Senate Inquiry The future role and contribution of regional capitals to Australia

1.0 The City of Greater Context The City of Greater Geraldton is located 424 km north of at a central point on the west coast boundary of the Mid West region (see Figure 1). The Mid West region covers 478,000 square kilometres, or almost 25% of the state’s land area and encompasses 17 local government authorities (Department of Regional Development, 2014). The region is well endowed with natural resources but sparsely populated. The City of Greater Geraldton is an important functional hub for the region, with all government departments represented. The City of Greater Geraldton is the largest regional centre outside the Perth metropolitan area.

Figure 1. Geraldton and the Mid West of Western Australia

Source: Government of Western Australia Department of Regional Development http://www.drd.wa.gov.au/regions/Pages/Mid-West.aspx The City of Greater Geraldton covers an area of around 9,890 km2 extending from the west coast to over 150 km inland. Between 2001 and 2011 the overall population of the area now encompassed in the city increased by around 4,000 or approximately 12%. Consistent with a broader regional trend, the two previously distinct administrative areas now incorporated into the recently formed City performed differently.

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The Mid West is recognised as having a relatively strong and diversified economy. In the relevant period, Gross Regional Product has been the third highest in Western Australia after the Pilbara and Goldfields reflecting the elevated activity in the resources sector (Regional Development Australia, 2013). Agriculture and fishing have been the mainstay of the regional economy and remain important, contributing more than $1billion in 2011-12. However, the region is also well endowed with mineral and energy deposits. In recent years mining has emerged as the main economic driver, as global demand strong and commodity prices encouraged significant investment in new projects. In 2012-13 mining production contributed over $3 billion to the regional economy. Retail, and construction, being the two largest employers, contributed $660 million and $227 million respectively. Tourism is also an important industry for local employment.

2.0 An assessment of current demographic trends in the City of Greater Geraldton Over the past decade high commodity prices and sustained global demand for Australian mineral resources have brought considerable wealth to the nation, and particularly to the state of Western Australia. Elevated labour demand associated with the rapid growth period has had important implications for particular regions and communities that are either host to a mining project, or a source hub for fly-in fly-out (FIFO) or other forms of long distance commute (LDC) workforces. The City of Greater Geraldton is one of those communities which has experienced population gain.

As noted above, as of mid 2011, the City of Greater Geraldton now includes Geraldton- Greenough and Mullewa (through voluntary amalgamation). Population growth occurred in the significantly more populous Geraldton-Greenough local government authority (LGA) and declined in the sparsely populated inland Mullewa SLA. As illustrated at table 1 below, growth rates were strongest between 2006 and 2011, consistent with the rise in mining activity in Western Australia.

Table 1. Population City of Greater Geraldton 2001-2011

Local government 2001 2006 2011 % change % change area 2001-2006 2006-2011

Geraldton- 34,019 35,736 38,340 5.05 7.23 Greenough

1,099 910 856 -8.0 -5.0 Mullewa (SLA) Source: Australian Bureau of Statistics (2012a) (based on place of usual residence)

In 2011 the population of the City of Greater Geraldton accounted for 8% of the state’s total regional population and just 2.3% of the state population (Australian Bureau of Statistics, 2012a). Internally population distribution is uneven with the greatest density occurring in the coastal and near coastal LGAs.

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Increases of 3% and 2.4% respectively also occurred in the adjacent and urbanising LGAs of Irwin to the south and Chapman Valley to the northeast of the Geraldton- Greenough conurbation.

Indigenous population In 2006 the recorded Indigenous population for the region was 3,568. In 2011 Aboriginal and Torres Strait Islander peoples comprised approximately 12% of the Mid West population (Australian Bureau of Statistics, 2012b) . According to Regional Development Australia the Indigenous regional population is growing three times faster than the non- indigenous population. As with the broader population, the distribution of the Aboriginal population across the region was uneven. In 2006 almost 60% of the indigenous population lived in coastal areas and around 50% lived within the city of Greater Geraldton. In the 2006-2011 period, Aboriginal employment rose significantly in the City, although not all of the work was local; many Aboriginal people ~ 500 are employed in the mining industry in locations distant to the City of Greater Geraldton.

3.0 Functional Roles and Connectivity of the City of Greater Geraldton In contrast to other regions in Western Australia where many shires rely predominantly on one or two industries, five industries in the Mid West account for 50% of employment: construction, retail, agriculture forestry and fishing, health care and social assistance, and mining underscoring a diversified local economy. The Geraldton-Greenough LGA (2011) has recently sustained the highest regional employment diversity in Western Australia. This is reflected in the growth of the LGA’s local economy in line with the State economy in the period 2006-2011, creating jobs at about the same rate as the whole State (P Plummer et al., 2013c). The degree of diversity increased sharply between the 2001 and 2006 census count and maintained a stable lead thereon.

Between 2001-2006 and 2006-2011 job growth can be primarily attributed to the local capacity to create jobs in the labouring, machine operators and drivers, management and clerical and administrative worker sectors of the labour market. Job creation across occupations was dominated by local structures which differed to that of the broader Western Australian spatial division of labour. In the 2006 – 2011 period, the location quotient moved to positive and the economic base contribution (a measure of the degree to which economic activity and employment in a region is related to servicing local demand as against servicing demand external to the region) trebled, indicating local specialisation and net employment growth (P. Plummer & Chapman, 2015).

The City is an important government services hub for the broader region and it therefore provides services and facilities to a large non-resident population which flows in from other local government authorities.

4.0 Current funding provided to City of Greater Geraldton Like the other regional capitals in Western Australia, the City of Greater Geraldton has limited opportunities to raise capital. The Financial Assistance (General Purpose, Local

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Roads and Special Purpose) Grants (FAGS) to local government are therefore very important. The data which underpins the allocation of funds is not necessarily accurate. The Australian Bureau of Statistics calculated that the undercount for the 2006 census was unusually high in Western Australia due to a variety of reasons associated with the rapid population influx in some parts of Western Australia especially in remote and regional areas and with the high population churn experienced by most Western Australian local government authorities (Australian Bureau of Statistics, 2013). Furthermore, there is considerable lag between population data being collected and FAG monies being allocated. As it is, FAG monies provide a small proportion (~12-15%) for the operational expenses of repairing and maintaining roads and the local government authority is expected to meet the balance of the roads expenditure. This problem is particularly acute in regional centres such as the City of Greater Geraldton which is fast growing and a large regional hub with few service alternatives for local residents and those living in outlying jurisdictions which rely on infrastructure and service delivery from Geraldton. It also underscores the importance of accurate census data. The functional role (and additional costs) of providing services and infrastructure utilised by non-residents to regional capitals such as Geraldton should be recognised and financially compensated by other spheres of government.

The rapidity of change in job creation, services demand, population growth and industry activity in the Mid West region demonstrates how important it is to conduct a census every five years. It has been mooted that the Commonwealth is considering conducting the census on a ten year cycle rather than five years. The City of Greater Geraldton strongly opposes the proposal. As it is, the mechanisms by which population is assessed for grants is inaccurate, and resource host communities consistently lobby for equitable recompense for services provided and utilised by visitors and transient and mobile labour forces. The Location Disability factor is recognition by the Western Australian Local Government Grants Commission of the higher operating costs local government authorities (and others, including the private sector), must bear due to location. Distance and therefore costs associated with freight and transport exacerbates the affordability of a range of goods and services, generally expected to be provided by a local government authority and other goods and service providers. In Western Australia where regional centres such as the City of Greater Geraldton are relatively isolated there are few opportunities to spread freight, transport and other costs across other destinations. The costs are not limited to local government and increase exponentially with remoteness (Department of Regional Development and Lands, 2013) impacting the community more broadly with higher cost of living and increased costs of doing business. Employment costs are also higher as a result of the need to offer additional inducements to attract experienced staff and the need to provide housing or offer housing subsidies. However, the calculation of the Location Disability is not transparent and it is discretionary. The Western Australian Royalties for Regions program has provided an important revenue stream for the provision of key infrastructure and upgrading of the City. The beautification

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and restructuring of the central business district of the City has been a fillip to local business and the Mid West more generally. However, funds for the Royalties for Regions program are wholly dependent on state mining and onshore petroleum royalties for additional investments in projects, infrastructure and community services in rural, regional and remote communities – over and above the State government service obligations (Department for Regional Development and Lands, 2012; Haslam McKenzie, 2013). As mining activities diminish so too does discretionary funds such as the Royalties for Regions program which has made such an important contribution to rural, regional and remote Western Australia infrastructure and liveability.

5.0 Benefits of additional funding Despite small populations in rural, regional and remote areas of Western Australia, non- metropolitan industries have generated extraordinary wealth. The disproportionate contribution by Western Australian regional-based industries to GDP over the last decade (Department of Mines and Petroleum, 2013) underscores the relative importance of local competitiveness and the ways in which the Western Australian regional capitals such as the City of Greater Geraldton have engaged with broader socio-economic processes. Importantly, the findings of research undertaken by Plummer and Chapman (2015) demonstrate that competitiveness plays out differently by sector and locality, suggesting the need for not just broad place-based policy interventions, but also strategies that are specific to individual sectors and places, regardless of population size. More direct influence can be asserted over local competitiveness. This can be facilitated through improvements in local economic conditions, including the quality of infrastructure, technological innovation, improving social capital, enhancing local environmental or urban amenity reducing regulatory imposts and creating conducive planning regimes. As noted earlier, the Western Australian Local Government Grants Commission Location Disability index assesses the impact of remoteness and resident population in relation to local government authority expenditure and revenue standards, compensating the relevant authorities for the higher operating costs of remote locations. However, it is evident that without a more accurate assessment of non-resident workforce and visitor data the remote regional capitals are significantly disadvantaged. 6.0 Investment challenges to maintain and grow regional capitals The dynamics of job growth in Geraldton is unlike most other rural, regional and remote localities and is more similar to that of Perth metropolitan area rather than the rest of regional Western Australia. However, banks and other financial institutions have shown reluctance to encourage investment in non-metropolitan localities and industries which are locally based (Ministry of Fair Trading, 1998). The reluctance of financiers to lend on homes in regional capitals or their requirements for significant deposits before approving mortgages provides a further barrier to investment for business development, home ownership and rental accommodation (Haslam McKenzie, 2011; Haslam McKenzie et al., 2009). Similarly, the risk averse policies of financial

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institutions restrict the ability for developers to gain financing for commercial and industrial developments that would greatly add to Geraldton’s economic base. Consequently the ability of regional capitals to generate jobs and keep skilled and professional staff is volatile, depending upon economic base and macro-economic conditions. Geraldton has been an important location of job creation over the last decade, (P. Plummer et al., 2013a). Between 2006 and 2011, the effects of the resources boom became evident with the strong growth recorded in the City of Greater Geraldton and communities near to Geraldton (P. Plummer et al., 2013a; P. Plummer et al., 2013b) across a variety of industries. The breath of industries which experienced growth underscore the role and contribution of Geraldton-based businesses. They include support services, construction, manufacturing, health care and social services, real estate, transport and warehousing. Robust and reliable industries are key to the future of the region, however they are also vulnerable to global market conditions. Without adequate recognition and support from the Commonwealth and State governments planning lags and volatile markets will undermine industry robustness. The recent fall in iron-ore prices and rapid diminution of mining activities illuminates the inability of the key stakeholders in regional capitals to anticipate and make a timely response to the growth management issues arising from the boom and bust conditions. Formalised, inter-sectoral relationships and governance arrangements are required to enable government, community and industry to work together to ensure an adequate housing, service and infrastructure response to volatile market conditions. Without ongoing investment in planning under supply, high cost and variable standard of services, inadequate infrastructure and housing supply will undermine future development of regional capitals and exacerbate the mismatch between local needs and future demand. Without adequate investment, skills development and employment opportunities for local residents, especially those, such as Indigenous people and young people, who face employment barriers, will be compromised. Such an approach is premised on equity considerations as well as promoting regional social and economic development. Employment practices should therefore support social and economic development in regional capitals that contribute to functional communities, thus enabling WARCA to extend their functional and connectivity roles to neighbouring communities. Resident populations of a scale to support the delivery of a reasonable standard and proximity of business, government and community services that allow residents and outlying communities to live, work and recreate locally is therefore imperative. 7.0 Incentives and policy measure that would support sustainable growth in regional capitals Policy approaches that aim to address uneven employment are important if the gap between more and less prosperous centres is to be reduced. Specialised policy responses are required to take account of the spatial distribution, performance, economic base/structure, diversity and competitiveness of cities such as Geraldton. It is important that the functional and connectivity roles of cities like Geraldton are recognised and properly supported in order that services and a range of quality of life indicators can be

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achieved, for a large regional network which relies on Geraldton. Allocation of resources should not be based solely on population, but rather on function and expected outputs if connectivity is to be preserved across the neighbouring regional areas. Given that Geraldton has a unique location with a diversified economy which relies on primary production and global markets policy measures that meet specific needs and opportunities are imperative. For example, remoteness, climatic conditions, seasonality of accommodation and visitor demands, markets, the degree of engagement with the global economy all have varying opportunities and costs which cannot be appropriately or adequately addressed with a ‘one size fits all’ policy agenda. Incentivising long term jobs growth and improved competitive advantage is welcomed, provided the incentives are not at the cost of existing funding arrangements for the support of regional centres and current regional economic development programs. Appropriate incentives for local job creation and local economic development such as the Victorian Putting Local First grants has the potential to encourage investment in job creation in regional capitals such as Geraldton. Transport and physical connectivity is very important to the City of Greater Geraldton and Mid West region. Ensuring policy measures that are cognisant of the importance of transport, but also the costs associated with maintaining infrastructure and hubs is very important to the City of Greater Geraldton. As noted earlier, direct influence over competitiveness can be facilitated through improvements in local economic conditions including infrastructure, social capital, liveability and amenity, technological support, responsive planning regimes and institutional and governance structures. It is therefore critical that policy measures aim to assist the regional capitals to maximise their competitiveness and enhance resilience to ensure sustainability and return on private and public investment.

8.0 Examples of Nation Building Infrastructure Requirements The economy of Geraldton, the Midwest region, and the nation could be significantly enhanced through additional investment in key infrastructure to service, support and attract industry investment in Geraldton. Specific examples include: Geraldton Outer By-Pass Geraldton is a major logistics centre for mining in the Midwest region, providing a Port for the export of mineral products and a diverse range of support services to the mining industry. Presently, all large haul vehicles travel through the centre of town to access the Port and service industries. In addition to being a major safety issue the current transport arrangements are inefficient due to the load, size and speed restrictions placed upon vehicles. The Main Roads Department of Western Australia is currently developing plans for a by-pass to be constructed that will improve connectivity of transport links to the mining sector,

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provide separation between heavy and light vehicles, remove the load and size restrictions currently in place, and improve safety within the City. Projects such as these should receive priority investment from the State and Federal Governments as Nation Building projects.

Electricity Supply A 330kv electricity supply is located within 200km of Geraldton, but has not been extended to our region due to the financial constraints of the State Government and its power supply company. Instead, Geraldton is supplied by an ageing 132KV power supply. The current 132KV power supply is a major limiting factor in the development of our region as it requires customers to suffer from ongoing interruptible power supply arrangements through curtailment policies that attempt to manage the demand on the system. As a result, any potential industry that will require more than 1.5MW is required to install back-up generator capacity to continue operations whilst the power supply is being curtailed by the energy provider. This creates a significant barrier or disincentive to potential industries that could provide value added services to the mining industry and important economic growth. Because of the low 1.5MW threshold, the policy also impacts on other service industries including retail shopping centres. In addition to the above, the lack of connectivity to the 330KV transmission lines prevents expansion of renewable energy production (such as wind farms and solar farms) within the region by preventing access to markets in the southern part of the state where demand is highest. Geraldton’s continued economic growth is and will continue to be thwarted whilst the current power supply arrangements are in place.

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References Australian Bureau of Statistics. (2012a). Census of Population and Housing. Canberra: Australian Bureau of Statistics.

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Haslam McKenzie, F. (2011). Attracting and retaining skilled and professional staff in remote locations of Australia. The Rangelands Journal, 33, 353-363.

Haslam McKenzie, F. (2013). Delivering enduring benefits from a gas development: Governance and planning challenges in remote Western Australia. Australian Geographer, 42(3), 341-358.

Haslam McKenzie, F., Rowley, S., Phillips, R., Birdsall-Jones, C., & Brereton, D. (2009). Housing Market Dynamics in Resource Boom Towns. Perth: Australian Housing and Urban Research Institute (www.ahuri.edu.au/publications/p80370/). Retrieved from www.ahuri.edu.au/publications/p80370/

Ministry of Fair Trading. (1998). Regional Financial Services Taskforce concerning the Withdrawal of Banks from Country Towns. Perth: Ministry of Fair Trading.

Plummer, P., & Chapman, R. (2015). Understanding local competitiveness: Briefing Paper # 9: Identifying key and strategic industries City of Geraldton 2001-2011. Perth: Centre for Regional Development, University of Western Australia.

Plummer, P., Martinus, K., & Tonts, M. (2013a). Regional capitals in the WA settlement hierarchy: Employment change and job creation Briefing Paper 2: Centre for Regional Development, University of Western Australia.

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Plummer, P., Martinus, K., & Tonts, M. (2013b). Regional capitals in the WA settlement hierarchy: Employment diversity and growth Briefing Paper 3. Perth: Centre for Regional Development, University of Western Australia.

Plummer, P., Tonts, M., & Martinus, K. (2013c). Endogenous growth, local competitiveness and regional cdevelopment: WesternAustralia's Regional Cities , 2001-2011. Journal of Economic and Social Policy, 16(1).

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