Regional Australia economy worth almost $600b but has slowed markedly compared to capital cities

On the outset, regional Australia looks to be a powerhouse.

If it were a separate country, regional Australia’s economy – worth almost $600 billion – would be in the top 30 global economies, placing at 22, just behind Taiwan and in front of Poland. 

It would be the sixth largest by territory and have a population of more than nine million.

But the growth of the nation’s regional places, compared to the capital cities, has drastically slowed over the past 10 years, new research by SGS Economics and Planning shows.

Prior to the Global Financial Crisis of 2007-08, GDP growth in Australian capital cities was at 3.3 per cent but slowed to 2.8 per cent.

For regional Australia, pre-GFC GDP growth was at 3.4 per cent, but afterwards it slowed to 2.3 per cent. Eliminating mining from the equation further widens this gap, says SGS national leader for economic and social analysis Terry Rawnsley.

“The reason we took mining out of the equation was, although you might have an iron ore mine, a coal mine or an electric plant – it’s all very automated and the profits don’t stay there, it goes to BHP Billiton or shareholders in Sydney and Melbourne,” he said. 

“We know the economy in regional Australia has slowed markedly over the past five or 10 years to what it was historically and that has created a lot of challenges for various governments about how they can meet the expectations of people living in regional Australia.”

Over the same period, the average age gap also widened between the capital cities and regional Australia. In 2007, the average age for regional Australia for 38.5 years and for capital cities, 37.3. In 2017 it was 40.4 years for regional and 37.8 for capitals.

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Five areas were identified as factors to help contribute to sustainable growth – infrastructure development, directive employment, provision of health and education services, government payments and strategy and coordination roles.

Regional Australia was defined in the report as everything geographically located outside of Sydney, Melbourne, Brisbane, Perth and Adelaide.

“The way you would run a city of one to four million people is very different to how you would run a city of 300,000 to 400,000,” Mr Rawnsley said.

The research grouped regional Australia into three different categories: cities within two hours of a capital city (Wollongong, Geelong), larger cities further afield (Canberra, Townsville) and places with population decline (Cowra, Bourke).

Mr Rawnsley said cities within close proximity to capital cities had the greatest potential to benefit from government investment.

“Places like Wollongong, Geelong, Ballarat, Bendigo and the Gold Coast – cities within touching distance to a capital city – are the ones where you could see some benefits from improved transport links and there are various sorts of planning underway to improve some of those links already,” he said. 

In the 2019 federal budget, $100 billion was pledged for infrastructure which included fast trains from Sydney to Wollongong, Melbourne to Geelong and Brisbane to the Gold Coast. 

Mr Rawnsley said making regional areas “vibrant and interesting places to live” was also important for growth, citing Tasmania as an example. 

“We talk about a couple of case studies from Tasmania – [the state] has done a really good job of playing on its quality food, wine, and cheese as a way to sell its branding,” he said. 

“The Museum of Old and New Art [MONA] has been a big part of that as well, some people visit and say, ‘I might move to Hobart and get some of that lifestyle’.” 

Hobart continued to defy the downward trend in median house prices, up 7 per cent year-on-year in the 12 months to March 2019, the recent Domain House Price Report showed.

The research findings were presented at an event in Canberra at QT Hotel on Wednesday evening.