact Roger Turner, Head frequently, their strategies and often overlooked or ignored of Enterprise and Skills at the action plans fail to address the by central policy-makers. In a CRC, who helped prepare this skills and training, investment, country where the population is paper (email Roger.Turner@ business support needs and predominantly urban, coupled with ruralcommunities.gov.uk). regulatory burdens faced by the the English view of the ‘rural idyll’ manufacturing, retail, public sector as somewhere to commute from, services, homeworkers, women- holiday in or retire to, policy and run enterprises and large firms delivery is urban focused and the contributing significantly to their countryside is seen as something to rural economies. protect rather than to develop.

KEY REFERENCES • Commission for Rural Communities 2006a, Rural housing: A place in the countryside? CRC 09, CRC, Cheltenham, UK. • Commission for Rural Communities 2006b, State of the countryside 2006, CRC, Cheltenham, UK.

About the author Margaret Clark is Deputy Chief Executive of the Commission for Rural Communities, with a particular focus on rural policy development. She works closely with the Department for Environment, Food and Rural Affairs and other public, voluntary and private sector bodies to ensure that policy and delivery reflects the particular needs and circumstances of rural areas. She was awarded the OBE in 1999 for services to rural development.

Developing rural economies in England 25 10. Economic growth in South and East Asian countries

Edwin Mills

KEY MESSAGES rights, letting its people and in the 1970s after about 10 years of companies earn money by rapid economic growth. • A functioning government, producing goods and services to property rights and relatively meet people’s needs. Widespread The most difficult cases are those free markets are generally literacy helps, but is achievable that start with destitute poverty required for economic even at low income levels if and poor governments. Bangladesh growth in countries aiming government is determined. is the poorest country considered to reduce poverty. here: GDP per capita is only about $ • Economic growth in At low income levels, technology US 1.50 per day. The government developing countries is appropriate for the country can is ostensibly democratic, but barely accompanied by rural to be imported, much of it already in functional. At its income level, urban migration because the public domain or bought with economic growth is the only viable demand for farm labour direct foreign investment. At all anti-poverty program. On the decreases as agricultural but the lowest income levels, some other hand, Bangladesh is growing productivity increases. technically trained local workers in real terms, and is far from being are needed to understand the the world’s poorest country. • Governments need to foreign technology and to adapt implement policies that assist it to local conditions. As income the rural poor to migrate to levels rise, increasing amounts of Economic growth and urban growth areas and gain research, development and product urbanisation access there to affordable design are needed for further housing and other public growth. Economic growth and urbanisation services. are strongly correlated. The poorest Democracy is helpful but not countries are 15−20% urban, and The author discusses trends and essential for economic growth. urbanisation increases until in the differences in economic and urban China has grown rapidly during highest income countries 80−85% growth in a sample of South and East recent decades, with little of the people live in urban areas. Asian countries comprising nearly half movement toward democracy. Table 1 illustrates this correlation. the world’s population. Democracy and economic growth The poorest country, Bangladesh, Asian countries differ from tend to evolve together. Korea is is also the least urban. The highest each other and from non-Asian one of the world’s best examples: income country, Japan, is the countries in many important an almost entirely nonviolent second most urban, just behind ways. Yet the sample of countries evolution toward democracy started Korea. discussed here have all grown faster during the last 30-40 years than almost any other set of countries in the world.

Conditions for economic growth

The requirements for economic growth are both economic and political. At the lowest income stage the conditions for growth are simple: a functional government that defines and protects property Seoul, South Korea on a hazy day

26 Regional economic growth: issues and drivers Table 1: Economic growth, urbanisation and poverty in a sample of South and The reasons for the correlation are East Asian countries well known. Increases in income per capita result from increases in Country GNI per capita GDP per capita % Poverty % Urban productivity in agriculture, industry in 2004 (USD) growth rate (USD1/day) (1997) 2000−2004 and services. At the lowest income (%) levels, the vast majority of workers Bangladesh 440 5.1 36.0 19 are needed to grow enough food for China 1,290 8.7 16.6 32 the population. As growth proceeds India 620 6.2 35.3 27 agricultural productivity increases. Indonesia 1,140 4.6 7.5 37 The result is a reduced need for Japan 37,180 1.3 — 78 farm labour, freeing workers for Korea 13,980 4.7 < 2 83 industrial and service sector jobs. Philippines 1,170 4.2 15.5 56 Thailand 2,580 5.3 < 2 21 These jobs are mostly in urban South Asia 590 5.8 — 27 East Asia 1,280 7.5 — 33 areas. High-density urban areas World 6,280 2.5 — 46 reduce travel and communication times and costs between buyers and sellers, and increase the range of Bangladesh is the poorest of the be available from international choice for job seekers, employers eight countries discussed here. agencies and private donors. and consumers. Productivity There are no restrictions on In the past 20 years China has increases by as much as 5−7% with rural–urban migration and the been transformed by the partial each doubling in total population of country has urbanised rapidly since the 1980s. However, it is extremely introduction of property rights. urban areas. difficult to obtain clear title and The growth has been both urban (industrial and service sectors) Urban locations stimulate the registration for urban land because and rural (agricultural sector). But adoption and production of new of a cumbersome and corrupt rural–urban migration is controlled technology in the industrial government system. This has led to by a complex system known as and service sectors. Price and chaotic development in Dhaka, the ‘hukou’. Anyone can live or work income elasticities of demand are only large metropolitan area, which anywhere, but only if one’s hukou high for industrial and service now has a population of about 12 is urban can one get government sector products, especially when million people. Housing rents and benefits from urban jobs, heavily consumers who have not been able prices in Dhaka are extremely high subsidised housing, special access to afford good clothing, housing, relative to incomes. to jobs, subsidised schooling, education and healthcare can now The result is large squatter healthcare, etc. Earnings of workers purchase some of these things. This settlements where a couple of with urban hukou are estimated to all contributes to large movements million poor residents live. They be about 8 times those with rural of workers from rural to urban areas have no legal claim to ownership hukou. While it is possible for a during the early stages of economic or rental status, so governments village resident to obtain urban growth. refuse to provide public services: hukou, especially if well educated, water, latrines, waste removal, it is difficult to obtain a good Are discriminatory schools, police, health services, etc. education without urban hukou. policies hindering Many are too close to subsistence economic growth? standards to benefit much from Chinese commentators voice the country’s recent rapid income concerns about urban poverty, Discrimination against the poor growth. slums and unemployment if the seems to be endemic in poor hukou system is abolished. But the countries—many fail to apply the One solution would be to enable country as a whole would surely rule of law impartially to low- as private housing (and commercial) benefit greatly from increased well as high-income citizens. In developers to obtain clear title to rural–urban migration. Both the practice that means poor rural land on which they are permitted 200 million excess rural workers residents are discriminated against, to build housing (and commercial and the urban businesses where including actual or potential facilities) for low-income residents. they might work would gain from rural−urban migrants. Substantial assistance would their urban wages. And of necessity

Economic growth in South and East Asian countries 27 agricultural productivity would increase more rapidly with less available labour

In contrast, India has been a functioning democracy since independence in 1947 and still has the best functioning democratic government in the region. Business and land have mostly been privately owned. Nevertheless, it is still a poor country with income per capita at only twice the US$1 per day poverty line and more than twice China’s poverty rate.

Rural–urban migration has been rapid and India has no controls on New Dehli, India migration of the poor. Large cities did have legal housing standards that tended to criminalise poverty, and Indian governments have sometimes forcibly removed large squatter settlements from private property. However, they have done more than most poor countries to provide places for poor migrants to live, and to provide schools that are accessible to poor children. And their economy is now growing almost as fast as China’s.

KEY REFERENCES • E Mills 2005, ‘Why do we Shanty town near Dhaka, Bangladesh have urban density controls?’ Real Estate Economics 33(3), 571–85. About the author • World Bank 2000, Entering Professor Mills (BA Brown, PhD Birmingham the 21st century, World Bank, UK) is currently Emeritus Professor of Real Washington, DC. Estate and Finance at the Kellogg School • World Bank 2004, Doing of Management, Northwestern University, business in 2004, World Bank, Evanston, IL. His primary research interest for Washington, DC. 40 years has been urban and regional economics • World Bank 2006, Equity and real estate, first on US data, and during the and development, World last 30 years also on India, Thailand, Indonesia, Bank, Washington, DC. Japan, Korea and Bangladesh.

28 Regional economic growth: issues and drivers 11. Rural Canada: drivers and riders

Ray D Bollman

KEY MESSAGES

• As widespread mechanisation of the commodities sector continues, successful Canadian rural communities will need to find a new good or service to export to maintain their employment base. • The falling price of transporting goods is helping rural Canada to be competitive in manufacturing. • Demographic factors, including rural Aboriginal peoples and the ability of rural areas to increase their Calgary, Canada – view from a farmer’s field population by attracting outputs (wheat or lumber or nickel distance would indicate a decline in young adults, early retirees etc.), communities dependent the price of rurality. and immigrants, will on primary or resource sectors influence their future growth will have fewer and fewer people Factors contributing to the price of opportunities. working in these sectors. Successful rurality include trends in the prices communities will be those who of transporting goods, moving find a new good or service to people, and communicating The author uses analyses of trends information. in mechanisation, prices associated export in order to maintain their employment base. Not all rural with service provision in relation to The price of transporting goods Canadian communities have been distance and population density, and is falling in the longer run, the able to find something new to demographic shifts to draw inferences price of transferring information export. about future opportunities for rural is falling in the long run and the Canada. price of transporting people is Labour-saving Trends in the price of increasing in the longer run. What rurality technology are the opportunities for rural development? ‘Rurality’ (the degree of being For almost 400 years rural Canada rural) is defined by distance and The falling price of transporting has prospered from exporting density. Density refers to the goods is one factor causing rural commodities – cod, beaver pelts, number of people per square Canada to be competitive in lumber, wheat, metals such as kilometre and a higher density manufacturing. Rural Canada has gold and nickel, uranium and now (i.e. a bigger town or city) implies always had manufacturing jobs diamonds. that higher-order services would (fish processing, smelting, sawmills, exist in this location. Distance is pulp and paper plants, etc.), but One long-run trend in human a measure of the time and money some of the newer manufacturing history is the increasing value cost to access these services or to jobs are part of the network of just- of human time. This means sell to these markets. Thus, places in-time delivery systems. Over the there is an ongoing incentive to with lower population density and last three decades, rural Canada has substitute machines for labour. longer distances would be more been increasing its share of total Thus, regardless of the price of rural. A decline in the price of manufacturing employment.

Rural Canada: drivers and riders 29 We might therefore expect that decline in the relative price of that can be sold into metro niches? successful rural communities in the purchasing a new vehicle. The question for rural areas is: can future will have a manufacturing rural areas find ways to link to this base (except for places with a ski The increase in the price of driver? One option is to produce hill in the winter or a lake resort transporting people, if it should specialty goods and services to in the summer). But declining continue, would have important sell into the rich, growing and transport costs will only open the implications for rural regions. The segmenting metro niche markets. opportunity for manufacturing price of a tourism visit to rural jobs, with many other factors (such Canada would increase relatively, Rural areas can attract young adults as skills and entrepreneurship) as would the price of commuting (especially if one householder can deciding the final outcome. to metro jobs, which may reduce commute to the city for work) and movement of urban people to rural earlier retirees (to ‘cottage country’, The falling price of transferring places to live and thus reduce urban where people retire to lake-front information is a two-edged sword. sprawl. cottages previously used only for Rural people can both send and holidays). But these movements receive information faster, but so Demography tend to be counteracted by the can urban people! We are seeing movement of rural youth to urban fewer rural bank tellers and fewer Aboriginal peoples will remain a areas seeking jobs and greater social rural travel agents. Will we see driver of the demography of rural opportunities. more rural entrepreneurs who can Canada. Historically, rural Canada use the Internet to sell their goods has been Aboriginal intensive and Some rural regions also have a or services? Aboriginal Canadians have been successful track record in attracting rural intensive. In 2001, 65% of international immigrants – for In general, the price of both Aboriginals lived in predominantly example, an area of Manitoba with public (buses, trains, airplanes) rural regions. They still experience a Mennonite heritage has targeted and private transportation services lower socioeconomic conditions German-speaking Mennonites has been increasing relative to than non-Aboriginal Canadians, from eastern Europe. As natural other prices since the beginning of though the gap has narrowed in population growth continues to the 1990s, with public transport recent years. decline across all Canadian regions, costs increasing more than private the ability of rural regions to attract transport costs. The overall cost Agglomeration economies are immigrants will be a driver of rural of private transportation has been driving the demographic growth of growth in future. increasing due to rising gasoline cities. Can rural areas compete by and insurance prices, despite a producing smaller production runs Factors along for the ride

The three fundamental drivers of technology, prices and demography, while not unique to rural Canada, are discussed here as key factors that provide opportunities for rural areas of Canada relative to urban areas.

Other factors by implication are ‘riders’, as in ‘if you are not driving, you are riding’. For example, two factors that would be classified toward the ‘rider’ end of the ‘driver- to-rider’ continuum are primary The Doepker family firm manufactures various types of truck trailers in the town industries, and infrastructure. of Annaheim, Saskatchewan, and sells them all over North America. Annaheim Primary industries are shedding has a population of less than 300 and is nearly two hours from the city of Saskatoon labour. If rural development is the (population 200,000). This is an example of one of their rigs. growth of jobs and/or the growth

30 Regional economic growth: issues and drivers of population, then commodity KEY REFERENCES production is no longer a driver of rural development. • A Alasia 2005, Skills, innovation and growth: key issues for rural and territorial development: A survey of the literature, Agriculture Similarly, the existence of and Rural Working Paper No. 76, Statistics Canada, Ottawa, Cat. infrastructure (roads, airports, No. 21-601-MIE (www.statcan.ca/cgi-bin/downpub/listpub. schools, Internet service, etc.) cgi?catno=21-601-MIE). does not drive development. The • R Beshiri 2001, ‘Employment structure in rural and small town driver is the idea or identification Canada: The manufacturing sector’, Rural and Small Town Canada of a good or service that can Analysis Bulletin 2(8), Statistics Canada, Ottawa, Cat. no. 21-006- be produced here and sold to XIE (www.statcan.ca/english/freepub/21-006-XIE/free.htm) someone from away. When the • Ray D Bollman 2000, Rural and small town Canada: An overview, idea is implemented, a demand for Statistics Canada, Ottawa, Cat. no. 21F0018XIE (www.statcan.ca/ infrastructure follows. english/freepub/21F0018XIE/free.htm). For more information • Ray D Bollman & M Prud’homme 2006, ‘Trends in the prices of rurality’, Rural and Small Town Canada Analysis Bulletin 6(7), email [email protected]. Statistics Canada, Ottawa, Cat. no. 21-006-XIE (www.statcan.ca/ english/freepub/21-006-XIE/free.htm).

About the author Dr Bollman (BSc, MSc Manitoba, PhD Toronto) has held a number of positions with Statistics Canada and is presently Chief of Research and Rural Data in the Agriculture Division. His research interests have evolved from the structure of agriculture and the pluriactivity of farm family members to all socioeconomic aspects of rural populations.

Wheat loading, Saskatchewan, Canada

Rural Canada: drivers and riders 31 12. Sea change issues and regional development in New Zealand

Ken Tremaine

KEY MESSAGES Northland • In New Zealand primary Rodney responsibility for growth Coromandel management lies with Bay of Plenty regional and local authorities. • Growth management Taupo strategies must take account Gisborne of local development drivers Hawk e’ s Ba

such as population and y employment growth, sea

change issues and tourism Nelson, Tasman, growth opportunities. Marlborough • Effective community governance and leadership,

and strong collaborative Queenstow

partnerships between local, n regional and central arms of government, are critical factors in successful regional developments.

This chapter gives an overview Figure 1: New Zealand’s ‘sea change’ areas of the relationship between urban growth management leadership Sea change and other growth management and regional through policy formulation and growth drivers in development in New Zealand. contemporary New New Zealand’s regional legislation. Growth management and planning are regulated Zealand policy and growth through a series of acts and related management framework statutes and regulations, including Growth drivers vary in different The NZ Government has the Resource Management Act parts of any country, and need to published several strategic 1991, the Local Government Act be specifically identified for each documents with ambitious visions 2002 and the Land Transport situation. They include factors like: for the future development of New Management Act 2003. • population growth, including Zealand. However, implementation local and international migration; of the strategies has been difficult Sustainability, integration and • labour force and employment due to the multitude of agencies the importance of linking growth, growth; and areas involved. infrastructure and funding are • changes in the nature of common threads running through household composition due to New Zealand operates under a these pieces of legislation. The demographic change, e.g. fewer devolved three-tier governance challenge is to successfully plan family households, more single structure of central, regional land use, infrastructure and and childless; and local government. Regional funding in an integrated way that • sea change factors, e.g. moving to and local authorities are responds to the particular character the coast for lifestyle; and mainly responsible for growth and changing nature of a place, and • economic activities such as management, with central the nature and aspirations of its domestic and international Government providing some people over time. tourism.

32 Regional economic growth: issues and drivers The phrase ‘sea change’, originally can then be incorporated into a to plan and manage key land use used by Shakespeare in The regional economic development decisions, the sequence and timing Tempest, is now used specifically to strategy which informs a growth of development in the subregion, describe a long-term demographic management strategy. and financing of growth-related push from metropolitan and infrastructure such as local inland settlements to the weather Much opposition to future growth transportation, water supply, and amenity rich coast across the from existing communities comes wastewater management and parks British Commonwealth and USA. from fear of change, and concern and leisure. that if existing services are not Sea change factors include baby coping then what will be the impact The many challenges that have boomer ageing, the need to cash on a communities’ quality of life emerged since implementation of in a portion of the primary house from additional growth. Successful the strategy began are typical of the investment to help fund retirement, growth management exercises will types of growth management issues declining levels of amenity, safety encompass forward planning for being faced by sea change areas of and transport frustration in larger social services delivery, the concept New Zealand. They include issues cities, the quest for a coastal or of growth paying for growth, and related to effectively linking New rural lifestyle, and the influence of the role of funding tools. Zealand’s three principal planning technology. statutes to ensure availability to the subregion of the full range More than 20% of New Zealand’s Learning from of potential funding support and population now lives in the sea SmartGrowth tools, and tackling and solving change areas shown in Figure 1. the common thread running SmartGrowth is a 50-year strategy These are all coastal, lake and/or through SmartGrowth, which is and implementation plan for mountain locations. Most of these to anticipate, fund and provide New Zealand’s western Bay of areas are experiencing strong essential services to meet the Plenty subregion. The project is a growth, with between 60% and demands of growth. leading edge attempt to integrate 70% of the country’s current land- growth and development, land Important aspects relate to rail building development taking place use, infrastructure, transportation, and road transport infrastructure, in sea change areas. Strategies to economic development, tourism adequate provision for open manage growth must therefore and funding strategies. spaces, and gaining agreement on recognise and respond to this driver. future tertiary education plans for Management of urban and rural the subregion. For example, the Linking growth development in a sustainable Strategy’s focus on development management, economic manner is one of the most corridors and integrating land use and social development fundamental challenges facing the and transport has resulted in a Bay strategies subregion. The area is growing of Plenty Regional Land Transport at an extraordinary rate, with Strategy, and a plan to protect rail Translating the growth drivers the current population of almost corridors for the future. into practice involves knowing and 150,000 expected to double over SmartGrowth has spawned two recovering in an equitable manner the next 50 years. related strategies that focus on the costs of growth, and accepting economic development and the principle of growth paying for The SmartGrowth Strategy tourism respectively: growth. concentrates on the principles of live, work and play in order to Smart Economy is the western Growth management strategies provide a balanced approach to Bay of Plenty subregional need to focus on growth in the growth management. It is using economic development strategy. labour force as a consequence local partnerships and collaboration This strategy sets a series of of population growth. And planners need to have a clear idea of the key economic drivers, by understanding which sectors of a regional economy will grow in the future and which are likely to decline. These key factors

Sea change issues and regional development in New Zealand 33 10-year high level goals for the for regional development and growth drivers are likely to subregion, including increased growth management. Effective flounder. The most successful business profitability, greater than community governance and strategies will be those brokered by national average rises in household leadership structures which local government that promote the income, and an increase in the understand the role of the different social, economic, environmental skills level of its workforce relative layers of government as well as the and cultural wellbeings of to the national average. Critical scope of implementation toolkits their communities, and seek to barriers to achieving the vision and are key factors. balance the needs of developers, outcomes are now being addressed. infrastructure providers and Strong collaborative partner communities. The Smart Tourism Strategy relationships between local, is a further link between growth regional (state), and central For more information management and ongoing (federal) government are essential • Sustainable development for New economic development. It focuses if practical solutions are to emerge Zealand: Programme of action: on the potential contributions in a timely manner. www.mfe.govt.nz/publications/ of both the domestic and sus-dev/sus-dev-programme- international visitor industry to the In New Zealand the key growth of-action-jan03.html local economy, and considers the management tools are at the • Growing an innovative New land and infrastructure needed to regional level. Through these it Zealand: www.executive.govt. cater to that market. is possible to effectively engage nz/minister/clark/innovate/ both central and local government. index.html Critical success Speaking with a ‘single regional factors for regional voice’ is one of the biggest • SmartGrowth case study: www. development challenges for local authorities and smartgrowthbop.org.nz/index. their strategic partners. aspx From SmartGrowth and other case • Smart Economy: http://council. studies, we can draw conclusions Strategies which tilt significantly tauranga.govt.nz/default. about critical success factors at the market or fail to anticipate aspx?CategoryID=100643

Coastline of the Bay of Plenty, New Zealand About the author Ken Tremaine is Principal of Ken Tremaine Consulting Ltd, which specialises in integrated planning and compliance cost reduction. He has developed a strong interest in the coordination of macro urban design, land use, transportation, and the timely provision and funding of infrastructure, employing the tools and techniques of the New Zealand Resource Management Act 1991, Local Government Act 2002, and the Land Transport Management Act 2003.

34 Regional economic growth: issues and drivers 13. The role of arts and culture in regional development

Ann Markusen KEY MESSAGES four times as rapidly as export- Artists related occupations between 1980 working • The arts can make a and 2000. in visual significant contribution or written to regional economies if New local consumption-serving media will appropriately nurtured and economic activity might be expected benefit from supported. to create more jobs and tax capacity. proximity • The 'arts ecology' or arts It is often difficult to recruit to large infrastructure of a place can production-oriented employees to city-centric help to attract and grow local rural communities. For such areas, industries artists. cultural facilities and programming such as advertising and media work. provide a particularly vibrant form Local amenities will be better, and • Regional leaders can build on of locally oriented growth potential, it may be easier to develop links synergies between the arts and for several reasons: to tourism and other sources of other regional development income from their work. activities to maximise • residents may divert economic contributions from expenditures they would Other artists prefer smaller the arts sector. have spent on other forms of towns because of their relative affordability, the availability of This chapter discusses artists’ potential consumption elsewhere into vintage farmhouses and older contributions to regional economies, local purchases that in turn industrial buildings as spaces then explores why artists gravitate to support other local incomes; in which to live and work, the certain regions, and the importance • the area may attract relatively isolation, sense of community, of dedicated spaces to nurture and footloose artists who bring their commitment and support of town encourage culture and the arts. own ideas, creativity and export sales (or grant-getting abilities) leaders, or simply because it’s where Local consumption and they live. regional growth in relocating to the community; • if successful in the local market, A study of the distribution of artists Economists generally argue that the artists may begin to attract across Minnesota showed an uneven regions need to sell goods or services tourists to the locality; distribution across the metro and to other places in order to grow, • if located in historic downtown rural areas. Part of this variation can and that a region’s consumption areas, they may revitalise the be explained by migration to areas of base (the portion of local economic areas and spur other retail greater artistic concentration – the activity that is sold to local residents) investments. clustering effect. is a background constant. Yet many But some regions are ‘home- quantitative studies do not confirm Artists and the cultural sector as a case study growing’ artists at higher rates. a causal relationship between One possible explanation lies in a expansion of a region’s export base Artists have high rates of self- region’s ‘arts ecology’ – the schools and its overall growth. employment, and can therefore and colleges, training institutions locate themselves almost anywhere and studios, performing arts spaces, Rather, a case can be made that they choose. galleries, clubs and artists’ centres local consumption patterns may be that can serve as places to develop shaped to favour local production. Many tend to gravitate towards and nurture local artists. In support of this hypothesis, medium to large cities, partly statistics show that employment because of the synergies between Institutional structures such as in local consumption-related the various art forms, and the state and local government policy, occupations in the 50 largest US networking opportunities available investments, regulation, public art metropolitan centres (‘metros’) grew when artists congregate together. programs, funding opportunities

The role of arts and culture in regional development 35 through foundations and arts centres—has increased local focus as catalysts and community patrons, and the presence of artists’ spending, attracted artists as members through approaches unions, professional associations residents, and eventually drawn aimed at attracting and welcoming and/or service organisations are in consumers, mainly from them, encouraging their interaction also important. surrounding areas. with community, and providing them with technical assistance and A set Implications for marketing support. of case economic development Leaders who play to their region’s studies policy and practice of small uniqueness and explore synergies between regional economic towns Building on existing assets development and the arts can and rural (schools, colleges or vacant reap significant economic rewards areas in buildings with character) to through the previously hidden Minnesota develop arts-centered programs contributions of the arts to regional has shown and spaces is just one option for development. that three regional leaders who want to types of maximise the contributions of the For more information investment in physical capital— arts to their region’s development. artists’ centres, artists’ live/work They can also bring artists into www.hhh.umn.edu/projects/prie buildings, and performing arts with Milkweed� Ed�itions, a nonprofit press, and� Minnesota Center for Book Arts. It contains open spaces, an auditorium for readings, classrooms, a library of books by Minnesota authors and small presses, and writers’ studios. The Loft serves more than 3,500 members, largely in the Twin Cities but many living elsewhere in Minnesota and the US. It faces mod�els, feed�back, mentoring, ��funding, fund�ing, and and� many challenges, among them coping with the The Loft Literary Centre is an example of a inspiration from others. Some need a room demands of diverse constituencies, helping community arts space for writers. �W��ith�� few of their own�� to write. The Loft Literary Center writers find community in a large organisation, exceptions, writers of poetry, fiction, memoir has addressed such writers’ needs�� for more increasing diversity, raising the funds it needs and� ��non�-��fiction create al�one��. O �ften�� th�ey�� work than 30 years. to survive, and overcoming the isolation of its at their craft as a second job, and struggle The Loft currently resid�es in the Open Book, current location. Despite all this, it continues to to find� ad�equate time and� space. Writers, three renovated warehouses on South play a major role in putting Minnesota on the especially earlier in their careers, need Washington Avenue in Minneapolis, shared national literary map. access to�� information, encouragement, role

KEY REFERENCES • A Markusen & A Johnson 2006, About the author Artists’ centres: evolutions and • A Markusen 2004, ‘Targeting Ann Markusen is an impact on careers, neighborhoods occupations in regional economist, Professor and community economic and economies, Project on development’, Journal of the Regional and Industrial and Director of the American Planning Association Economics, Humphrey Institute Project on Regional and 70(3), 253–268. of Public Affairs, University of Industrial Economics • A Markusen 2006, ‘A Minnesota, MN. at the Humphrey consumption base theory of • A Markusen & G Schrock Institute of Public Affairs, University development: an application of Minnesota. Her research focuses on to the rural cultural economy’, 2006a, ‘The artistic dividend: Agricultural and Resource urban artistic specialization industrial and occupational approaches Economics Review, forthcoming. and economic development to regional development, and on the • A Markusen & D King 2003, implications’, Urban Studies arts, high-tech, and defence activities as The artistic dividend: the arts’ 43(10), 1661–86. regional economic stimulants. She has hidden contributions to regional • A Markusen & G Schrock authored many books and papers, and development, Project on Regional 2006b, ‘The distinctive city: served as a Fulbright Lecturer in Brazil, and Industrial Economics, Humphrey Institute of Public divergent patterns in growth, Senior Fellow at the Council on Foreign Affairs, University of Minnesota, hierarchy and specialization’, Relations, and President of the Regional MN. Urban Studies 43(8). Science Association of North America.

36 Regional economic growth: issues and drivers 14. Growth through opportunity: Indigenous regional economic development Joe Procter KEY MESSAGES

• Indigenous economic development needs to be based on commercial realities rather than academic assumptions. • Indigenous groups deserve the same professional commercial advice that top ASX companies and governments demand. • Indigenous regional growth requires leaders to be pro- development in pursuing commercial opportunities, and to take a long-term view on Indigenous equity. Indigenous dealings covering 36 Singapore. Its advisory clients • Governments should years in Indigenous politics, 9 years have included Medibank, Telstra, facilitate and provide in the resources sector, 3 years as Royal Australian Navy, Toll incentives for private Director of Indigenous Business investment, not manage it. Holdings, Pacific Hydro, Coles Australia, 3 years as Managing Myer, Qantas and BHP Billiton. • Traditional owners are Director of Indigenous Capital It has undertaken private equity acting professionally and Ltd, and 3 years as Associate of transactions with a wide range commercially, should be Carnegie, Wylie & Co. (CWC) of companies, including STW, treated as full commercial investment bank. Macquarie Radio Network, SCTV, partners, and should be Neverfail Springwater, Lonely rewarded appropriately for Hence my opinions are based on 30,000 years of holding costs. Planet Publications, Scarborough transactional experience rather than Minerals, Bondi Icebergs, and voluminous government, university The author draws on his extensive Bluetongue Brewery. It has a and macro-economic studies. In experience in Indigenous investment major investment relationship with my experience assumptions count to argue the case for professional, Queensland’s Sunsuper. for little and survival is all that commercial approaches to Indigenous counts (though I am not suggesting development opportunities, and a CWC’s Indigenous advisory for a moment that these studies are facilitative rather than controlling role activities and investments include unimportant). for government. the PNG–Qld gas pipeline project, with several smaller resource Opinions based on I am pro-development, given the opportunities where traditional experience benefits that I have seen resonate owners have landholdings or rights from wealth-generating activity. Firstly, I must state that the together with pending negotiations. opinions recorded here are mine alone, and may not reflect views of CWC: an investment When working with Indigenous other Indigenous people living in bank for everyone communities CWC’s philosophy is: regional areas. CWC is a boutique investment • to provide the same professional My opinions have been formed bank with offices in Sydney, advice to Indigenous groups through commercial and Melbourne, Brisbane and that the Commonwealth

Indigenous regional economic development 37 Government and top ASX to invest capital into Indigenous extremely pro-development and companies demand; projects in the regions, through excited about the potential project • to align our position with that means such as tax deductions, and benefits brought through their of our clients; and matching capital grants, investment long-term involvement. • to create opportunities for schemes, and infrastructure CWC has helped facilitate the Indigenous groups to access support. All these mechanisms professional organisation of the capital markets. have been used in mainstream areas that have experienced TOs’ position by accelerating Lessons for Indigenous market failure – agribusiness, the Indigenous Land Use regional growth information technology Agreement process, assisting and telecommunications, with their Heritage and Cultural Indigenous leaders need to be pro- biotechnology, commercialising Management Plan, forming a development and to take advantage university research. Allocations representative TOs’ leadership of commercial opportunities when of public funds to facilitate group, and helping to assess they present themselves, as they are investment will save the whole potential service joint venture few and far between in some areas. community money in the long partners. Throughout this process run, as the private sector will the TOs have been acting Communities should take then have entered the sector. The commercially, based on market affirmative action and engage the responsibility of Government and forces. best professional and independent ultimately the taxpayers of this advice to maximise benefits for country is lessened the more the Given the recent stop-start tactics their rights. They need to take private sector participates in the by the project’s major proponents, a long-term view with regard sector. the only group that is proceeding to potential compensation, and in a business-like fashion appears reinvest in revenue-generating History has proved time and to be the TOs and CWC, who activity for the next generation. again that the more control have systematically worked their that government exercises over Equity ownership should be way through the ILUA process. Indigenous investment and preferred rather than cash managing Indigenous assets, the The current proponent has payments, as this provides less outcomes will be achieved. suggested the TOs’ are major additional leverage for contracts, hurdles for the project proceeding. employment and second horizon The longer that government clings opportunities. Resource companies to control, the longer it will be This could not be further from the should welcome equity ownership the government’s problem, and truth! The compensation being proposals as it aligns the Indigenous disadvantage will sought is only around 1.75% of Indigenous groups with their own continue to exist. project costs. Any independent commercial objectives. analyst will tell you that the real Rather, governments need to hurdles are the price of steel, Indigenous groups should embrace facilitate access to mainstream labour, gas tariffs, government joint venture partnerships with capital markets for Indigenous investment and terms of customer mainstream operators. They should groups. Warren Buffett pledged off-takes agreements. These also embrace non-government his entire fortune to other factors were mentioned during involvement in the transaction, philanthropic investors ‘because the very public negotiation taking as successful commercial activity they are better at it than me’. place between the upstream and does not rely on government downstream proponents – AGL, intervention. However, I am not A case study of Oil Search, Exxon and Santos. suggesting that this removes affirmative action: PNG– government’s responsibility to Qld gas pipeline The TOs believe it is a project inject capital into regional areas. of national significance and they CWC were engaged by the Cape should be rightfully rewarded for Lessons for government York traditional owners (TOs) 30,000 years of ownership and policy-makers in early 2006 to advise and assist holding costs. They are seeking them in their negotiations in real commercial partnerships Governments need to create relation to the PNG–Qld Pipeline to underpin their communities’ incentives for the private sector project. Our TO clients are futures.

38 Regional economic growth: issues and drivers About the author Joe Procter (BBus, GradDipSocSci, MBA WAust.) is an investment professional with Carnegie, Wylie & Co (CWC). He has been employed in a variety of positions in the gold, nickel, oil and gas sectors, including several years with Woodside Petroleum Ltd. He has led CWC’s entry into Indigenous investment and corporate advisory.

Joe is a former Director of Bangarra Dance Company, the National Indigenous Council (NIC) and Indigenous Business Australia (IBA). He has removed himself from all Government and representative bodies to concentrate on building commercial ventures through Indigenous Energy Pty Ltd and Indigenous Capital Ltd.

Indigenous regional economic development 39 15. Creating opportunities in desert Australia

Fred Chaney

KEY MESSAGES • Arid and semi-arid Australia poses an ongoing challenge to Australian governments: how best to facilitate economic and social development of its people and places. • The desert knowledge movement has supported locally developed solutions involving business networks and public–private partnerships in mining, tourism, design, and bush foods. • Government has an ongoing role in supporting and subsidising the education, training, employment and Territories, and is occupied by occupied areas is being discussed other services that will equip 573,000 people (3% of the total with little regard for existing desert Australians for full failures to integrate the present and participation in our society. population). It contains major tourism icons like Uluru National past drift to the towns. This chapter describes how scattered Park and much of the nation’s communities across the arid and mineral and petroleum wealth. The policy challenge semi-arid regions of Australia have It is the repository of the oldest The vast reach of desert Australia used community engagement and living culture in the world, and has poses a major policy question for innovation to pursue locally devised spawned our only truly Indigenous Australian governments in an and supported solutions. It also touches art movement. age where cross-subsidisation is on the roles of private developers and seen as an offence against rational governments in tackling the problems The desert is thus a region of economic policy. of desert Australia. vital importance to Australia but it struggles with many Desert Australia: a There is no shortage of areas of issues, including distance and definition high-profit economic opportunities a widely dispersed population. in remote Australia. Each centre Seventy percent of the Australian Its demographics tell a sobering of current wealth production continent is arid and semi-arid. story: outside scattered nodules represents regional opportunities In general terms the central arid of immediate prosperity the to address the social and economic region has less than 250 mm annual population drift is to the cities or imbalances in those regions. average rainfall, and its surrounding prospering regional centres. The mining industry is a prime semi-arid region generally has less example, but by itself it cannot In much of the desert region, than 500 mm. For convenience remove the social and economic non-Indigenous populations these two areas are collectively deficits, even where it partners are declining, while Indigenous referred to here as ‘desert’. communities and governments. populations are rising in The Australian desert region covers communities where there are major There are other opportunities about 5.3 million square kilometres issues of social dysfunction. Further across the desert in environmental distributed across seven States and depopulation of Indigenous- and cultural tourism, art, and bush

40 Regional economic growth: issues and drivers foods. But none of these present a whole-of-desert opportunity for economic development sufficient to counter the current adverse social trends, and to equip desert communities to participate in mainstream Australian society. Current governments accept that some cross-subsidisation is necessary to ensure reasonable access to normal services for remote Australians. But it remains the case that in the desert, outside a few large centres, neither services nor opportunities are equivalent to those in the capital cities and major towns of Australia. Most important, the services provided are not equipping Indigenous desert peoples for a dignified place in modern Australia. Desert Knowledge CRC core projects Emerging solutions 1 Livelihoods based on managing natural and cultural heritage. 2 Key industry opportunities in remote areas (bush products industry; self-drive tourism The desert knowledge movement industry; and pastoralism). is an example of how some of the 3 Supporting the emergence of small business in desert Australia (including Indigenous small business). solutions emerge from within the 4 Viability of settlements (what are the drivers of viability). region itself. Desert Knowledge 5 Services to settlements (including approaches to delivering services to remote communities, Australia (DKA) is a statutory reducing costs and increasing efficiencies, and models for business and institutional corporation established by the structures). Northern Territory government 6 Desert regions as integrated systems (including understanding a desert region as an with bipartisan support. It grew integrated system, designing a thriving sustainable region). out of community concerns about adverse social and economic trends Research Centre (CRC) • Five businesses in the Broken in desert Australia, commencing underpinned by support from Hill Mining Services Hub in Alice Springs in 1997 and a broad range of desert local formed a joint tendering spreading to other desert towns governments, Indigenous, business venture. By working together across the continent. and regional development they have been able to tender organisations. for larger projects with $5 The objects of its enabling million of work generated to statute include encouraging and DKA has had some early success date. facilitating education, training and in building regional economic • DKA facilitated the commerce relevant to sustainable capacity through business development of the Our economic and social development, networking, and is proposing to Outback – Partnerships and developing wealth-creation build on that in areas as diverse and Pathways to Success in activities in a manner that as contracting, cross-border Tourism report, in conjunction promotes harmony in and between tourism, and bush foods. It aims to with AusIndustry and a range communities, while maintaining showcase best-practice examples of partners. Building on existing the economy, environment, culture of building regional economic initiatives, it will become the and identity of those communities. strengths through localised employment and procurement. foundation for cross-border In 2002 the desert knowledge marketing and development of network spawned a 28-partner Some of its significant early Outback Australia’s tourism. Desert Knowledge Cooperative achievements include: • A DVD documentary has been

Creating opportunities in desert Australia 41 produced and distributed across partnerships are currently being overall without a far greater the network on the 2005 Cool negotiated between community commitment from governments to Living House. This house, bodies, all levels of government and invest in the places and the people. designed by a network member mining companies at a number of The adverse trends and social in Alice Springs, won the pilot sites. dysfunction can only be reversed if Greenhouse Friendly Desert tackled as a national issue. House competition. The ongoing challenge The battler outback strength that • Representatives from 13 local is part of our national mythology businesses in the network These opportunities for communities, businesses and is reflected in the considerable showcased 17 products from achievements of the desert across the desert regions at the government, with their focus on employment, business knowledge movement since 1997. inaugural Blue Sky Red Earth We need equivalent ingenuity, food festival in Broken Hill. development, education and training, have the potential to strength and effort from the nation as a whole to ensure that Non-Indigenous desert Australian attack the underlying social all of regional Australia is a full businesses are clear that their problems in those regions, as well participant in our economy and future lies in partnerships with as to assist economic integration society. Indigenous businesses and and growth. engagement with Indigenous For more information Education, training and customers. DKA is currently www.desertknowledge.com.au trying to broaden and deepen the employment are vital to all business networking operation, communities if we are to have and in the next stage will build on harmonious and integrated towns KEY REFERENCE the lessons learned and successes and settlements. The extension of best practice in these fields • John Taylor 2005, of the Linked Business Networks ‘Population and diversity: Project. across the desert region would be transforming. Local solution- policy implications of Governments and miners have brokering is vital to reversing emerging Indigenous sought to build on the successes of current adverse trends. demographic trends’, Report individual mine sites to encourage to the Ministerial Council on wider regional development. But we will not achieve acceptable Aboriginal and Torres Strait Regional public–private social and economic conditions Islander Affairs, March.

The Pinnacles, Nanbung National Park Western Australia About the author The Hon. Fred Chaney AO is Chair of Desert Knowledge Australia. He practised law in New Guinea and Western Australia before entering the Senate in 1974. His long service in the Senate and House of Representatives included Ministerial appointments in Aboriginal Affairs and Social Security. Since leaving Parliament in 1993 he has researched Aboriginal Affairs policy and administration and served on the National Native Title Tribunal and Reconciliation Australia Ltd.

42 Regional economic growth: issues and drivers 16. Drivers of endogenous growth in Australia’s regions

Robert J Stimson

KEY MESSAGES displaying poor or even negative and industry structure, distribution growth. of income and wealth, household • There is enormous structure, ethnicity, and housing variability across regional The transitions occurring tenure and financial stress. Australia in the capabilities nationally are the result of factors of communities to adapt exogenous to the nation and factors For large regional cities and towns successfully to socioeconomic endogenous within it. Exogenous (populations greater than 10,000 change. factors such as globalisation of at the 2001 census) advantage is • Endogenous resources production processes and the associated with mining, tourism such as minerals, natural deregulation of trade and financial and service-based communities. attractions and high levels of systems affect all countries and In contrast, disadvantaged human capital are all factors regions, and their impacts are communities (55% of the total) are that increase employment relatively well understood. associated with agriculture or an opportunities and promote older manufacturing base, or were population growth and Over the last 20 years, research into classified as welfare and retirement industrial diversity. regional economic development disadvantaged ‘sea change’ • Socioeconomic disadvantage has been increasingly focused on communities. is greatest in small regional endogenous factors and processes. towns and rural areas that The theories and models that have For small regional towns have failed to adapt to emerged include factors such as: (population below 10,000 at the declining agricultural and old 2001 census and with an urban manufacturing sectors, or to • regional economic diversity, population greater than 50%) large influxes of low-income • population size and advantage is associated with income retirees and unemployed agglomeration, and employment advantaged small people. • levels of human capital and mining localities, and population • Policy-makers may need income, growth advantaged ‘sea change’ and to consider more closely • technology, and ‘tree change’ small regional centres. The disadvantaged communities the unique factors affecting • institutional factors, in this group (73% of the total) are comparative and competitive entrepreneurship, and leadership, either agriculturally based, or have a advantage of each place and and their impacts on regional group of people. stagnant population and declining growth and development. employment opportunities, The author draws on two recent This paper summarises the results including many based on old studies to describe patterns of of two recent studies investigating mining operations. advantage and disadvantage across the performance of places across rural and regional Australia, then rural and regional Australia (see For small urban localities discusses some of the implications for Key references section for details). and rural areas (populations policy-makers. The focus is mainly on economic greater than 1,000 people at the Some places in Australia are performance, but population 2001 census, but with an urban coping well with the processes of dynamics are also considered. population of less than 50%) socioeconomic change, making advantage is associated with sea successful transitions and displaying Understanding change or tree change communities endogenous advantage that is community advantage that are income and employment driving growth and development. and disadvantage advantaged, and locations within In contrast, other places are coping commuter zones of larger cities. less well with those processes The first study looked at The disadvantaged areas (64% of of change, being vulnerable and employment levels, occupational the total) include sea change or tree

Drivers of endogenous growth in Australia’s regions 43 change communities with relatively people with university and integration of places into the ‘new low income and employment technical qualifications in New economy’, even though it might in levels, declining agriculture-based South Wales and Queensland, but some cases generate endogenous communities, and many pastoral to a lesser degree in Victoria and employment growth. and farming areas. the other States. There is also a clear pattern of And only in Western Australia Measuring and disadvantage in many of the and South Australia does location regional cities and towns associated modeling endogenous on or near the coast or proximity with declining agricultural regional growth to the metropolitan area have a areas and the ‘old economy’ significant effect, and that effect is manufacturing industries. A more recent study by the author’s negative. team has attempted to measure Overall, there is a greater incidence endogenous regional growth of socioeconomic disadvantage performance in Australia by Conclusions and negative growth across rural analysing patterns of endogenous The patterns of advantage/ and regional Australia that there is employment growth in non- disadvantage and of endogenous advantage and positive growth. The metropolitan local government growth performance across rural incidence of poor performance, authorities (LGAs) in the five and regional Australia are not only while widespread across rural areas, mainland states. highly variable, but also somewhat is greatest across the small regional unexpected in that the evidence The study confirmed the towns and associated regions, and does not always fit with popular importance of industrial structure less across the larger urban centres. perceptions and the rhetoric and industry specialisation, portrayed in the media and in population size and change, Rural and regional political debate. levels of human capital, and policy implications aspects of industry sector and For example, in small urban In the past, Australian occupation category in explaining localities and rural areas the governments of all political differences in regional endogenous common talk of the ‘rural crisis’ is persuasions have developed policies growth performance, but showed a reality in some but by no means and implemented programs significant variation in the way all instances. Two large groups of aimed at populating rural and these factors operated across the small urban localities and rural states. areas are showing the effects of the regional areas, protecting particular downturn in agricultural incomes industries, and favouring particular Population growth emerges as a afflicting some regions, and those groups of people and particular factor with a strong positive impact places best reflect the popular places. in all five mainland States, and conception of the ‘rural crisis.’ In the context of contemporary population size at the beginning But other rural communities are macro-economic policy, one of the decade 1991–2001 has an thriving, with new employment might expect regional policy to important positive impact in all and commuting opportunities. states except New South Wales. be directed at enhancing national The high concentration of competitiveness and other strategic The level of industry sector disadvantage associated with objectives. Yet it is inevitable that specialisation, and the change welfare and retirement migration governments will also wish to in it over time, both have an in many large regional cities and address regional inequalities. important positive effect in all towns and also in some smaller states except New South Wales, regional towns and rural areas that The economic success of many and the structural change index are characterised as sea change of the larger regional centres is and the dynamics in it over time and tree change communities is of associated with government- are important positive factors in particular concern. funded service provision, Queensland, South Australia and particularly of education, health, Western Australia. The findings reinforce the notion administration and other public that population growth does not services. The continuing shift There is a particularly marked necessarily create great opportunity towards privatisation and impact from the incidence of in terms of the successful outsourcing of these services may

44 Regional economic growth: issues and drivers affect the longer term vitality of mining and tourism centres in KEY REFERENCES these places. isolated and remote locations are • S Baum, K O’Connor & not disadvantaged, though the R Stimson 2005, Fault But many of the smaller regional mining centres will decline if the lines exposed: Advantage towns have little to offer people mineral industry begins to crumble, as a place to work or even to live. and disadvantage across as is happening in some of the Engagement with the industries Australia’s settlement system, older centres. and occupations of the ‘new Monash University ePress, Melbourne. economy’ is difficult there, even if The types of drivers that • R Stimson, A Robson & some of those places have begun might help overcome regional to grow, or the decline in their T-K Shyy 2005, ‘Modelling disadvantage could include a focus populations has been arrested. determinants of spatial on industry clusters and business variations in regional The isolated and remote incubators as a means of promoting endogenous growth: non- communities in rural and regional regional development, together metropolitan regions in Australia have been seen as with other means of harnessing the mainland states of ‘vulnerable’ for a long time, opportunity that take advantage Australia’, paper presented and have attracted a variety of of the unique comparative and to the 45th Congress of the assistance programs. But the newer competitive advantage of a place. European Regional Science Association, Amsterdam, About the author August. • R Stimson, A Robson & Bob Stimson is one of the leading researchers T-K Shyy 2006, ‘Modeling in Australia in the field of urban and regional regional endogenous growth: analysis, development and planning. He has an application to the non- authored 38 books and over 200 research metropolitan regions of papers, and has taught and conducted Australia’, paper presented at research in economic, urban and economic the International Workshop geography, spatial behaviour, housing studies on Creativity and Smart and survey research since the mid 1960s. He Policy as Signposts for is currently Professor of Geographical Sciences and Planning at the Innovative Development, University of Queensland, and Convenor of the Australian Research Tinbergen Institute, Council Research Network in Spatially Integrated Social Science. Amsterdam, May. Canowindra A Wiradjuri word meaning home

The New South Wales town of Canowindra lies in the Lachlan Valley between Cowra and Orange and reflects an era of past grandeur when life moved at an easier and more elegant pace.

The town is located in a natural basin on the Belubula River, 330 km west of Sydney via Bathurst, 32 km north of Cowra and 300 m above sea-level. Built on rich river flats it functions as a service centre to the surrounding district which produces lucerne, wheat, wool and fat lambs. The current population is around 1700.

Drivers of endogenous growth in Australia’s regions 45 17. Impacts of environmental change on Australian agriculture Andrew Johnson

KEY MESSAGES Region Distribution of total Share of employment in agricultural employment agriculture • While the contribution of Capital city 18.0 1.0 agriculture to the national Other metro 3.7 1.7 economy has declined Coastal non-metro 22.7 9.8 significantly in the past Inland non-metro 46.4 16.8 40 years, it is still a major Remote non-metro 9.2 15.6 employer in rural and regional Australia. terms, rising at an average rate include climate change and • Climate variability and other variability, availability of water, environmental factors, as of 2.4% per year during the issues of environmental quality well as open markets and period 1963–64 to 2003–04. In and quantity, urbanisation, technology developments, value-added terms agricultural $ technological development, trade are drivers of change for the production exceeded 25 billion in reform, and national security and sector. 2003–04. biosecurity. • A sustainable future depends The agricultural sector continues to on increasing the economic be an important employer in rural Ongoing economic globalisation value generated from and regional Australia, as shown in and open market access are agricultural landscapes; the above table. increasing the intensity of reducing agriculture's competition; rising consumer and ecological footprint; and There are now fewer, larger farms, government scrutiny are imposing increasing the resilience but small farms still dominate: in a range of new environmental and of rural and regional 2002–03 63% of farms were less social expectations on the sector; communities. than 500 hectares in size, compared and competing demands for water with 69% 20 years earlier. and other environmental resources This chapter reviews the contribution and services are having a negative of agriculture to Australia’s national The rates of return for broadacre effect. On top of all this, climate economy, considers environmental and farms have diverged significantly change and climate variability are other drivers of change for the sector, in the same 20-year period, with increasing risk and uncertainty for and outlines approaches to ensuring its returns for the bottom third of agricultural business operations. long-term sustainability. businesses falling 2–3 points Economic importance of compared with a rise of 1–2 points Keys to sustainable Australian agriculture for the top third of businesses. futures Other key trends include Agriculture’s share of the national To meet these challenges intensification of production, economy has declined significantly Australian agriculture cannot rely diversification of outputs, closer over the past 40 years, from 20– only on traditional approaches integration of production and of increasing returns through 35% in the period between 1901 related activities in the value chain, increased productivity. Rather and the early 1960s, to around 5% escalating land prices, increasing Australia will need to position itself in 2001. Manufacturing has also concern about ecological, social and as a preferred supplier of premium, declined in that period, with the ethical impacts, ageing of the rural higher value agricultural products. greatest increase being seen in the population, and related chronic services sector. shortages of labour. We will need a combination of economic, environmental and Despite the decline in its relative The primary drivers of change social responses, and partnerships share of the economy, agricultural that are impacting on the sector’s between producers, resource outputs have increased in absolute long-term economic prospects managers, industry, research

46 Regional economic growth: issues and drivers easy answers. In future there will be limited growth in value for bulk commodities, balanced by increasing demand for new, higher value products and technologies. To prosper, agriculture will need a capacity to better anticipate change and to respond to market signals throughout the value chain. It will also need to build stronger connections to the wider community to capitalise on new business opportunities emerging as a consequence of achieving sound environmental performance. Diversifying with aquaculture – a typical marron farm showing breeding and grow-out ponds. providers and educators along the services, and conserving and entire value chain. restoring a diverse and resilient natural asset base in agricultural Figure 1 illustrates three elements landscapes. KEY REFERENCE of sustainability for agricultural communities. Firstly, we need to • Productivity Commission increase the total economic value 2005, Trends in Australian ↑ economic value to ↓ ecological footprint from agricultural landscapes. The Australia from agricultural of Agriculture, Research Paper, landscapes Australian agriculture range of available options include: Canberra.

• Increasing unit productivity ↑ resilience of Australian and quality under risk and rural and regional communities About uncertainty the • Industry diversification, author differentiation and value adding Figure 1: Three core elements of of commodities Andrew sustainable agriculture • Optimising efficiencies and Johnson (PhD synergies along the entire value Finally, we need to increase the Qld, MPA chain resilience of rural and regional Harvard) communities. Measures to promote • Increasing the economic benefits is Chief of resilience might include assisting obtained from ecosystem goods CSIRO Sustainable Ecosystems. rural and regional communities and services Andrew’s professional interests to better understand and adapt • Better capturing economic value are in natural resource planning from new knowledge services to economic, social and climate and policy, public participation and technologies change; enabling more effective in private and public sector integration of agriculture into the • Enhancing ability to anticipate decision-making, public and wider socioeconomic matrix; and and adapt to local, regional and private sector partnerships, and facilitating effective partnerships global change. novel approaches to support with indigenous enterprises and rural and regional development. Secondly, we need to reduce the communities. ecological footprint of Australian He is a Director of a number of agriculture. This can be achieved Traditionally the key message for entities responsible for natural through increasing efficiency of key farmers has been to get big. There resource management and inputs under risk and uncertainty, is another way—and that is to get regional development, and has reducing the production and different! consulted to the United Nations export of contaminants, measuring, Environment Program and mapping and valuing key processes Can Australian agriculture get World Bank in South-East Asia. that provide critical ecosystem different? Of course, there are no

Impacts of environmental change on Australian agriculture 47 18. Population trends and economic development: the role of government

Graeme Hugo

KEY MESSAGES regional centres. At the same time, to family, housing, education or there has been a net migration of services. • Regional population changes people from both the capital cities across Australia are diverse, and inland regional areas to nearby Policy options to with some areas growing coastal regions. And while most while others decline. increase or stabilise migrants initially settle in capital populations • Regional areas with the cities, about 15% currently go to right mix of employment non-metropolitan areas. Policy-makers need to take opportunities, amenities and account of the social and economic services can attract internal Figures from the Australian Bureau processes that are driving and international migrants. of Statistics show that the main population changes, and need to • Appropriate policy growth areas are areas adjacent to build on comparative advantages interventions must be large cities, sea-change or tree- with respect to these drivers. They combined with proactive change areas, regional centres, and community involvement to some mining and tourism areas. need to be aware that much of the successfully attract and retain In contrast, the declining areas are current population growth in non- migrants in regional areas. wheat–sheep farming regions, small metropolitan areas is due to the and medium-sized country towns, movement of people from other non-metropolitan areas. Therefore This chapter first looks at the facts and some older regional industrial of current population trends in and mining areas. it will not be possible to achieve Australia, then discusses implications population growth in all or perhaps for population policy from government Drivers of population even most non-metropolitan areas. and community viewpoints. change Of course, appropriate jobs must be Features of Australia’s available to attract workers. regional demography Population change is governed by birth rates, death rates, and internal Strategies that governments Popular mythology says that and international migration. can use to maintain current Australia’s regional population People move from one part populations include improving is homogenous and declining; service and utility provision outside that immigrants will not settle of Australia to another for a cities, retaining government in non-metropolitan areas; that variety of reasons, including services in non-metropolitan areas, most ‘sea-change’ and ‘tree-change’ economic opportunities, a and exploring possibilities of smart immigration is from capital cities; better environment, educational decentralisation of post-school and that policy initiatives cannot opportunities, other lifestyle influence regional population factors, housing-related factors, education. levels. family-related factors, and health Schemes aimed at attracting or ageing factors. The statistics paint a different internal migrants from capital picture. Firstly, there is Surveys of potential immigrants to cities are unlikely to attract young considerable diversity in regional Australia show that workers with single adults. They are best focused population growth and decline. portable jobs and non-workers are on two groups: young families, Regional areas have both higher most influenced by the amenities and baby boomers. Baby boomers fertility and higher mortality rates offered by a particular locality. comprise 28% of the population, than metropolitan areas. There Employment opportunities are the have the highest level of wealth, is a significant net out-migration major factor for unskilled and some and are attracted by lifestyle factors. of youth from rural and regional groups of skilled migrants. Others’ In addition, older internal migrants areas to capital cities and large choices are driven by factors related should not be discouraged.

48 Regional economic growth: issues and drivers Attracting international also risen, from less than 5% in have helped to attract and settle migrants 1998–99 to about 23% in 2004–05. migrant groups, for example the Goulburn Valley ‘Building Links’ In recent decades we have seen A recent survey of migrants living Project 2002, the City of Ballarat’s a new era of State-specific and in capital cities showed that Migrant Attraction and Retention regional immigration programs all 40–50% of men and women of Project, and Warrnambool’s over the world that are aiming to all ages would accept a job in a Regional Migrant Relocation influence not only which migrants regional area, with a significantly Program. Other places can learn are allowed to settle but also higher proportion among those of from these and similar cases. where they settle. Australia has non-English speaking background. had a Working Party on Regional Clearly, employment opportunities Policy issues Migration, and Department of are crucial. Other findings were Immigration and Multicultural that those in trade occupations In summary, policy-makers need Affairs Taskforces with NSW, were more willing to move than to clearly distinguish recruitment Victoria and SA governments. professionals, families were more versus retention strategies, and attracted to regional areas than needs for unskilled versus skilled Many of the schemes have used an single people, spouse employment labour. Local communities need to ingenious definition of ‘regional’. and schooling for children were have a proactive role in attracting The mechanisms used to attract both important factors, and and supporting migrant groups, the preferred groups of migrants regional centres with services are and immigrant support services include bonuses in the Points most attractive. must be decentralised. System, allowing employers, state or territory governments On the other hand, there are Other issues for governments and or relatives to sponsor skilled retention issues when migrants local communities to consider migrants, providing a greater role settle in regional centres. 2001 include the place of humanitarian for regional certifying bodies, and census data shows a gravitation migrants and overseas students relaxing some of requirements such of recent migrants from regional in immigration policy, and the as minimum salary for migrant areas to capital cities. Lack of relative merits of seeking to attract workers. support infrastructure and services temporary versus permanent and a lack of appropriate social migrants. These State-specific and regional networks seem to be the major migration schemes have resulted reasons, indicating a need for local Population processes are amenable in an increasing percentage of communities to be more involved to policy intervention. However, regional migration visas being in welcoming and interacting with while population policy should granted, from 3.3% of the annual migrant groups. facilitate economic, social and intake in 1998–99 to 15.2% in environmental objectives, it must 2004–05. The percentage of these There are a number of examples not be seen as a substitute for a migrants in the skilled stream has of community-based projects that regional development policy. About the author KEY REFERENCES Graeme Hugo is Federation Fellow, • M Bell & GJ Hugo 2000, Internal migration Professor of the Department of in Australia 1991–1996 overview and the Geographical and Environmental overseas-born, AGPS, Canberra. Studies, and Director of the National • G Haberkorn, S Kelson, R Tottenham & C Centre for Social Applications of Magpantay 2004, Country matters: social atlas Geographic Information Systems of rural and regional Australia, Bureau of Rural at the University of Adelaide. His Sciences, Canberra. research interests are in population issues in Australia • GJ Hugo 2005, 'The state of rural populations', and South-East Asia, especially migration. In 2002 in C Cocklin & J Dibden eds, Sustainability he secured an ARC Federation Fellowship over five and change in rural Australia, UNSW Press, years for his research project, ‘The new paradigm Sydney, pp56–79. of international migration to and from Australia: • S-E Khoo & P McDonald eds 2003, The dimensions, causes and implications’. He has published transformation of Australia’s population: widely on population and migration topics. 1970–2030, UNSW Press, Sydney.

Population trends and economic development 49 19. Population change and its impacts on local economic development Ann Bennison

KEY MESSAGES environmental responsibility, this approach focuses on the most • Many of Australia's local governments are being challenged by critical building blocks for success: the service needs of increasing numbers of ageing and low-income the local community and the residents. region. • Sustainable, 'smart growth' planning principles can be applied to develop local economic solutions that best meet local needs. It emphasises community-wide • Investments from other levels of government and business are and regional collaboration for needed to supplement the limited financial resources of local building prosperous and liveable governments. places. While each community • Best-practice examples can inform and assist other communities and region has unique challenges to determine what will work best for their own local economic and opportunities, there are some development. common principles. 1. An integrated approach: All This chapter discusses the roles of all levels of government in catering for the levels of government, business, needs of Australia’s ageing population. Sustainable, whole-of-community education, and the community approaches are advocated for local economic development that includes social, should work together to environmental and governance as well as business economic aspects. create a vibrant local economy, The local government In addition, local government through a long-term investment context increasingly provides the strategy that encourages local opportunities that integrate the enterprise; serves the needs of Australia has almost 700 councils. aged, families, the young, the new local residents and businesses; Total annual expenditure in the immigrants and the disabled into builds on local competitive $ sector is estimated at around 21 the community. advantages; protects the natural billion (some 2% of gross domestic environment; and increases product), and local government For the purposes of this paper, social equity. directly employs about 165,000 local economic development 2. Vision and inclusion: people. is defined broadly as the range Communities need a vision and of activities that seek to advance strategy that involves all sectors, Local government roles have community wellbeing and improve including the voluntary civic traditionally been in providing overall quality of life. In other sector and others traditionally infrastructure: water, sewerage, words, local economic development left out of public planning drainage, waste disposal, libraries, is taken to include the social, processes. recreational facilities, park lands, environmental, economic and 3. Poverty reduction: Local employment centres, main street governance aspects of development economic development efforts maintenance, organising festivals, rather than just the business and should be targeted to reducing and promoting arts and culture. investment-related activities. poverty, by promoting jobs that match the skills of existing Local governments are also the Principles of sustainable residents, improving the skills long-term strategic planners and planning of low-income individuals, approval bodies for development and ensuring the availability applications. They help to build A comprehensive new model is of quality affordable child care, local businesses and create emerging for ‘smart growth’ that transportation and housing. opportunities for new enterprises recognises the economic value 4. Local focus: Because each by delivering a range of incentives of natural and human capital. community’s most valuable and innovative solutions. Embracing economic, social and assets are the ones they already

50 Regional economic growth: issues and drivers have, economic development pay, benefits, opportunities Community responses efforts should give first for upward mobility, and a priority to supporting existing healthful work environment. These trends mean that local enterprises as the best source of governments face rapidly growing 11. Compact development: To business expansion and local job demand for human services with minimise economic, social growth. limited financial resources and and environmental costs, new a narrow revenue base, as an 5. Industry clusters: development should take place increasing proportion of their Communities and regions in existing urban areas before residents are pensioners or on low should identify specific gaps using more agricultural land or incomes. and niches their economies can open space. fill, and promote a diverse range 12. Liveable communities: To Local government has of specialised industry clusters infrastructure assets valued at that draw on local advantages protect the natural environment $ and increase quality of life, more than 110 billion, but to serve local and international largely constructed without markets. communities and regions should have land use patterns particular consideration for ageing 6. Wired communities: that ensure a mix of uses, populations. The pressures of Communities should invest in minimise the impact of cars, providing adequate infrastructure, technology that supports local and promote walking, bicycling, maintaining affordable housing businesses, improves civic life, and transit access to activities and facilitating viable economic and provides open access to and services. activity, whilst continuing to information and resources. protect the natural environment 7. Long-term investment: Drivers of Publicly supported economic population development programs, change investments and subsidies should be equitable and An ageing targeted, support environmental population is and social goals, and prioritise one of the most significant infrastructure and services that demographic promote the vitality of all local changes facing enterprises. Australia. 8. Human investment: Communities should provide Not only are lifelong skills and learning we having less opportunities by investing children, but in excellent schools, post- we are generally secondary institutions, and all growing availability of continuous significantly older education and training. than previous generations. 9. Environmental responsibility: Communities should support The other major and pursue economic demographic development that maintains factor impacting or improves, not harms, the on local governments comes from and sense of community, are environment and public health. the ‘sea-change/tree-change’ effect serious challenges facing all 10. Corporate responsibility: that has seen significant population governments, particularly local Enterprises should work as movement to many of Australia’s government. civic partners, contributing to coastal regions. the communities and regions The Australian Local Government where they operate, protecting Some larger inland urban centres Association has published guides the natural environment, and are also growing, although on a to assist local councils to plan for providing workers with good much smaller scale. an ageing community, is compiling

Population change: impacts on local economic development 51 a council ageing strategy register, Many are adopting best practice However, in the face of these major and is developing an online toolbox sustainable development planning demographic changes a sustainable that will provide councils with the principles that are spatially driven future for Australia also depends tools, resources and contacts to and rely on local knowledge, on: integrate population ageing issues understanding and commitment. into all aspects of their operations. Such projects are an example to • increasing the level of Commonwealth leadership politicians and policy-makers that Councils have begun to respond and financial assistance to local ‘top down and narrow business- in a variety of ways: some are government; only directives’ do not deliver investing in services to support sustainable regional economic • continuing to support the their senior residents, such as outcomes. development of regional libraries and home and community skills, education and national care; others are investing in infrastructure provision; and initiatives to support their mature- Role of other levels of • empowering communities by aged workers, or sponsoring government expanding the principle of programs that promote active subsidiarity. Local government has achieved ageing. An increasing number For more information are employing age development much over the years and will officers. no doubt continue to do so. www.alga.gov.au

Local economic development: some best practice examples

• In NSW, Newcastle City Council has helped to reposition the City after the closure of the BHP steel mill.It has worked strongly on delivering a cultural precinct to its CBD, and jointly developed the Newcastle Live Sites program with business and the State Government to coordinate more events in the heart of Newcastle. This program integrates ideas and talents of local performing artists with the aim of providing development and employment opportunities for the performing arts industry. • In Tasmania, the Cradle Coast Authority was created to coordinate and drive regional economic development across nine local government About the author areas in North-West Tasmania. It is engaged in activities such as Ann Bennison is a Director tourism development, education and training, and cultural and industrial of the Australian Local promotion that are specifically focused on the needs of its region. Government Association and • Victoria’s City of Ballarat’s new agri-business centre will bring together the first and only woman office- complementary agri-business activities on a greenfield site that will build bearer of the Local Government on the region’s traditional food-processing strengths while arresting Association of Queensland. the economic decline of the rural community in which it is located. An education and training facility will be incorporated to lift the region’s skills She has been a Councillor base and help to curb the flow of people leaving the local community in in Brisbane City Council search of opportunities elsewhere. (Australia’s largest municipal government) since 1994, and has served on various committees including the Environment Committee, Customer & Local Services Committee, and Urban Planning Committee. Her first two careers were in finance and industrial relations.

52 Regional economic growth: issues and drivers 20. Tourism in regional development

Andrew McEvoy

KEY MESSAGES Tourism Australia’s role ‘intention’ to travel Australia. and mode of operation Through our role in the tourism • International and domestic and travel marketing matrix we tourism offers opportunities Tourism Australia (TA) is the influence the actions of others by: for employment and growth statutory authority responsible • championing a clear destination of regional economies. for international and domestic marketing strategy; tourism marketing of Australia, as • Tourism Australia has • articulating and promoting a well as the delivery of research and responsibility for research compelling tourism destination forecasts for the Australian tourism and marketing of the brand; Australian tourism sector. sector. • facilitating sales by engaging • Successful marketing of Its main objectives under the and supporting the distribution particular destinations Tourism Australia Act 2004 are to: network; depends on a clear • influence people to travel to • gathering and communicating understanding of the needs Australia, throughout Australia, market intelligence for improved and expectations of different and within Australia; decision making; and market segments. • help foster a sustainable tourism • working with partners who can Regional communities with industry in Australia; and extend our influence. appropriate natural or man-made • help increase the economic We measure our success by total assets and local business champions benefits to Australia from visitor spend and dispersal of that can profit from opportunities in the tourism. spend. tourism sector. Tourism Australia helps TA is a leverage marketing them understand their target market organisation that aims to move Our ‘Where the bloody hell are and promote their locality. people from a ‘preference’ to an you?’ global marketing campaign TTF Australia National Tourism Employment Atlas 2004

Map 1: Tourism employment

Darwin ■ intensity by Tourism Region Kakadu Arnhem

Daly Tropical North Queensland Katherine

Cairns

Broome Kimberley

Tablelands Townsville Northern Port Hedland Whitsundays Mount Isa Mackay Pilbara Macdonnell Mackay Outback Alice Springs Fitzroy Gascoyne Bundaberg Petermann Hervey Bay/Maryborough Midwest Sunshine Coast Darling Brisbane Downs Gold Coast

Geraldton Outback SA Northern Rivers Goldfields Tropical NSW Big Sky Country Coffs Harbour Kalgoorlie-Boulder The Living Outback Wheatbelt Flinders North Coast NSW Lord Howe Island Perth Ranges Broken Hill Hunter Peel Eyre Explorer Whyalla Country Central Coast South East Peninsula Great Sydney South Southern Riverland Mildura Blue Mountains West Riverina Capital Mallee Country Illawarra Albany Adelaide The Murray Canberra Kangaroo Island Wimmera Albury Limestone South Coast Coast Western Inset for Southern Victoria Grampians Inset for Southern South Australia Ballarat Snowy Mountains Mallee The Murray Wimmera Mount Gambier Central Murray Eyre Flinders Western Lakes Murray East Peninsula Ranges Gippsland Riverland Murray East Bendigo Clare Loddon High Yorke Valley Goulburn Country Peninsula Melbourne Tourism Share of Central Highlands Employment (%) Barossa Greater Launceston Lakes 9.0 and over Devonport Gippsland Adelaide Murraylands 7.0 to 9.0 East Coast 6.0 to 7.0 North West Western Adelaide Hills 5.5 to 6.0 Northern Geelong Ballarat Phillip 5.0 to 5.5 Limestone Macedon Peninsula Island Kangaroo West Coast Upper Yarra Island Coast 2.0 to 5.0 Spa Melbourne Fleurieu Peninsula Southern Country Melbourne East Greater Hobart

Tourism in regional development 53 Understanding the Is a sizeable group in the market place, & has a market similar set of core values. Spends more and disperses more. TA undertakes research aimed at getting a clear picture of the Global Target needs and expectations of different Market segments of the market. As one Experience example, Figure 1 illustrates the Seeker Will value the quality of Has a natural affinity with the destination over its characteristics of the segment we the Australian brand, & functional aspects. will be less concerned call the ‘experience seeker’. with rational barriers. Communications directed to this target group will In a nutshell, the experience have broader appeal to other groups (halo effect). seeker’s needs can be summarised as follows: Figure 1: The experience seeker • Functional: looks for contrast, learning experiences, 2006 was the most talked about Tourism has many benefits for opportunities for involvement in Australian tourism history, regional economies. It brings new (environment, people and being seen by 180 million people dollars into an economy which are culture), insights into the in key markets. There was a 71% spent and then re-spent, producing everyday increase in web hits, and 800,000 a multiplier effect. Tourism is labor • Economic: spends more, does downloads in total. intensive because of the importance more. Willing to pay for ‘world’s of personal experiences. It offers best’ a community an alternative to Tourism and regional • Social: deeper, more complex, growth traditional industries, is something wanting to develop personally, Australia is very good at, and can questioning the established $ The tourism sector is a 75 billion be a source of civic pride. norms, looking to stand out $ sector ( 54 billion domestically) from the crowd Most of the regional businesses and employs more than 500,000 • Emotive: holidays are balanced, engaged in tourism are small to Australians, with 200,000 of they are both personally medium enterprises (SMEs), with those in rural and regional areas. important for their personal It is possibly Australia’s most 80% of the businesses employing needs and for their partner/ regionally dispersed industry. The less than 10 people. Tourism friend accompanying map shows the offers growth opportunities for • Cultural: curious about the Indigenous as well as mining and distribution of those jobs and the world, different to the rest – a extent of the dispersion. pastoral communities. more complex person. To better meet those needs we aim to understand: • What they read, watch, listen to (media) • How they research and plan (information) • How they book a holiday (distribution).

Cairns: The Skyrail cableway

54 Regional economic growth: issues and drivers Two regional case studies

With a population of 4,000, Kangaroo Island in South Australia attracts 160,000 visitors annually (40 times its population!), of which 57% are from overseas. It is a natural wonderland with a great name, so perhaps it is not surprising that tourism has replaced farming as its number 1 industry, with wine and food becoming part of the tourism rather than agricultural sector. As one example, farmers Lyn and Graham Wheaton are now tourist operators, acting as hosts and tour guides and running a successful business at their property, Stranraer Homestead.

In the 1980s, the small town of Daylesford and its neighbour Hepburn Springs in Victoria’s Spa Country were full of empty shops. In the 2000s there has been a real estate boom, and ‘no vacancies’ signs are common throughout the year. Alla Wolf- Tasker’s Lake House is one of many success stories in this community.

Lessons for regional champions, including local industry About the communities notables, enlightened councils, and author private sector developers. Tourism is not the panacea for all Andrew is responsible for communities. Firstly, the presence Nevertheless, with the right managing the of natural or man-made assets combination of local assets and is important, as is easy access to Industry and individuals committed to making it overcome distance: for example, Organisational happen, regional communities can Hervey Bay has boomed since the Development profit considerably by appropriate advent of VirginBlue and Jetstar team within marketing of their region. flights to this centre. Tourism Australia. This includes marketing Australia For more information Successful regional tourism as a compelling destination to initiatives are often led by www.tourism.australia.com Australians, as well as assisting the Australian industry to better capitalise on global tourism opportunities.

Tourism in regional development 55 21. Growing regions: the place for new industries

Peter O’Brien

The prosperity and growth of Australia’s regions is closely related to the profitability, sustainability and resilience of their industries.

The Rural Industries Research and Development Corporation (RIRDC) handles the research and development needs of a range of new and established rural industries, as well as issues affecting the whole of rural Australia, to facilitate a more profitable, sustainable and dynamic rural sector.

Australia’s rural industries have shown strong productivity growth, largely underpinned by research and development. The growth New industries and products enhance regional tourism by providing a regional flavour in productivity shown by the invests in areas such as farming the landscape they need economic agricultural sector significantly systems that integrate forestry, security. outperforms the rest of the market and improving the management economy – 2.8% a year between of human resources, information Productivity growth, through 1975 and 2004 – and has shown technology and communication innovation, can deliver economic a productivity dividend of $177 systems on farms. security and environmental billion over the last three decades. sustainability. A major focus of RIRDC’s Australia’s rural industries need cross-sectoral programs is productivity growth to remain The changing face of providing innovation to underpin profitable, competitive and Australia’s regions productivity growth – growth that sustainable in a demanding global is essential to prosperous, dynamic Alongside the growth in trading environment, under tough regions. productivity, the Australian physical conditions. By rapidly agricultural sector has changed adopting innovation that improves RIRDC also has responsibility for in terms of the makeup of its their performance, Australian a range of established industries: industries. In the past twenty years farmers have been able to rise rice, chicken meat, horses, fodder, the proportion of gross agricultural to the challenge of international pasture seeds, deer, buffalo, output that comes from the competition. and honeybees. Some of these traditional major commodities has industries contribute strongly to fallen—from 75% to about 59%. It RIRDC’s role the regional economies of the areas is a trend that is likely to continue. in which they operate. Others RIRDC has a cross-sectoral are vital in supporting other rural This change reflects remarkable responsibility, dealing with issues enterprises. growth in industries other than the relevant to the whole of rural and traditional major commodities like regional Australia, like better trade A healthy rural economy depends beef, wool and broadacre grains. conditions for rural producers, and on sustainable farming practices. The new growth is in industries better environmental management For farmers to adopt practices that like the Australian olive industry, for farming systems. RIRDC also ensure the long-term health of viticulture, and the many other

56 Regional economic growth: issues and drivers New industries—like Asian vegetables—are increasingly making an important contribution to vibrant regional communities new and emerging rural industries able to take the risks that go with difficulties than major commodity for which RIRDC is responsible new industry development. producers in gaining market access. —such as organic foods, crocodiles, They also have all of the needs of Asian vegetables, coffee, green tea, The changing composition of traditional industries— the need alpacas and essential oils. Australia’s agricultural output for innovation, for research and has implications for the role of development— but they lack the These are the new rural industries; government in encouraging the financial base to underpin them. industries which are growing development of the new rural significantly and are now an industries. Some of the needs of new rural important part of the national industries are different from rural sector. They are playing an Challenges for rural those of the traditional industries. important part in revitalising entrepreneurs To unlock the potential of these regional Australia. industries, our approach to policy The business of new industry development and R&D investment The producers involved in the development is essentially risky. needs to take into account their new rural industries are often unique values and their specific innovators. While some are career New rural industries have needs. farmers who have diversified particular challenges in the their farm business, many are establishment and maintenance Enhancing the flavour of entrepreneurs from other sectors, of strong industry organisations. Australia’s regions attracted to the challenge of They have challenges in the investing in new industries, even establishment and maintenance of New industries and products though they are intrinsically continuity of quality and supply. enhance regional tourism by risky. They are often passionate, They have particular concerns providing a regional flavour; they entrepreneurial, and are willing and about market access, with more deliver environmental benefits; and

Growing regions: the place for new industries 57 they boost the productivity of other Governments can help in capacity regional economies. The olive agricultural industries. building, in improving institutional industry is a good example; the arrangements, in supporting crocodile industry is a good Tourism now plays an important research and development; example; so too are the raft of role in many rural economies, in reducing the risks for new new rural industries that RIRDC and the new industries contribute industries. By reducing some of the invests in – from cocoa to wasabi, strongly to the type of regional hazards for incubating industries from coffee and green tea to differentiation that can make we can prime the pump for rural mohair. regions attract visitors. prosperity. But as developing industries Visitors to many of Australia’s Supporting new rural industries they do face risks – indeed, some region are attracted by distinctive can help accelerate diversification will fail; while others will grow regional produce – from and differentiation of Australian dramatically. Canola and cotton agriculture. RIRDC’s investment rainforest fruits, crocodile steak are two examples of established in new rural industries is setting and Australian gourmet coffee industries that were once new and up Australian agriculture for a in tropical regions, to temperate emerging. truffles, extra virgin olive oil and more profitable, resilient and sheep milk cheeses. Increasingly, sustainable future, where the most Australian production is already appropriate crops and animal these types of new industries changing, and this change will products are grown in the most contribute to diversified, resilient continue. With the right help, the appropriate regions. Many new rural regions. new rural industries will make an rural industries use less water and important, growing and unique face fewer disease problems. They contribution to the profitability, Supporting success are key components of regional sustainability. sustainability and resilience of rural New industry development Australia. can dramatically benefit from The new rural industries have For more information government intervention to potential for significant growth increase the likelihood of success. and for a greater contribution to www.rirdc.gov.au

About the author Peter O’Brien, RIRDC Rural Industries Research and Development Corporation Managing Director, Ne es w In ssu du l I New st has served ra Human Capital, Communications rie Ru and Information Systems Plant Products s al as Executive n Food Integrity and New Animal Products o ti Biosecurity Asian Foods Director of the Bureau of a Essential Oils N Global Competitiveness Organic Produce Rural Sciences, Director Rare Natural Animal Fibres Rangeland & Wildlife of the Australian Fisheries Systems Wildflowers and Native Plants Tea Tree Oil Management Authority and as Environment & Farm Management Chicken Meat an executive in the Australian Agroforestry & Farm Government Department Forestry Deer Honeybee Buffalo Rice of Agriculture, Fisheries and Pasture Seeds Horses Forestry. Dr O’Brien has also Fodder Crops worked in research on wildlife stries management and exotic disease Established Indu contingency planning, and has published on performance RIRDC is the most diverse of the Australian Government Research and Development Corporations. Clients management and scenario and research extend across a range of rural and regional industries dealing with issues from staples like rice and chicken; luxury products like crocodile skins and truffles; and rural policy issues like trade and farm health planning. and safety.

58 Regional economic growth: issues and drivers 22. Regional development and infrastruture: the Queensland approach Bob McCarthy KEY MESSAGES In regional Queensland $36 billion of public and private • The Queensland Government must plan and fund both public investment to sustain and grow infrastructure and soft, smart infrastructure to achieve its Smart regional communities is already Regions objectives. being undertaken or under active To do this it is using a combination of direct investment and consideration. The Blueprint for partnerships with industry and local communities. the Bush proposes $10 billion in energy infrastructure, $3 billion in Provision of infrastructure for Queensland’s regional economic development regional and rural roads, and $2.5 is an essential component of the Smart Queensland: Smart State Strategy. billion in rail infrastructure and The author outlines what the State Government is doing to build public ports. infrastructure and to promote regional innovation, skills and business development. The Queensland Government is also facilitating the roll-out Infrastructure Planning fundamentals of broadband infrastructure in challenges for the Smart regional areas, in association State In 2001, the Government released with the National Broadband a broad, five-year Strategic Demand Aggregation project. The Queensland’s total area of 173 Infrastructure Plan which outlined Outback Net project will provide million hectares is comparable its philosophy on infrastructure with the 170 million hectares of development, the strategic direction Germany, France, Italy and Spain for capital investment, and combined. But whereas those opportunities for research, training, countries have a total population innovation and technology. of 240 million, Queensland’s is a The Government has since focused mere 4 million, with 1.5 million in attention on regional planning, greater Brisbane and 2.5 million with the release in 2005 of the spread across the rest of the state. South-East Queensland Regional Plan 2005–2026, and a Blueprint The provision of public for the Bush in 2006. infrastructure is a fundamental broadband services to more than building block for growing our Eight billion dollars have been 70,000 residents including 17,000 regions. Public infrastructure allocated for new and capital students, 1,000 teachers and 7,000 refers to the hard stuff, the physical infrastructure projects in 2006–07, Indigenous Australians from assets: buildings, wires, roads and with the Government’s total capital Stanthorpe through to Birdsville, highways, dams. We also need works budget being forecast to Winton and Moranbah. to provide soft infrastructure: exceed $10 billion in coming years. the key services that support the Developing smart development of human capital, The South-East Queensland regions research programs and business Infrastructure Plan maps out The economic development $ networks. investments of up to 55 billion initiatives reflected in the over the next 20 years. It includes Regional Plan are underpinned More specifically, we need to 230 projects and initiatives that by the Queensland Government’s provide smart infrastructure: will create hundreds of thousands Smart Queensland: Smart State support for knowledge, information of jobs for people involved in Strategy 2005–2015. This Strategy and the promotion of creativity, planning, designing and building identifies investment in research, innovation and skills. new infrastructure. development, technology diffusion

The Queensland approach to regional infrastructure 59 and commercialisation of ideas. It also includes investments in knowledge, skills, diversity, creativity and connectivity as the key mechanisms to achieve increased productivity and a better quality of life.

As part of the Smart State hub for innovation, research, education and training, $1 billion has been committed to implementing the Queensland Skills Plan (www. trainandemploy.qld.gov.au/ skillsplan/). Caring for our In related initiatives the $5.5 The Leading Smart Regions environment million dollar Environmental project has recently been Partnership Scheme will New Government and industry initiated in partnership with key combine and enhance several capital expenditure in the regional economic development existing vegetation management mining industry was estimated $ stakeholders. This project aims programs. And 4 million has at $10.1 billion in 2004–05. The to create shared visions for also been allocated to expand the Queensland Future Growth Fund economic development in each of very successful rural water use has allocated $300 million to Queensland’s regions. It is designed efficiency program throughout support the continued development to develop long-term partnerships Queensland. of clean coal technology. In among key regional economic $ addition to the 500 million Local communities are closely development stakeholders. Low Emission Technology involved in implementing these Demonstration Fund established by The Smart Regions portal provides programs. Fourteen community- the Commonwealth Government information directly to economic based, regional natural resource there is a $300 million industry development organisations in the management groups are working fund. regions. The website also includes with government to protect the environment. In another investment attraction materials When it comes to water we face environmental initiative, $11 developed as part of the Growing the same challenges as the rest million is being spent over three Regional Business initiative. of Australia: widespread water years to address significant aspects shortages, and the need to manage of pest management in the The Business Retention and land and irrigation in sustainable Expansion program is another state—specifically on preventing ways to prevent degradation and and eradicating new pests, reducing initiative specifically designed salinity. We have made a multi- to assist regional communities the impacts of widespread pests, billion dollar commitment to build and developing innovative pest improve their local economies. new dams. management solutions. About the author Regional economic development Bob McCarthy is now the Director-General of is an essential part of developing Queensland’s Department of State Development, Queensland as the Smart State, and and was previously Director-General of the having the right infrastructure in Department of Natural Resources. During his 28 place is an essential part of regional years of working across the private sector, federal and development. The Queensland state governments, Bob has forged a reputation as a Government is committing proactive, results-driven executive administrator and the funds and developing the policy-maker. He has experience and understanding of agribusiness, partnerships to make it all happen. resource management and structural change, and regional economic development, and played a major role in restructuring the state’s meat For more information processing industry. www.smartstate.qld.gov.au

60 Infrastructure and regional development 23. Transport infrastructure: AusLink’s contribution to growing regions

Leslie Riggs KEY MESSAGES of Australia. Rising fuel prices are increasing transport operating • Australia's regional and costs, squeezing profit margins national economies depend and potentially leading to some heavily on exports, many of modal shift. But if current prices which are transported on the are sustained, structural adjustments nation's major roads. AusLink need to flow through the economy. • A projected doubling of Building our National Transport Future transport needs within 20 A national reform years has prompted reform, Travel between the cities is along agenda with major planning and long, skinny transport routes, with In the past the planning and investment decisions now 90% of our total road transport prioritising of land transport made cooperatively by activity being conducted on 20% of funding was primarily in the Australian, state and territory our roads. hands of state governments. This governments. Exports are the lifeblood of our contributed to fragmented and • The Australian Government’s economy. One in five Australian short-term planning, decision- AusLink program includes jobs is directly or indirectly making and funding for our land a defined National Land connected to exports. This is even transport infrastructure. Something Transport (AusLink) higher in regional Australia, where had to change. Network as the focus for around one quarter of jobs is The Australian Government planning and investment, export-related. jointly developed whole-of- developed AusLink, an integrated corridor strategies for the 24 Effective and efficient land land transport plan for Australia. major corridors, a National transport is essential to deliver AusLink provides a framework Land Transport Plan, and cargo to Australia’s export hubs. and direction for better transport funding support for road, rail Seasonal commodities travel from planning, funding and investment and intermodal improvement inland Australia for shipping to decisions into the future, in in regional and local areas. export markets, along with the bulk partnership with the states and of the products from the mineral territories. This chapter gives an overview of the and resources industries. Investment of more money into role of transport infrastructure in the improving roads and rail is not the While large quantities of bulk Australian economy, with a particular only way. Reform is also a big part cargo are delivered by rail, the lion’s focus on the new direction in land of the solution. transport infrastructure investment share of the non-bulk freight will represented by the AusLink program. continue to be borne by the nation’s In roads, there are regulatory roads. Rail’s share of the task, while improvements being made Importance of our growing, will not have any real by the Council of Australian transport infrastructure impact in moving freight off roads. Governments (COAG) to deliver This is especially so in urban end- greater efficiencies in the way in Australia has a comparatively points, where local delivery will rely which we use those roads. small population located in a almost entirely on road transport. For example, two initiatives, Higher small number of large centres Australia’s transport needs are Mass Limits and Performance separated by very long distances. expected to double within the Based Standards, are tools to Most of Australia’s population next twenty years and projections deliver a better use of trucks on is concentrated on the eastern suggest that there will be limited our roads. They will both lead to seaboard, from Melbourne to population growth and a continued technological improvements in our Brisbane. migration to the coastal fringes trucks, such as:

AusLink’s contribution to growing regions 61 • Road-friendly suspension, which reduces the amount that a truck bounces around on the road, thereby reducing the rate of deterioration in the road base; • Front under-run protection, which reduces the impact that a truck will have on other vehicles if it is involved in a crash. Why is AusLink important?

The Australian, state and territory governments, represented by the relevant transport agencies, are now working together to identify bottlenecks and deficiencies in our major transport infrastructure as a will identify major bottlenecks and Territories according to a basis for governments then to agree and deficiencies; will determine formula based on population and on the priorities for infrastructure the strategic priorities for the road length and then further by funding over the coming decades. corridor’s long-term development; the Local Government Grants and considers the land transport AusLink planning combines Commissions in each state and corridor within the broader the Northern Territory. Councils information about our current transport system. use of Australia’s national roads, are free to spend this money on railways and intermodal terminals Under AusLink the Australian road priorities they nominate. with information about the Government is delivering its first Supplementary Roads to future demands by industries and National Land Transport Plan, Recovery funding from the recent passengers on the network. By committing expenditure of $15 Budget gives local government identifying the long-term needs billion over the five years to June greater opportunity to accelerate across all forms of land transport, 2009. the upgrading of local road we intend to target investment to infrastructure. achieve the best outcomes. As well as investment in the national road and rail network, Investing in our major transport Components of AusLink AusLink includes two elements corridors between cities and that support regional land transport within regions across Australia is infrastructure. Firstly, the Strategic AusLink consists of a number of a fundamental part of ensuring components. Regional Program provides a forward-looking agenda to support that regions can contribute to The National Network is the growing and sustainable regional developing their own future. defined network of important road economies. With total funding for AusLink’s partnership approach and rail infrastructure links on the program of $220 million, the will contribute to the growth which the Australian Government’s program funds transport projects of Australia’s regions through planning and infrastructure support that have a regional focus within improved infrastructure. Through is focused (see accompanying map). a regional planning framework. the AusLink corridor strategies, These projects involve partnerships we can be confident that jointly Corridor strategies are being with local councils. identified priorities will be used jointly developed by the Australian to determine how we collectively and relevant state and territory In addition, since 2001 every governments for 24 corridors that council in Australia has received meet the future needs of our road are the primary links within and funding for local roads under the and rail infrastructure. between our main urban centers. Roads to Recovery program. For more information Each strategy is focused on the Direct funding to local councils whole corridor; is multi-modal; is distributed amongst States see www.auslink.gov.au

62 Infrastructure and regional development Moving hay in South Australia

Stuart Highway, Northern TerritoryAustralia

About the author Leslie Riggs headed the Regional Services area of the Department of Transport and Regional Services before taking up her current role of Executive Director of AusLink. Earlier in her public service career she was involved in policy and programs in the education and training area, and in delivering workplace relations services. She has extensive experience in programs development, implementation and management, especially where programs are undergoing significant change.

AusLink’s contribution to growing regions 63 24. Water management in Australia

Ken Matthews

Elements of water management covered by the NWI KEY MESSAGES agreement • Water is high profile in the 1 Water access entitlements and planning framework cities—but absolutely vital in 2 Water markets and trading regional Australia. 3 Best practice water pricing • Water management is 4 I ntegrated management of water for environmental and other public currently being reformed benefit outcomes across Australia, based on the 5 Water resource accounting National Water Initiative. 6 Urban water reform • Security of entitlements and 7 Knowledge and capacity building transparent planning are two key benefits to regional 8 Community partnerships and adjustment. Australia. • Water trading will be a major to environmentally sustainable At this stage many aspects of force for change. levels of extraction. water policy, planning, science Just under half of the NWI’s 70 or and economics are still in their This chapter outlines features of the so actions involve national actions infancy and relatively untested National Water Initiative and its or other action by governments in large-scale environments, and expected benefits for regional economic working together. This reflects not private sector participation is just development. just the emphasis in the Agreement on greater national compatibility beginning. The National Water in the way Australia measures, Initiative plans for, prices, and trades Yet there are strong grounds for water. It also represents a greater optimism, with considerable public The National Water Initiative level of cooperation between and private goodwill towards (NWI) is Australia’s blueprint for governments to achieve this end. reform. The NWI remains the national water reform. It represents The aim is to find a national the Australian Government’s and agreed national blueprint. Water approach among many different state and territory governments’ is on the political agenda, and players to integrating production shared commitment to reforming progress is being made. and environmental issues, and 200 years of practice in relation to balancing science and economics. our water resources. Among other things, state and We want to keep water at the front territory governments have agreed: The NWI Agreement signed by all of national public policy. these governments is an attempt • to legislate for clear ongoing entitlements, to consolidate in one document No-one is pretending that this will the whole of water reform. It be simple—this is a new journey for • to complete plans by a certain recognises: both the Australian Government date, and the states and territories. There • to adopt certain national • the continuing national are no silver bullet solutions and few imperative to increase the standards and frameworks, opportunities for quick runs on the productivity and efficiency of • to implement performance board. Australia’s water use; benchmarking arrangements, • the need to service rural and Water is political: everyone has their and urban communities; and own opinion, and there are strong • to implement urban water • the need to ensure the health of community views. Success depends demand management measures, river and groundwater systems, on ongoing close Commonwealth– including by establishing clear State cooperation, for there can be in order to improve water pathways to return all systems big winners and losers. management in Australia.

64 Infrastructure and regional development of investment opportunities under the NWI should lead to increased investment by both public and private stakeholders. In summary, the NWI signifies: • a commitment to identifying over-allocated water systems, and restoring those systems to sustainable levels; • the expansion of the trade in water resulting in more profitable use of water and more cost-effective and flexible recovery of water to achieve environmental outcomes; • more confidence for those investing in the water industry due to more secure water access Hume Dam. Photo by Trevor Ierino. Courtesy Goulburn Murray Water entitlements, better registry arrangements, monitoring, Water and regional plans will help to bring certainty reporting and accounting of Australia for consumers, and allow them water use, and improved public greater scope to plan agricultural access to information; Regional Australia’s water use and other activities. • more sophisticated, transparent intensity is much greater than and comprehensive water that of urban Australia. Regional The establishment of water planning; and Australia consumes about 85% of markets and water trading means • better and more efficient Australia’s total water use. that more water will move to its management of water in urban highest value use. This will include environments, for example Although availability of water does water trading between urban and through the increased use of not guarantee regional economic rural users. recycled water and stormwater. growth, scarcity of water and lack For more information of security over future supplies Actions under the NWI will of water could constrain regional improve water accounting through see www.nwc.gov.au improved and nationally consistent growth. About the author water metering and measuring for The water planning and all water uses, not only for irrigation. Ken Matthews AO entitlements actions under the (BEcon Syd) is the NWI will help regional Australia Private sector involve- inaugural Chairman through clearer water planning ment in water reform and Chief Executive processes, more integrated of the National Water management of environmental Investment in infrastructure is Commission. He water, and more secure water a very live current policy issue previously served as Secretary of the entitlements for water users. The in all parts of Australia. It is Department of Transport and Regional requirement for consultation with important that water is built Services, and of the Department of interest groups about proposed into the infrastructure debate, Agriculture, Fisheries and Forestry. water plans gives all parties the and that private investment in He was responsible for advice on opportunity to have their views water infrastructure is welcomed. manufacturing industry policy and heard, and makes the processes There is no intrinsic reason why technology policy in the Department of more open and transparent. water distribution should be a Industry, Technology and Commerce, governments-only domain. and earlier held a series of positions A key aim of the Initiative is to within the Department of Defence and restore surface and groundwater Innovative actions under the the Canadian Department of National systems to environmentally NWI can be accelerated by private Defence, dealing with international sustainable levels. Water sharing sector involvement. The security policy and defence industry policy.

Water management in Australia 65 25. Broadband infrastructure for regional Australia

Simon Bryant KEY MESSAGES 3 providing targeted Government services in rural and remote areas, funding interventions where and recommended an incentive- • Government support for appropriate. based program to address these broadband access in regional Competition is promoted both issues. and remote Australia has through the competition regulatory been based on the principles regime and the design of funding In response the Australian of competition, regulated programs and the processes under Government introduced the access to infrastructure, which they are administered. Higher Bandwidth Incentive and incentives to private Scheme (HiBIS), a $157.8 million providers. Improved access to broadband initiative that provided registered • New approaches are now services in regional Australia has Internet Service Providers (ISPs) needed to fill service gaps in been on the political agenda for with incentive payments to supply the most remote areas and some years, and was a key focus higher bandwidth services in where there are technical of the terms of reference of the regional, rural and remote areas impairments in current 2002 Regional Telecommunications at prices comparable to those networks. Inquiry (the Estens Inquiry), available in metropolitan areas. • The new Broadband Connect which followed an earlier program will support a Telecommunications Service Inquiry The aim was to ensure equitable small number of major (TSI). access to broadband services infrastructure projects that throughout regional, rural and will focus on broad network The TSI report found that key remote Australia through effective coverage and provide a concerns related to rural and support for the competitive ISP platform for future faster remote areas rather than regional market and cost-effective targeting broadband services. centres, and that the service areas of Government funding support. • Collaboration and of concern were the connection, HiBIS was followed by the $878 partnerships between private repair and reliability of basic million Broadband Connect providers are encouraged telephone services, coverage of program in 2006, designed to build under this new approach. affordable mobile telephone services, and reliable access to the on the success of the previous The author summarises the Internet. incentive program. Government’s policy approaches to The HiBIS and Broadband regional broadband support, discusses The Estens Inquiry was past approaches and achievements, asked to undertake a detailed Connect programs have achieved and looks at the challenges ahead. assessment of the adequacy of very wide access to metropolitan- telecommunications services comparable broadband services Policy principles for to regional, rural and remote across regional Australia. There regional broadband Australia, and to advise on some is now significant additional support specific policy concerns identified terrestrial broadband infrastructure by the Government. and service coverage, a number of Three principles guide the new broadband providers, and an Australian Government’s increase in broadband take-up in approach to supporting provision Incentive-based programs regional areas. of infrastructure and services to regional and remote Australia: The Inquiry found that high costs Limitations of the and high prices associated with incentives approach 1 promoting competition, thin markets and high-priced 2 legislating for appropriate technologies are the key issue for The remaining infrastructure regulatory safeguards, and equitable access to broadband gaps are broadly of two kinds:

66 Infrastructure and regional development 1 in the more remote areas, and • to provide effective and Under the revised Broadband 2 where there are technology efficient wholesale access to Connect program, the interim impairments in more ISPs on reasonable terms and incentive program is continuing in commercial areas. conditions. financial year 2006–07. Expressions of interest in the new aspects of It is becoming clear that the The issue of improving the program are being called for incentive approach may not be the sustainable infrastructure will early in the financial year, and a most effective way to address these be addressed through large- small number of major projects may gaps, as the business case for the scale network approaches, begin later in 2006–07. remote areas is becoming marginal potentially using collaboration and even with incentives, and there are partnerships to build strengths. For more information significant difficulties in identifying Commercial areas will be funded and addressing ‘swiss cheese’ commercially. The net result will see www.dcita.gov.au/ technology impairments across be improved economies of scale communications_for_consumers/ existing broadband networks. and scope, and more efficient and funding_programs__and__support/ effective Government support. At broadband_connect. Major metropolitan areas are the same time, the Government KEY REFERENCE now transitioning to improved recognises that some areas may broadband capacity. The remain unviable. • D Estens (chair) 2002, Government’s approach aims Connecting regional Australia: to stimulate improved capacity The building of a platform for the report of the Regional in regional areas, and if possible enhanced broadband services Telecommunications Inquiry to stimulate commercial will proactively address future (www.teleinquiry.gov.au/rti- developments in some other needs. While it may not be report.html). metropolitan areas. possible to achieve equal speeds across all regional areas, we need The HiBIS incentive approach has to think about parity to enable About the supported competition, but there new broadband applications and author are claims that barriers remain to services, and we need a technology Simon sustainable competitive entry. pathway to enhanced performance Bryant is as we go forward. As we go forward we want General maximum competition and Manager Effective access to wholesale differentiation of retail products, (GM) of the broadband services is the key to and it may not be wise to rely Broadband promoting effective broadband entirely on regulation to achieve Infrastructure Branch in the competition in a way that enables this objective. Department of Communications the maximum degree of service Information Technology and the differentiation and choice. There Arts (DCITA). Possible new directions may be an opportunity for more facilities-based competition in He is responsible for Broadband Connect is now being more commercial areas. implementation of all aspects revised to include a strategy aimed of the Australian Government’s at addressing these challenges. It The private sector will make $878 million Broadband will incorporate a small number major contributions, primarily Connect program, as well as of major infrastructure projects focused on commercial areas, but the $50 million Metropolitan that encourage collaboration and also contributing towards under- Broadband Connect program. partnerships with private providers. served areas by building on existing He was previously GM of infrastructure and extending this The main requirements of the DCITA’s Telecommunications into quasi-metropolitan areas. infrastructure projects will be: Competition and Consumer Branch, with responsibility for • to address coverage gaps in a The Broadband Connect program overseeing the competition more sustainable way; has linkages with other Connect regulatory regime, as well as a • to build an infrastructure base Australia elements, including range of consumer protection that can easily scale up to Clever Networks, Mobile Connect, initiatives and safeguards. broadband capacity; and and Backing Indigenous Ability.

Broadband infrastructure for regional Australia 67 26. Being young in growing regions

Maria Helena Henriques Meuller and Deidre Debruyn

KEY MESSAGES must be placed at the centre of and risks generated by the all development efforts. Youth process of economic and cultural • Today’s youth (15–24 year are critical stakeholders in the globalisation. olds) comprise 20% of the global economy, and their energy, world’s population. motivation and creativity are Indigenous and rural • Nearly 85% of these young essential assets to bringing about youth in growing people live in the developing change at international, national, regions world, sharing the poverty, regional and local levels. illiteracy, health problems The different circumstances and limited economic Young people as of youth in developed versus opportunities of their developing countries are well countrypeople. a resource and a challenge acknowledged, but the dichotomy • To help ensure that youth of youth within nations and regions can participate fully in Young people today are the best is often overlooked. In particular, society, the United Nations educated generation in history: we need to recognise the needs of Educational, Scientific m��ore children than ever complete youth who are disadvantaged or and Cultural Organisation primary school, four out of five marginalised, such as young people (UNESCO) encourages and eligible youth are enrolled in with disabilities, young women, supports youth participation secondary education, and 100 migrant youth, rural youth and in governance, policy million youth are currently in indigenous youth. development, advocacy and tertiary education. From an development programs in intergenerational perspective they Indigenous young people face many creative ways. have particular competence in new multiple challenges, including information and communication continued dispossession and ‘The capacity for progress of our technology. They are adaptable displacement from traditional societies is based, among other and often have an increased land, and the challenge to give elements, on their capacity to intercultural and global perspective, culturally valid meaning to the incorporate the contribution and as many travel around the world for use of new technologies. They responsibility of youth in the work, studies, exchange programs often do not have access to building and designing of the future. and vacations. culturally appropriate education, In addition to their intellectual and generally lack representation contribution and their ability to But nearly 85% of today’s youth and influence in decision-making mobilize support, they bring unique live in the developing world. processes that directly affect them. perspectives that need to be taken into Despite the process of rapid account.’ urbanisation, the majority of youth Rural youth account for around continue to live in the rural areas 55 percent of the world youth World Programme of Action for Youth to the population. They are among the Year 2000 and Beyond, United Nations, of sub-Saharan Africa, Central and 1995 South-East Asia, and Oceania. most disadvantaged of groups. Often they have limited access Global youth Worldwide, there are 209�� million to educational programs that are youth who live in extreme geared to their situation and needs, Based on the UN definition of poverty (on less than US$1 per and many drop out of school at an youth (15�� to 24�� years old), there day). Up to 160 million youth early age to work for their family. are about 1.2 billion young people are undernourished, 88 million Rural young women have even living in the world today, making are unemployed; 133 million are greater difficulties than young men, up almost 20% of the world’s illiterate; and 11.8 million are HIV as they are often not given the population. The next generation positive. Perhaps more than any same opportunities in education, of young people will be even other social group, it is the young training and involvement in rural larger. It is clear, then, that youth who encounter the uncertainties development activities.

68 Managing structural and social change UNESCO’s policy of The philosophy of UNESCO’s Section for Youth action for and with youth 1 Young people constitute a heterogeneous group with distinct needs and aspirations Although youth have always been a major focus in UNESCO’s 2 Young people are a resource, not a problem programs, in 1997 it reaffirmed 3 Young people are key partners, not a mere target group youth as a cross-cutting priority for 4 Young people have extraordinary creative capacities and are its future policies and programs. catalysts for new ideas Its ‘mainstreaming youth’ strategy is guided by the World programme 5 Young people are a dynamic force and catalyst of positive social of action for youth to the year 2000 transformations and beyond. This blueprint for 6 Young people are the present, not the future improving the conditions of youth was adopted by the UN General 7 Young people advance critical visions which often do not correspond with the objectives and perspective of Governments Assembly in 1995. UNESCO’s and adults policy has also been informed by recommendations, declarations 8 Young people are interested in political issues but this interest may and plans of action resulting from take forms other than organised politics. More often than not, regional and international youth young people are more concerned about global issues such as the meetings held during the 1990s. environment, peace and poverty than national politics 9 Young people want to participate The overall objective of UNESCO’s strategy of action with 10 Young people’s interests, needs and contributions must be taken and for youth is the empowerment into account of young people to ensure and enhance their full participation

Funded by the Australian Broadcasting Corporation (ABC) and Australian Government agencies, Heywire offers young rural and regional people a wide range of opportunities, such as leadership development courses, high-level business training through corporate governance scholarships, export market training, mentoring and development awards. It gives young people, aged 16 to 22, the chance to have a say on what life in rural and regional Australia is like for them through personal radio stories broadcast on the ABC.

Being young in growing regions 69 in society as equal and valuable empowering young people • Promoting youth organisations partners. To achieve this, and giving recognition, • Youth and School Councils, UNESCO has recognised the need visibility and credibility to their Youth Forums and Youth to facilitate and support youth contributions; Parliaments participation in five interrelated 4 the advocacy function— • Youth Hearings and youth and equally important areas: acting as a clearinghouse of workshops information concerning youth, 1 The governance function— disseminating publications and • Informing young people ensuring the presence of young information material, preparing • Training in youth participation women and men in UNESCO and sustaining campaigns and • Promoting youth participation bodies (Secretariat, Delegations, coordinating action with other through information and National Commissions) as UN agencies and programs; and communication technologies well as in workshops, meetings 5 the monitoring function— • Encouraging young people to and conferences organised by monitoring and evaluating undertake voluntary work and UNESCO or its partners; projects targeting and involving community service 2 the programming function— young people, and promoting • Fostering young people’s developing partnerships research on youth development. participation in and use of the between UNESCO and young media people, to solicit and integrate Ensuring youth their views and priorities participation in growing • Promoting the presence of and collaborate with them regions young people in international in setting up projects and forums and conferences In order to create meaningful programs in UNESCO’s areas opportunities for young people to What is vital is the commitment of competence; participate agencies need a range to apply a broad concept of 3 the policy development of youth-participation strategies ‘participation’, and the will to create function—providing that will capture a wider and new approaches to collaborative assistance to Member States broader youth perspective. Among working and dialogue between in mainstreaming youth other alternatives, growing regions young people and adults. issues into their policies and can foster the active participation For more information programs in order to create of young people from diverse social spaces and opportunities for and cultural backgrounds through: www.unesco.org/youth

KEY REFERENCES About the senior author • International Youth Dr Mueller (BA Pontificia Parliament’s Youth Universidade Catolica do Rio de Commission on Janeiro Brazil, MA Calif, DSc Globalization (IYP Harvard) is coordinator of Commission), http://iyp. UNESCO’s youth activities and oxfam.org/documents/Chapt Head of the Section for Youth in its er%205%20Indigenous%20Y Bureau of Strategic Planning. She is outh.pdf. a program and project manager with extensive experience • United Nations, World in planning, implementing and evaluating social and programme of action for youth health programs for governments and UN agencies. to the year 2000 and beyond, 1995. • UNESCO, World youth report, 2005.

70 Managing structural and social change 27. Growing regional communities: women, young people and migrants

Margaret Alston KEY MESSAGES entrepreneurs, housewives, rural counsellors, teachers, doctors, • Rural restructuring, caused by technology changes, globalisation nurses, Indigenous women, women and drought, is having major social impacts in small inland rural from non-English speaking communities. backgrounds, young, mid-life, old • For women the challenges include balancing work and family, and very old women. finding suitable work close to home, being supported with child, aged and disability care services, and having access to health and In addition to racism, Indigenous welfare services. women experience significantly • For young people the challenges include completing high school lower life expectancy, higher and having access to satisfying full-time local positions, TAFE and morbidity rates and higher levels university education, transport, health and welfare support, and of domestic violence than other strong networks. women. They need greater access • Rural people from non-English speaking backgrounds also to health and welfare services, need services in English language proficiency, interpreting, work education, employment and opportunities, training and support networks that are ethno-specific. income security, and freedom from violence. • Employment, education, service and infrastructure requirements are common across these groups. Faced by drought and reduced farm This chapter draws on the author’s and other research to outline the effects of incomes, many other rural women ongoing rural restructuring on women, young people, and rural people from are moving into the paid workforce non-English speaking backgrounds, and points to a need for investment in social in large numbers. At the same and human capital enhancement to improve quality of life for these groups. time the decline in rural service infrastructure means that they Rural restructuring in indicated by population shifts, need to invest significant effort in Australia amalgamation of properties volunteer activities. into larger holdings, a decline For the purpose of this discussion in the numbers of families in Many women in the middle years ‘rural’ is defined as those small work long hours, often driving inland rural communities that outback areas, the ageing of significant distances to their are largely based on agricultural rural communities, and higher workplaces. Some are moving to production. Excluding the non- morbidity rates when compared regional centres to access work, urban coastal regions of Australia, with urban areas. These changes taking their children with them. these small inland communities are impacting particularly heavily This means that many rural and comprise 16% of Australians. on women, young people and people from non-English speaking remote families spend much of Technological advances and backgrounds. their time apart, and many men in changes in production systems remote areas live on their own. have caused significant changes in All of these rural groups are Most rural women remain these communities at least since diverse so there are dangers in the middle of last century. These responsible for household tasks at generalising their experiences, but the same time as they are working changes have accelerated in recent recent research provides evidence decades, spurred by the impacts on farms, in paid work and in the of some clear social trends. of globalisation, a decline in community. Access to child care, agricultural prices, and widespread maternity, disability and aged drought. Rural women care services are limited, placing great pressures on these women to The consequent rural restructuring Rural women include farm provide care while continuing to has had major social impacts, women, business women, work in a variety of spheres. Not

Women, young people and migrants in rural communities 71 difficult for rural and remote young people because there are few post- secondary facilities near by. As a result rural and remote students make up a declining proportion of tertiary students in Australia, and are becoming increasingly educationally disadvantaged by contrast with their urban counterparts. Overall there are more rural young people not fully engaged (that is not in education or work at full-time levels) by comparison with urban areas.

The decline in the number of female full-time positions in small rural towns compared with male- designated positions indicates significant restrictions of choice for young rural women who stay surprisingly, they report increased Australia and elsewhere. What behind. Many are limited to levels of stress. is less recognised is the gendered insecure, casual, part-time positions, nature of this exodus, with greater making it difficult for them to The lack of focus on women’s numbers of young women than participate fully in community life issues, the low numbers of women men leaving rural areas. and leading to their social exclusion. in decision-making positions, and a High teenage pregnancy rates are A gender divide appears in senior national focus on economic rather also evident in rural communities. than social indicators results in a high school years in small rural failure of service delivery to rural community schools. Young women women most evident in their lack are far more likely to remain at Rural people from of safe birthing facilities and other high school to complete their non-English speaking maternity services. schooling, and are more likely backgrounds to report their desire to go on to Meanwhile older rural women higher education. As with the other groups discussed also experience significant impacts here, it is difficult to generalise about from changes in their communities. Young rural men are more likely rural people from non-English The over-65 rural population is than women to have a range of speaking backgrounds. The issues that impact on rural women and dominated by women because work options in their communities. young people do so regardless women live longer than men. Many Many drop out of school early to work on family farms or take up of their ethnic background. A rural women live alone and are apprenticeships in rural industries. distinction also needs to be made experiencing low levels of service But a lack of education is a key between refugees who flee a political delivery, lack of aged care facilities, factor associated with social situation in which their lives and little or no public transport, exclusion amongst adults. High those of their families are in danger, and poor telecommunications rates of suicide occur amongst and migrants who come of their infrastructure. Yet many continue young rural men, which may be own accord and are free to return their volunteer work well into old related to uncertainties about to their native country. Refugees are age, providing significant social the future associated with the more likely to be suffering emotional capital in many small communities. undermining of family farming and distress and trauma. the loss of previously secure, male- Young people designated jobs. Migrant farming families operate with high levels of family labour, Out-migration of young people Access to post-school vocational and migrant women are more likely is a recognised trend in rural and tertiary education is more to work in the family business than

72 Managing structural and social change they are off the farm. A common Policy implications human and social capital remains phenomenon for migrants is to a challenge for communities and facilitate chain migration, bringing It’s not all bad news for rural governments. To maintain vibrant out family and friends, and Australia. A recent Australian rural communities and attract ‘clustering’ in communities with wellbeing index shows that those people to these regions into the others from their own country. areas with the highest levels future we need to enrich internal of positive wellbeing tend to factors within communities by First-generation migrants are be outside metropolitan areas. building social capital and investing more isolated than their second- The areas scoring highest have in human and community capacity. generation children. Older characteristics that include an first-generation women in older age profile, more females, Rather than responding to rural particular can be very isolated, fewer never married people, and restructuring with a downgrading with limited English ability and smaller income inequality—all of services, governments and few opportunities for work and characteristics of many small rural other organisations need to education. Integration into the communities. resource rural communities and community is made more difficult provide accessible transport and by distance, a lack of public There is strong evidence that many communications infrastructure to transport, a lack of interpreters rural people and rural businesses support those who choose to live in in rural areas, a lack of resources, are benefiting from globalisation, these wonderful areas. and a lack of knowledge amongst finding economic activities and migrants themselves. markets that have expanded the In addition, governments and opportunities available to their communities need to focus on the Rural people from non-English communities. Other rural residents particular needs of women, young speaking backgrounds are a are taking up opportunities to people, and rural people from non- potential source of strength and telework, linking the advantages of English speaking backgrounds to invigoration for rural communities, a rural lifestyle with a city job. break down social exclusion and with their diversity, cultural insights to improve the quality of life of all and human capital. Governments However, combining the benefits people in rural Australia. and communities need to recognise of globalisation and rural For more information this and invest in the appropriate community living with greater services and support structures. investment in infrastructure and [email protected] About the KEY REFERENCES author • M Alston 2000, Breaking through the grass ceiling: Margaret women, power and leadership in rural Australia, Alston is Harwood Publishers, UK. Professor of • M Alston & J Kent 2001, ‘Generation X- Social Work pendable: young, rural and looking for work’, a and Human report to Woolworths Ltd on funded research, Services and Centre for Rural Social Research, Charles Sturt Director of the Centre for Rural University (CSU), Wagga Wagga. Social Research, Charles Sturt • M Alston & J Kent 2006, ‘Impact of drought on University, Wagga Wagga. She is a rural and remote education access’, a report to leading rural sociologist and social DEST and Rural Education Fund of Foundation worker and has published widely for Rural and Regional Renewal, Centre for on rural social issues, rural women, Rural Social Research, CSU, Wagga Wagga and the social impacts of drought • M Alston, J Kent & A Kent 2004, ‘Social impacts and leadership. In 2003 she of drought’, report to NSW Agriculture, Centre researched the impact of the UN’s for Rural Social Research, CSU, Wagga Wagga. gender mainstreaming policy on rural women across the world • I Gray, P Dunn, B Kelly & C Williams 1991, under a visiting expert program at Immigrant settlement in country areas, Bureau of the UN’s Food and Agricultural Immigration Research, Canberra. Organization.

Women, young people and migrants in rural communities 73 28. Innovation in youth servicing: capacity building in regional Australia

Lisa Shreeve KEY MESSAGES been encouraged to exercise their Myths about rural youth leadership and passion today. • Young people want a voice There are many false perceptions in local decision-making Communities have agreed for years about youth (generally regarded as processes, and opportunities that more needs to be done to help 12–25 year olds) in regional, rural to share their experiences. young people to participate in local and remote areas. We may think • The Wheatbelt Area decision-making. Despite this, that young people want to leave Consultative Committee many people either do not want regional communities but on the (ACC) has worked to create to engage young people, or do not whole they don’t. The majority an environment that values know how to. would prefer to live where they and includes the young, Profile of the young in Australia and to engage with them in innovative ways. Population Total Australian population (2001 Census) 18,769,249 • Projects such as the Number of children aged 0–14: 3,912,475 (20.8% of total) Innovation in Community Number of girls aged 0–14: 1,904,553 Youth Servicing pilot have Number of boys aged 0–14: 2,007,922 improved youth services Total number of young people aged 15–24: 2,566,346 (13.6% of total) in the area, and helped to Number of young women aged 15–24: 1,259,514 change the cultural mindsets Number of young men aged 15–24: 1,306,832 of community adults. Estimated number of Indigenous aged 12–24: 116,698 (3% of those aged • More such change is essential 12–24) to equip our young people Number of people aged 15–24 in regional, rural and 79,685 (c. 30% of total regional with the skills they need remote Australia: population) and provide them with Percentage of rural youth aged 15–24 in: opportunities to lead and Inner regional areas 61% Outer regional areas 30% apply their creativity. Remote areas 5% Education Youth are leaders of today, not Secondary school attendance among 16 year olds: tomorrow. Urban areas 84% We are assets, not liabilities. Very remote areas 41% We are solutions, not a problem to Percent of rural youth planning to go on to university: be solved. Girls 62% (Sooraya, mentor, South Africa) Boys 39% This chapter outlines experiences of Participation rate of rural students in tertiary studies: 17.4% in 1997 the Wheatbelt Area Consultative Health Committee in engaging young people, Hospitalisation rates for pregnancy and childbirth in young people involving them in local decision- Regional 9.4% making, and changing the mindsets Remote 14.7% of adults who were reluctant to work Major cities 6.5% with the young. Youth suicide in rural and remote areas compared to metropolitan: Just over a third of Australia’s Regional 8.8 per 100,000 population (34%) is under 25 Remote 24.1 per 100,000 years of age. If we don’t encourage Metropolitan 6.4 per 100,000 an environment that values the Life expectancy for Australian child born today: opinions, contributions, ideas and Girl 82 years dreams of this 34%, this equates to Boy 77 years 100% of our future who have not Source: www.youthfacts.com.au

74 Managing structural and social change are, close to family and friends, if essential that communities have The Youth ACC fosters a think- suitable opportunities are available. organisations to go to for help in tank environment based on a gaining support of key stakeholders common vision and aligned We may think that young people and developing partnerships to commitment. All participants are leave regional areas as soon as they address problems collaboratively. actively encouraged to be inventive, finish high school. In fact, more ACCs fulfill the role of creative and open-minded in their than 50% remain in their area, understanding and helping to approach to the Youth ACCs work, while others leave for training or apply regional development theory bearing in mind the operating education then return at a later and practice. framework of the Wheatbelt ACC. date. Specifically the aim was to provide We may think that young people Wheatbelt Youth ACC young people with life skills to are not interested in participating experience assist them meet future goals. in their communities. On the The three areas of particular focus The Wheatbelt ACC in Western contrary, young people are able to were information and education; Australia recognised that there identify numerous current assets leadership; and mentoring. within their communities and was no regional body providing have numerous ideas on how to youth support services on a Amidst many challenges, there use these assets to further improve region-wide basis, and in 1998 have been at least as many their communities. adopted a staged plan to change successes. The Wheatbelt Youth this. The establishment in 2000 ACC has proven that young When creating change at the local of the youth program known as people are interested in making a community level, young people the Youth ACC was one of these difference, if given a chance in a believe that, although they may not steps. Others included a youth meaningful way. all have the right to vote, they do leadership program and a youth have the right to put forward their entrepreneurial activity. The ICYS project views, and they want a say. The Wheatbelt ACC believes The Innovation in Community Area Consultative that we, the community, should be Youth Servicing (ICYS) project Committees encouraging an environment where was the ACC’s most successful young people are valued. This in changing the cultural mindset Area Consultative Committees requires: about wanting to work with young (ACCs) are non-profit community people and including young people. • processes for young people to organisations managed by It was funded by the Australian be heard and included; volunteer committees, working Government Department as the Australian Governments’ • young people to be given of Family and Community regional development network. assistance so they can be heard; Services (now FACSIA) as one Their key role is to foster regional • young people’s views to be of 26 Australia-wide pilots. The development through social incorporated; Wheatbelt ACC was able to equity, economic growth and • young people to have a role in appoint four staff over a 12-month period to work primarily with 16 environmental protection. decision-making processes and shires in the Eastern Wheatbelt. receive feedback. ACCs are funded by the Australian Government Department of Over the past six years, the Youth The project would not have been Transport and Regional Services ACC has brought together youth successful without collaboration and assist communities to access representatives to identify priorities with key regional partners. Regional Partnerships funding to and opportunities for social, Throughout the project there grow stronger communities and economic and environmental were inhibitors that decreased the regions. There are 56 ACCs in development in the region. project’s effectiveness in certain metropolitan and regional areas Consultation with young job areas, but overall a number of across Australia. seekers, business, community community capacity outcomes and Indigenous people was were achieved. Two examples relate Today ACCs are working towards included in the development and to telecentres, and the range of new a ‘whole-of-government’ approach implementation of the Wheatbelt services now available to young to regional development. It is ACC’s Strategic Regional Plan. people in the area.

Innovation in youth servicing in regional Australia 75 Telecentres existed in the area Tips for working with Changing mindsets: an before the ICYS project. They are young people ongoing challenge now open for longer hours, and are Of course we haven’t succeeded more youth-friendly. They provide For the past eight years we have in changing everyone’s attitude to counselling referrals using the focused on integrated service young people and their inclusion in ICYS Referral Kit, school holiday delivery through collaboration community decision-making. programs, and assistance to job and building partnerships with seekers. They are organising youth young people and communities Strategies available to communities activities at and outside the centres to pool available resources. Our like ours include creating to encourage more members, have long-term goal is to facilitate the opportunities for more meaningful a youth representative on their establishment of an independent exposure and inter-relationships committees, and have established Wheatbelt Youth Service with its between young and older people, offline websites and discounted own incorporation and steering undertaking community education to assist in altering negative Internet access for youth. committee. perceptions of young people, and In the Central Wheatbelt area, the We’ve engaged young people adopting strategies to reduce exclusion of young people from full wide range of services now available in a variety of innovative ways, participation in their community. to young people includes a YMCA including didgeridoo workshops; bus, mentoring, a youth newsletter, pizza-and-coke nights; Girl’s Changing cultural mindsets is new telecentres, and many Parties (health, beauty treatment difficult when we are dealing Government-sponsored programs and fashion); archery, self-defence with so many organisations and including Jobs West, JPET (Job and other recreational workshops; associated personalities, but it Placement Employment and pool parties and outdoor movie remains necessary to create an Training), Avon Youth Services, environment where young people events; online consultations/chats and Alive and Well. are valued, otherwise all of our best to target the 18–25 year olds; attempts at action will fail. Many community groups, including leadership development weekends; For more information police, churches, service clubs and break dancing and drama business enterprises, participated in workshops; and end-of-school www.wheatbeltacc.com.au, or the project in various ways. celebrations and career expos. email [email protected]

KEY REFERENCES About the author • ARTD Management & Research Consultants 2005, Lisa Shreeve is Evaluation of the Innovative and Collaborative Youth Servicing currently Executive (ICYS) pilots, Australian Department of Family and Officer (EO) of Community Services and Indigenous Affairs (FACSIA), the South West Canberra (www.facs.gov.au/internet/facsinternet.nsf/youth/ Area Consultative icys_pilots_evaluation.htm). Committee (ACC) • N Bolzan 2003, Kids are like that: community attitudes to young in WA. She previously worked for 8 people, a report to the National Youth Affairs Research Scheme years as EO of the Wheatbelt ACC, (NYARS), FACSIA, Canberra (www.facs.gov.au/internet/ which was focusing on the cultural facsinternet.nsf/aboutfacs/programs/youth-kids_that.htm). mindset change needed in inland • B Manning & R Ryan 2004, Youth and citizenship, a report Australia for small towns to survive and for NYARS, FACSIA, Canberra (www.facs.gov.au/internet/ thrive in the 21st century. Lisa lives in facsinternet.nsf/aboutfacs/programs/youth-youth_citizenship. Merredin, a small town 3 hours east of htm). Perth, and is completing her Masters of Regional Development. She was • J Sercombe 2002, Telling the emperor: a guide to youth Australian Youth Delegate at the 2004 participation in decision making for organisations, WA UN 12th Commission on Sustainable Department of Community Development, Perth (www. Development, and a finalist in the childrenandyouth.wa.gov.au/MS/LMSfiles/dcdguitellingtheem Young Australian of the Year, Telstra perorfororganisations050216.pdf). Small Business Awards.

76 Managing structural and social change 29. Social policy, service delivery and needs- based planning at the local level

Ann Harding KEY MESSAGES Microsimulation uses previously Dynamic models simulate the collected and stored information effects of time on a population • Microsimulation is a sets about individuals, households by modelling the transitions that modelling technique used or firms. The technique is used individuals would be expected to estimate the impact of primarily to estimate the impact government policy changes to experience in the real world of government policy changes on (education, marriage, work changes, on population subgroups. these individuals or households, retirement, etc.), and are used for • Spatial microsimulation particularly on small subgroups projecting the future impact of modelling is used to identify within the general population. and analyse characteristics of reform. For example, DYNAMOD specific socio-demographic At the same time estimates of the has been used to predict retirement groups over small areas. aggregate impact can be obtained incomes. • The National Centre for by summing the individual results, Spatial microsimulation Social and Economic giving a good overall picture of the Modelling is developing and impact of the proposed change on modelling (spatialMSM) involves applying models to predict government revenue or expenditure. first creating a synthetic small area the spatial impact of policy household database. The effect changes, help agencies match Microsimulation is now widely of policy change at the local level services with client needs, and used in OECD countries. Most is difficult to estimate because applications involve static models forecast future service needs of a lack of microdata sets that to estimate the immediate (or in particular locations. are available at this level. The ‘morning after’) impact of tax solution is to reweight detailed The author describes applications of and social security reforms. The microsimulation modelling tools in STINMOD model developed by sample survey data to small area analysing characteristics of population the National Centre for Social and population targets based on subgroups, predicting the impact of Economic Modelling (NATSEM) national Census data, household government policy changes in local is an example, and has been used to expenditure surveys (HES) and areas, and underpinning needs-based predict the effects of tax reform in Census-defined Statistical Local planning of future services. Australia. Areas (SLAs) (Figure 1).

What are SMALL AREA DATA UNIT RECORD DATA microsimulation (SOURCE) 2001 Census data at SLA models? level: 1998-99 Household Expenditure Survey - XCP data for SLAs Microsimulation is a means of modelling real-life events by simulating the actions of the individual units that make up the UNIT RECORD DATA system where the events occur. REWEIGHTING (AMENDED) Microsimulation models are USING LINKING - Updated to 2001 designed to answer questions like: VARIABLES - Enhanced income • What is the effect of income tax upon different types of families? • What does it cost to raise the $ age pension by 2.00 a week, Iterative process to identify SMALL-AREA ESTIMATES and what proportion of the aged a set of variables suitable 1) Unit record dataset for reweighting would benefit? 2) Set of weights for each SLA • What will Australian society look like in 20 years time? Figure 1: Constructing small-area estimates

Social policy, service delivery and planning at the local level 77 Applications of channel and in the most Evidence-based policy- spatialMSM efficient way. making The Centrelink CuSP Model 1 Analysis of specific population There is a growing demand for (Customer Service Projection subgroups decision support tools to reduce Model) assists Centrelink The spatialMSM technique strategic decision-making the risk to policy-makers who are allows identification and analysis by producing projections of making billion dollar decisions. of specific socio-demographic Centrelink customers and The tools allow assessment of groups and characteristics over channel use over the next 5 the distributional implications small areas. The analyses can be years, for small areas, and under of policy changes before they are at the level of people, income alternative scenarios about the implemented, thereby improving units or households—for future (e.g. see Figure 2). predictive capacity and strategic example children in low- 4 Forecasting current and future planning. Spatial microsimulation income families; children in need for services models are an exciting new jobless families; unskilled youth; development in this regard. The CAREMOD model those in housing stress; or the simulates current characteristics distribution of households in NATSEM has also developed of older Australians at a poverty. child social exclusion measures detailed regional level (the for each SLA in Australia, with 2 Predicting spatial impact of a SLA). It imputes functional child and adult poverty estimates policy change status and thus likely need for across SLAs to be published soon. Spatial microdata are now different types of care, and Much of the new spatial household linked with NATSEM’s forecasts future incomes and data at SLA level will be freely existing microsimulation assets of aged Australians. models to model the immediate For example, the model can available through the website of distributional or revenue map the percentage of the the ARC Research Network in impact of a policy change. population aged 55 years and Spatially Integrated Social Science This approach links synthetic over who will need high-level (ARCRNSISS) (www.siss.edu.au). spatial output to STINMOD, institutional care in specified For more information then models changes to the tax SLAs at a given time in the and transfer system for small future. This work is being www.natsem.canberra.edu.au, or geographic areas. done in partnership with the email [email protected]. The NATSEM team is Commonwealth and NSW edu.au for free copies of all currently modelling changes governments. publications as released. in Commonwealth Rent Assistance, income tax, social security and family payments. Available models include: • HOUSEMOD—housing/ 35.0% rent assistance Chermside Fortitude Valley 30.0% • spatialMSM—poverty, tax, Nundah Strathpine income 25.0% • CuSP—service delivery, and 20.0% • CAREMOD—need for 15.0% aged care. 10.0% 3 Where to put government 5.0% offices? (needs-based planning) 0.0% Centrelink needed an evidence -5.0% based methodology to help Retirement Disability & Employment Youth & Families & Other -10.0% match services available Carers Services Students Children to customers’ needs and preferences, and to deliver the Figure 2: Projected changes in customers, 2002 to 2007, by Customer Service Centre in service via the most suitable northern Brisbane

78 Managing structural and social change QUEENSLAND People in poverty, 2001 (before policy change) Brisbane, Statistical Division Number of people in poverty, 2001 0.0 - 121.6 121.7 - 291.5 291.6 - 652.1 652.2 - 1236.5 1236.6 - 8285.8

BRISBANE

KEY REFERENCES About the author • A King & T Melhuish 2004, ‘The regional impact of Commonwealth Rent Ann Harding Assistance’, Final report, Australian (BEcon Syd, Housing and Urban Research Institute, PhD Lond) Melbourne, November (www.ahuri.edu. was appointed au/general/document). Professor • E Taylor, A Harding, R Lloyd & M Blake of Applied 2004, ‘Housing unaffordability at the Economics statistical local area level: new estimates and Social using spatial microsimulation’, Australasian Policy and the inaugural Director of Journal of Regional Studies 10(3), 279–300. the National Centre for Social and • L Brown & A Harding 2005, ‘The new Economic Modelling (NATSEM) at frontier of health and aged care: using the University of Canberra in 1993. microsimulation to assess policy options’, She is an internationally recognised in Quantitative tools for microeconomic expert in the fields of microsimulation policy analysis, Productivity Commission, modelling, income distribution and tax/ Canberra transfer policy, and previously worked on major policy reviews in several Federal • SF Chin et al. 2005, ‘Spatial government departments. Under her microsimulation using synthetic small area leadership NATSEM has become estimates of income, tax and social security one of Australia’s leading research benefits’, Australasian Journal of Regional centres, having constructed models Studies 11(3), 303–36. and undertaken research across a wide spectrum of social and economic policy.

Social policy, service delivery and planning at the local level 79 30. Service delivery to lightly populated areas

Rob Hunt

KEY MESSAGES • On becoming a bank, the former Bendigo Building Society needed new strategies to differentiate itself in the market. • With a strong customer and community focus, the bank chose community engagement models to implement a range of community enhancement activities within a sustainable commercial framework. Banks and communities • Community Bank® branches are locally owned public companies with bank-supplied infrastructure and support, and profit-sharing Our 1994 research showed arrangements that include community as well as individual that customers felt the current shareholder dividends. banking system was focused on • Other successful activities include a Community Telco to provide its own objectives rather than cost-effective internet access, and the Community Enterprise those of customers or individual Foundation to provide a tax-effective gifting structure for local communities. charities and community projects. Yet historically banks were formed • The model is fostering cooperative and community spirit and to help build a prosperous village, improving local outcomes through capital retention, capacity by bringing together locals with development and local employment. excess capital and those with good business ideas but little capital. This chapter outlines how the Bendigo Bank is providing cost-effective banking We knew that our success was and other financial products and services to small towns and communities in inextricably linked to the success of ways that keep local capital local, and put profits back into local development. our customers and communities, so if we could assist the development Strengths and on a new strategy for the future. and success of each ‘village’ we challenges in 1994 We had a strong customer and would secure our own future country community focus, and success. The Bendigo Building Society was reliable and functional banking formed by Bendigo locals in 1858 product. We concluded that the new to capture savings and provide economy and elements of loans for local housing—that is, to However, we were a small globalisation provided an respond to a community need. organisation, not well known opportunity for a different model of outside Victoria. We had a banking, one closely connected with By 1994 the Bendigo had decided limited product range, limited the community and its aspirations. to convert to a bank, and undertook expertise outside our savings and an evaluation of its strengths, housing loan business, and limited Ingredients for community needs, and historical distribution and coverage. sustainable communities and current banking models to determine how it could establish And we were starting to adopt a From our review we compiled the a different style of banking for conventional bank approach to following list of basic ingredients communities across Australia. expansion. We needed to challenge for sustainable communities: this if we wanted to create a Our strengths went well beyond different style of bank, a bank that • mobilise, involve and engage the products and services we clearly adds value beyond product. community leadership as a provided. We were an integral Yet the skills we needed for bank whole; institution within the regional city conversion would have to come • use quality information of Bendigo. We had built a small, from the big, traditional banking in decision-making and adaptable team capable of taking organisations. assessment;

80 Managing structural and social change • better utilise the community’s Community Bank® Other community entire capital base (human, enhancement activities Between June 1993 and June intellectual, productive, 2000, some 2060 bank branches financial); Every community wants to be a closed across Australia, leaving smart community, but few can • reduce the capital drain from many communities without branch influence priorities relating to our districts (communities); banking facilities. Bendigo Bank access to the latest services and • produce world-quality received numerous requests to facilities. In Bendigo we used the product and global-equivalent open branches in these towns and community engagement model to efficiency; suburbs. The old-style branch help it form its own Community • create environmentally seemed doomed to fail, so we Telco. sustainable enterprise and devised Community Bank®. activity; Bendigo Community Telco In our solution, local communities started with 14 of the city’s • use technology to open up new own and operate a Community largest businesses, and now has markets; Bank® branch of Bendigo Bank. 5,000 customers spending $17 • develop capacity to utilise Through a local, publicly-owned $ million annually. The Telco combined buying base; company, they invest 400,000 (which provides services through to $500,000 to establish their • create an environment for a range of wholesale suppliers) own branch banking business. continual learning and provides the entire customer We provide all the banking upskilling; and experience and interface, as well as infrastructure and support and a local community billing facility • always ensure young people are the community company and and technical support for each included. Bendigo Bank share all branch customer. We concluded that we would revenue. Whatever is left over after need a new business model and a the community company pays its This business has produced a branch running costs, it keeps as true community-based business much more competitive market, profit. partnership to succeed. We set has achieved a reduction in unit about leading the necessary In our current national network price for all local users, and is changes in behaviour and attitude, producing solid local profits. It has both internally and externally. of 180 sites we have around 1,200 local directors and 40,000 local generated local employment, and is We built our success through shareholders. All sites have strong strengthening connection with the influencing, activating and connections with customers and customers to ensure the priorities partnering others, and through community, and many of the earlier they want are the ones that gain working on community priorities. sites are generating local profits attention. We needed to help re-create more and dividends. Last year Bendigo Bank paid these communities $60 Since launching the Telco in self-reliant communities. The basic million as their share of revenue Bendigo, we have established a new ingredients were there: leaders in the community–business high-tech Business Continuity were readily available in each partnership, and we expect this Centre and back-up facility which community to involve, unite and figure to rapidly increase in future is also generating cash surpluses engage in the solution. We felt that as each business matures. and has become a valuable new with their help we could improve community asset. capital and resource management, Community dividends are improve local involvement, and contributing to sponsorships The Lead On Youth Program is enhance community capacity. and scholarships, purchasing a community engagement model fire engines for local districts, that unites, involves, educates and Over the past 7–8 years we have supporting schools, purchasing encourages young people to take done this through a range of buses to move people between part in real-life community and community enhancement activities. aged care hostels and community business projects that enhance All utilise community engagement facilities, building new community both their own skill base and within a commercial framework to halls, and establishing new business the community. Bendigo Bank ensure sustainable outcomes that centres to attract professional was initiator of the Lead On involve communities in producing services and essential community framework and is key sponsor of their solutions. facilities back to their district. both Lead On Australia and many

Service delivery to lightly populated areas 81 of the individual sites, partnering The trustees of the CEF ensure organisation that is more valuable State and Federal governments in that administration is kept to a than the sum of its products and rolling out 12 sites in communities minimum and that all gifting services. Building the capacity across Australia. adheres to the charter and of communities also enhances regulatory requirements, so that 95 the prospects of success for our The Community Enterprise cents in every dollar will go to the own business. The Bank is now Foundation (CEF) is our prioritised community activity or well positioned to grow earnings response to the need to provide an individual charity. nationally and to increase its effective gifting framework (with market share to carve out a unique minimum administration cost) to Benefits of the position in Australian banking. permit Community Bank® to tax- community enterprise effectively gift to its communities. model Many other initiatives are under We developed a distribution way or planned to strengthen our model enabling our perpetual Through our community connection with our customers trustee company (Sandhurst enterprise model communities and communities and to improve Trustees Limited) and the Bank’s are fostering cooperative and their prospects of success. We distribution network to support the community spirit, retaining are confident this will reflect in establishment of such a foundation. local capital, improving local strong, commercial benefits for our competition, building local shareholders and all stakeholders The CEF provides a gifting competencies, and identifying and well into the future. structure that ensures that local developing local champions for all For more information moneys can stay local and will of these community activities. be dealt with in accordance www.bendigobank.com.au/ with priorities set by locals. Bendigo Bank aspires to be an community.

Bendigo Bank Artist’s impression of new Bendigo Bank building About the author As Managing Director of Bendigo Bank since 1990, Rob Hunt has guided the bank through many innovations in developing as a regional and community banking organisation. As well as being architect of the Community Bank model, he has been actively involved in planning regional development initiatives, and instrumental in developing a community-owned enterprise model for a telephony and technology platform, as well as a youth community engagement model.

82 Managing structural and social change 31. Adjustment to change amongst Australia’s regional cities

Andrew Beer and Terry Clower KEY MESSAGES capital cities. For our purposes the Statistical Districts of metropolitan • Employment and population data from the 2001 and earlier satellites such as Geelong, Censuses show that Australia's regional cities have become Newcastle and Wollongong are also economically more specialised over time. excluded. At the 2001 Census there • New areas of specialisation include agribusinesses based on were 76 regional cities comprising intensive production systems, remote tourism, education, and sea- 10% of Australia’s population, with change related entertainment, leisure and tourism industries. the majority of these cities located • Areas dependent on mature manufacturing and mining industries along the eastern seaboard (Figure 1). have generally continued to decline. • Regional cities that have moved to greater levels of economic Impact of deregulation specialisation in response to deregulation and globalisation have had the most predicable economic growth outcomes. Deregulation and a greater • The findings reinforce the importance for each regional centre of focus on building international identifying and investing in industries with the best prospects for competitiveness have transformed growth and competitive advantage. the Australian economy over the last 20 years. Major shifts included The authors report on long-term trends in population change and employment a substantial reduction in tariffs, patterns in Australia’s regional centres, and discuss implications for regional the floating of the Australian dollar decision-makers of trends in economic specialisation. in the mid-1980s, the introduction In Australia regional cities are defined as urban centres with a population of a National Competition Policy, of more than 10,000 persons outside the Statistical Divisions of the deregulation of labour markets, and a decline in real labour

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Adjustment to change amongst Australia’s regional cities 83 shaped by the mix of industries Shepparton, for example, are inland Employment trends in they contain, and the capacity centres with strongly developed regional cities of individual enterprises to take agricultural processing industries, Employment data (Figure 2) advantage of new opportunities while Bendigo and Ballarat are offered by the global marketplace. provide insights into the industry also inland centres, but with mixed structures of regional cities. As a We have tracked the outcomes economies based on education, group these cities have a relative through analyses of changes in government administration and concentration of employment in their population and employment other services. retailing, health services, education, patterns, based on Census data. and accommodation, cafes and Twenty regional cities lost restaurants compared with the Population trends in population between 1996 and national average, and are relatively regional cities 2001 despite national population under-represented in property growth. Population loss was and business services, the finance The highest rates of population concentrated in southern Australia sector, agricultural production, and growth between the 1996 and amongst cities with established manufacturing. 2001 Censuses occurred in regional manufacturing industries and cities in Western Australia and More detailed analyses show an declining mining and power Queensland. In part this reflects increase in functional specialisation generation activities. trends at the state level, with across and between regional cities, the Western Australian and Some cities such as Armidale and suggesting that the industries Queensland economies growing within these cities have become Goulburn in New South Wales more rapidly than the national more specialised with greater and Maryborough in Queensland average. exposure to market forces and have served as major service international competition. Most rapidly growing regional centres for agricultural regions, Exceptions include cities such cities are located on the coast and and the downturn in their industry as the steel-making centre of depend upon tourism and leisure sectors (wool production and sugar Whyalla in South Australia, which industries, but there are significant respectively) were associated with previously specialised in industries exceptions. Mildura, Griffith and population loss. that are no longer competitive.

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Figure 2: Percentage employment by industry, regional cities and Australia

84 Managing structural and social change The discussion of population The highest rates of population was not related to economic growth and loss amongst and workforce growth were performance, the analysis suggested regional cities and their changing recorded in clusters that participate that an increase in the level of employment structure raises in service-oriented industries, specialisation resulted in stronger important questions about the or centres that had emerged as prospects for labour force and differing growth trajectories commuter destinations for one population growth. For the period evident amongst these urban of the capital cities. By contrast, 1996 to 2001 regional cities that centres. Clearly, some regional clusters with a concentration in became more specialised had, on cities grew in the inter-censal mature manufacturing or mining average, the most population and period 1996–2001, while others industries generally recorded labour force growth. have declined. While there are workforce and/or population loss over time. Clearly, specialisation alone is not significant differences in outcomes sufficient to guarantee growth as the between the Australian states, they Relationship direction and focus of any change do not fully explain how or why is important: further specialisation these differential rates of growth between growth and specialisation in declining industries is likely to have occurred. Cluster analysis has result in poorer growth (or further been used to investigate different The emergence of new clusters decline), while specialisation in patterns of growth in order to seemed to be associated with a rapidly growing industries may shed light on why some centres relatively high rate of population well produce far stronger economic have prospered while others have and workforce growth, suggesting development. declined. that industrial specialisation per se may contribute to higher rates of Implications for regional Emerging employment growth. policy- and decision- makers clusters There is international debate about the impact of economic To get a clearer picture of The analysis presented here specialisation on the growth functional specialisation in regional suggests that regions confronting prospects of urban centres, with cities, we used cluster analysis an economic shock, such as a some research suggesting that to group the cities according to downward turn in the terms of economic specialisation is critical trade or the closure of a major industry structure, based on the to growth processes, while other manufacturing plant, need to Census-derived percentage of the studies suggest that specialisation engage in an initial search for a workforce employed in each sector. carries risks and may not deliver diversity of growth opportunities. benefits equal to those from In 1961 two clusters characterised Second, they should test those economic diversification. by general regional service opportunities relative to their potential for growth and their functions contained a significant In the absence of relevant capacity to penetrate global percentage of the total population Australian evidence for either markets. Third, they should then of regional cities. By 2001 many proposition, our team undertook specialise in industries with the more clusters had emerged, formed regression analysis to determine brightest prospects for growth, the relationship between economic around industries that were not deepening their capacity in these specialisation, population change, prominent in earlier censuses. For industries over time to establish labour force change and proximity example, in 2001 an agribusiness long-term competitive advantage. cluster and remote tourism to major urban areas and the coast. emerged for the first time. The analysis found no statistically The research summarised significant relationship between here reinforces the importance Other new clusters had appeared economic specialisation and of endogenous development earlier, such as the city of Armidale distance from the capital cities, strategies. Regional economies are as an education cluster in the 1996 distance from the coast, population now more likely to see real benefits analysis. ‘Sea-change’ centres with change or labour change for the from endogenous development an employment structure focused period 1996 to 2001. actions than previously because on entertainment, tourism and access to global markets means leisure industries first appeared in However, while the absolute greater potential rewards from the 1991 analysis. level of economic specialisation successful industry development.

Adjustment to change amongst Australia’s regional cities 85 For more information About the Acknowledgments: [email protected] authors The authors gratefully acknowledge funding by a KEY REFERENCES Andrew Beer is a Professor Flinders University Small * Australian Bureau of in the School Grant, and assistance of Michael Statistics 2001 Census of of Geography, Kroehn and Steve Fildes with Population and Housing, ABS, Population data analyses and graphics. Canberra. and * A Beer 1995, ‘Regional cities Environmental Management in Australia’s changing urban at Flinders University, and system’, Geographia Polonia Director of the Southern 66, 33–49. Research Centre of the Australian Housing and * A Beer 1999, ‘Regional cities Urban Research Institute. within Australia’s changing His research interests include urban system, 1991–96’, housing, especially housing Australasian Journal of management issues, and regional Regional Studies 5(3), 329– development. He has published 438. many books and articles and * A Beer 2005, ‘Goodbye been involved in a number RARA, hello goodtimes’, of government initiatives, Sustaining Regions 4(2), 3. including the Southern Suburbs * A Beer, A Bolam & A Industry Development Working Maude 1994, Beyond the Group (SSIDWG). capitals: urban growth in regional Australia, Australian Terry Clower is associate Government Publishing director of the Center for Service, Canberra. Economic Development * A Beer, A Maude & B and Research and assistant Pritchard, 2003, Developing professor with the Institute Australia’s Regions: Theory and of Applied Economics at the Practice, University of New University of North Texas. Dr South Wales Press, Sydney. Clower has served as project manager, staff researcher, and * B Salt 2004, The Big Shift, statistical analyst on numerous Hardie Grant Books, South projects reflecting experience in Yarra. labor relations, economic and community development, public utility issues, transportation, telecommunications and economic impact analyses.

86 Managing structural and social change 32. Innovations in regional governance

Yehudi Blacher

KEY MESSAGES People; and funding programs associated with the Community • Successful communities are active, confident, resilient, and highly Support Fund. It supports nine involved in making decisions that affect their lives. Ministers across these areas, • The Victorian Government has established the multi-portfolio coordinated by the Deputy Premier. Department of Victorian Communities and is implementing innovative regional governance structures to strengthen The aim was to consolidate in one communities and promote their wellbeing. department all portfolios relating to • Strengthening communities may be as simple as encouraging the two dimensions of community: volunteering and investing in social infrastructure (sport and arts people and place. This focus on facilities and local amenities). people and place is the basis on which the Department has been • To effect the changes, the skills and culture of the public sector internally structured and through needs to change from old hierarchical models to ones of facilitation which it projects itself externally. and partnership brokering across multiple sectors and levels of government. DVC has been established around This chapter summarises evidence for measures that will strengthen three core ideas: communities, and outlines the new regional governance structures and processes • the importance of community put in place by the Victorian Government to address these issues. strengthening to achieve public policy outcomes; What makes a make decisions about their futures • that this is best done by focusing community successful? through participatory governance on local communities; and arrangements and partnerships are • recognition that delivery on The number of people who more likely to be active, confident these objectives will require trust governments and public and resilient. Communities that are the public sector to move administrators is declining more active, confident and resilient from a traditional hierarchical in Australia and elsewhere. are more likely to be able to take model to one characterised Communities want greater control control of their futures. by multisectoral partnerships over their futures. According through which local to research conducted in 1999, communities can help to shape successful regional communities Victorian Government response directions, set priorities and even are active, confident, resilient control resources. and strongly involved in making decisions about their futures. They Recognition of this relationship Community strength have a sense of belonging and led the Victorian Government and wellbeing indicators identity, good ‘community spirit’ to establish the Department of and strong leadership. Victorian Communities (DVC) in DVC’s goal is to build strong 2002. The Department is organised communities that have a Conversely, weak communities around people and places rather sustainable mix of assets are characterised by imposition of than programs or functions. (economic, human, natural, top-down decision-making, a lack cultural), and strong governance of belonging and identity, and low DVC brings together a broad that maximises the use of those levels of volunteering and other range of portfolios, including assets. engagement in social and civic life. Local Government; Sport and Recreation; Youth Affairs; Strong governance is characterised This research supports the Multicultural Affairs; Women’s by broad and inclusive networks of proposition that governance issues Affairs; Aboriginal Affairs; decision-makers utilising processes and community strengthening are Employment Programs; Victorian that ensure all the interests within intertwined. Communities that can Communities; Volunteering; Older communities have a voice in

Innovations in regional governance 87 decision-making and problem (principle of place) in priority setting, design of solving. Strong governance is built • Shifting from government investment strategies, delivery, through connectedness based on controlling and directing managing and reporting. close personal and community the delivery of services to • Involvement of the private networks, and governance government playing the role sector to access new resources networks. of facilitator and enabler and new skills. (principle of enabling) A recent DVC report showed • Fostering innovation and large variations from one local • Devolution of service planning enterprise using commercial, government area to another and delivery to the local level donated and government across a range of community (principle of subsidiarity) resources to deliver local strengthening indicators. For • Developing cross-sectoral solutions to community issues. example: approaches to addressing • A focus on outcomes, especially social opportunities and community strengthening • the percentage of the problems through partnerships outcomes, rather than outputs population that feel safe on the between governments, or programs. street alone after dark ranges community agencies and the from 50 to 89%; • A preference for local corporate sector (principle of employment and co-location of • those who feel there are partnership) staff within existing agencies. opportunities to have a real say • Harnessing the capacity of on issues ranges from 41 to local leaders and entrepreneurs These reforms are underpinned 71% of the adult population; (principle of local capacity and by a strategy of boosting our local • parental participation in schools ownership). presence across Victoria and using ranges from 44 to 81%; and our local staff in three critical • volunteering on a regular basis The Victorian Government’s roles: to navigate government by ranges from 23 to 64%. new social policy framework opening doors and guiding people includes commitments to the to the right mainstream service All this suggests that strengthening implementation of measures aimed systems, to broker connections, communities may be as simple at giving effect to these principles. and to promote partnerships as encouraging volunteering and A central element of the changes for optimum resource use and investing in social infrastructure, is recognition of the critical role sustainability. sport, recreation and community played by local government in the arts facilities, and even improved planning and delivery of services in Critical to the next steps is the streetscaping and other local their communities. need to change the skills and amenities. culture of the public service so A place-based approach that it is able to operate in this Innovations in regional to public administration new environment, in which governance coordination will be more highly DVC’s community strengthening valued than control, and alliance- Given that communities want approach has a number features building will be more valued than greater control of their futures, that highlight the practical changes giving directions. how can Government address we are making on the ground to these issues from a community boost regional coordination and Lessons learned strengthening perspective? I community strengthening: In reflecting on the past three years propose the following six design • A focus on broadly based principles: community engagement, we in DVC have learned a number including groups often of lessons about the challenges of • Viewing the world through engaging communities. the lens of the clients, be excluded. they individuals, families or • Community level planning and Firstly, it is critically important communities (client focused priority setting—a key role for to understand the context in principle) local government. which you operate. For DVC this • Developing a simpler or single • Direct community involvement meant spending considerable time face of government locally in governance, for example engaging agencies and sectors, both

88 Managing structural and social change inside and outside government, servants; and communities directly KEY REFERENCES slowly building an understanding engaged in making choices about of the concepts and objectives their futures and having the • Department of Transport underpinning the Department, and wherewithal to do so. and Regional Services 1999, making strategic decisions about Community research reports, Commonwealth of Australia, where to invest our energies. Those in leadership roles in the public sector need to lead not only Canberra (www.dotars.gov. Secondly, it is important to the development of new ideas au/regional/communities/ challenge the paradigm in which but also the translation of those reports/index.aspx) you operate. This requires in-depth ideas into new structures, new • Department of Premier thinking about the intellectual instruments, new skills and most and Cabinet 2005, A fairer framework within which the importantly, new behaviours. Victoria: creating opportunity organisation is to operate. and addressing disadvantage, Communities do not see the world State Government of Thirdly, community strengthening through the myriad of outputs Victoria, Melbourne. requires a joined-up approach to be and programs that constitute the • Department for Victorian effective. basic toolkit of the public sector. Communities 2005, Indicators It is up to us to render that world of community strength at the When we established DVC the accessible and intelligible. Local Local Government Area level in joining up and governance issues communities need to be a part of Victoria, State Government of were seen to be peripheral to the priority setting, decision-making Victoria, Melbourne. debate but they are actually at the and implementation arrangements. • J Pope & DJ Warr centre. Strong communities need These endeavours are at the 2005, Strengthening local active local leadership; robust heart of innovation in regional communities: an overview of governance. accountable local institutions; research examining the benefits sustainable resourcing strategies; For more information of neighbourhood houses, DVC, integrated local service delivery; Melbourne. listening and empathetic public see www.dvc.vic.gov.au

About the author Yehudi Blacher is Secretary of the Department for Victorian Communities, before which he was Deputy Secretary in the Department of Premier and Cabinet. Yehudi has a strong interest in public policy and administration, and has consistently been involved in major reforms of the public sector while in senior positions within the Victorian Public Service. His early career roles included positions in academia and the private sector. Twelve Apostles, Great Ocean Road, Victoria

Innovations in regional governance 89 33. Community cohesion and resilience in regional Australia Rhonda Galbally

KEY MESSAGES we know that 64% of heart disease is caused by feeling a lack of • To increase individual and community resilience in the face of control over life, while only 46% is change, we need to tackle feelings of hopelessness, isolation and loss associated with risk factors such as of control. smoking, unhealthy eating patterns • This is best done through a range of participative groups to provide and insufficient exercise. opportunities to engage all ages and sectors of the community. • Strong governance arrangements of groups and partnerships with Surviving rapid change business and government are keys to community reform through engagement. How can we increase the resilience of regional Australians, in the The author explains why a wide variety of community groups with strong face of the huge changes they are governance are the key to improving individual and community resilience, experiencing? health and wellbeing. We need settings that increase Changes and transitions Family patterns are changing too, in regional Australia people’s sense of control, of from the old extended families to belonging and of hope—in nuclear families in relative isolation, families, workplaces, and The changes impacting on and increasing numbers of young regional Australia have been well community groups. and old people living alone, by documented elsewhere in this choice or circumstances. publication. They include effects Families lie on a continuum. At of globalisation, agricultural one end are families that support technology, emergence of new Impacts on health and development of all members and regional industries such as tourism wellbeing enhance social and economic and agribusiness centres, and contributions of their members. At demographic shifts due to ageing Many individuals feel out of the other end are families that are of the population, sea change control, that they have no say, isolated, lonely and toxic. One in moves, and movement of young no power over their own lives. ten adult Australians live alone. people to urban areas. They report feeling a sense of hopelessness, isolation, Research on workplace settings Environmental changes, including and disconnection from their shows that at every level down climate change, salinity problems, community, a sense of not from the top, the risk of feeling out and availability and price of water belonging. of control increases: risk of disease and energy, are also impacting doubles from the top to the second heavily on regional communities. Health and safety issues are level and by a factor of five at the of major concern in regional bottom level of the workplace These changes are contributing to Australia, with higher incidences hierarchy. Which suggests that economic and cultural transitions due to relocation and changes in of all non-communicable diseases unless you’re the boss you’re not the nature of work, with more such as heart disease, stroke, likely to be healthy. casual and part time positions, and diabetes, cancer and obesity. There So it appears that the best in some areas new opportunities are also increases in domestic from cluster-based industry violence, family breakdown and opportunities for fostering developments. child abuse, and higher incidences increased resilience will come of depression and other mental from community groups—from The roles of women and men in illnesses, including suicide, than in encouraging people in regional rural areas are changing, in terms of urban areas. Australia to join up and join in, who works where, and who brings shoulder to shoulder with others in in the primary income. From a long-term British study the community.

90 Managing structural and social change Engaging communities

We can categorise various types of community group that engage and involve people:

1 Human services groups, covering professional services provided by salaried staff to individuals, some of whom are disadvantaged. 2 Specific purpose, new community organisations, established by community impetus in regional and small towns struggling to reinvent themselves and develop new reasons for being. They are participative and goal-focused, with a purpose related to such as bowls and bridge clubs and Is there a group for every person’s economic and social renewal senior citizens centres for older interest, issue, need? Are there and survival. people. groups for every lifespan group, from youth to older? Are the 3 Government-driven Each of these needs to be assessed groups viable and well run, neighbourhood or community for their impact on the sense of using modern business skills and renewal programs, often in control, belonging and hope of marketing, with strong governance? disadvantaged communities. their members, participants or These face issues of service recipients. Strong community infrastructure sustainability, being hard to is necessary not only for the sustain without significant health and wellbeing of individual ongoing government funding. Community community members, but also to 4 Numerous participative infrastructure in regional Australia attract necessary human services, community groups covering businesses and regional economic every issue, interest and development. need from neighbourhood The strongest indicator for regional community cohesion houses, community halls, So what can be done to assist is the strength of community Landcare groups, community community organisations to infrastructure, measured by the broadcasting, sports, CWA, become more: choirs, faith-based groups, number of groups per population, learning, arts and culture. Their and the strength of these groups. • vibrant (not doing the same members are one of the group, things they did a decade ago as Richard Wilkinson makes the not an individual receiving a the membership drops off); service. point that the more disadvantaged the area, the less likely there will • modern (addressing the issue Some participative groups require be numerous community groups of succession, bringing in new payment of a membership fee; for people to join, so there must blood, new activities, new others are free. Volunteering is a technology, new business skills); subset of community participation. be a deliberate strategy to develop the community groups in response • reaching out and inclusive There are community groups for to community demand. Note too (well marketed, not the best every stage of life: playgroups, that this approach is a preventative kept secrets for the ‘in’ crowd); sports for young people, adult strategy; if prevention hasn’t • transparent and financially groups such as service clubs, worked then communities will well managed (developing new chambers of commerce and need the community service model and secure revenue streams, industry, farm associations for that delivers individual services for not operating insolvently and meeting and matching, and groups people. dangerously); and

Community cohesion and resilience in regional Australia 91 • entrepreneurial as appropriate Organisations can facilitate KEY REFERENCES (taking on new challenges, partnerships between community fundraising effectively, looking and regional business by bringing • I Kawachi & LF Berkman for new opportunities— local business people onto their (eds) 2003, Neighborhoods and health, Oxford University undertaking responsible Boards to add important skills Press, Oxford. business planning, not taking and fill the numbers on boards. unnecessary risks). Business pays attention to the • MG Marmot et al. 1997, What can we do to help finances and viability issues, ‘Contribution of job control community organisations to brings new ideas and new ways to and other risk factors to social forge realistic partnerships with planning and managing, and has variations in coronary heart local business (not just hitting the skills to bring the vision to disease incidence’, Lancet 350, 235–39. on business unrealistically for a reality. one-way flow of support, usually • B Mattsson & M Mattsson money), and with government, We need resilient Australians to 1998, ‘To sing in a choir and especially local government? forge and contribute to economic be healthy: which are the regeneration, transition and mediating mechanisms?’, development, and ultimately to Scandinavian Journal of Public Community governance Health 26(3), 238. issues sustained economic growth. • S Syme 2004, ‘Social Governance of community In the end it is the quality of determinants of health: the infrastructure is the key to reform the governance that enables community as an empowered because governance sets the group’s community infrastructure to partner’, Preventing Chronic direction, ensures that groups are support improvements in the Disease: Public Health operating to their capacity in a health, wellbeing and resilience of Research, Practice and Policy business-like way, manages risk regional Australians. Upgrading 1(1) (www.cdc.gov/pcd/ and keeps the groups safe, ensures the governance of the smallest issues/2004/jan/syme.htm). viability and sustainability. Good community group holds the key to • RG Wilkinson & KE Pickett governance enshrines inclusion, community reform. 2006, ‘Income inequality and population health: a and prevents, contains and resolves For more information conflict, both internally and review and explanation of the externally. ourcommunity.com.au evidence’, Soc. Sci. Med. 62, 1768–84 (10.1016/j.socscime About the author d.2005.08.036). Rhonda Galbally AO is the founding CEO of www.ourcommunity.com.au, a gateway of tools, information, advice and training to improve governance and help community groups find funds, grants, insurance and board members. A community campaigner for more than 25 years, Rhonda previously served as founding chief executive of the Australian Commission for the Future and then of Vic Health, the funding body that redefined health promotion in Australia.

92 Managing structural and social change

Rural Industries Research and Development Corporation GROWING REGIONS Reports from an international conference

Full papers of select articles are available on CD-ROM.

Presentations are also available on CD-ROM.

The Australian Government Department of Transport and Regional Services thanks all contributors and participants of the Growing Regions Conference.

25–27 JULY 2006 BRISBANE • QUEENSLAND • AUSTRALIA