Is uneven economic growth dividing Australian society?

Our recent SGS seminar series revealed that just ten locations across Australia contributed over half of the nation’s economic growth during 2015-16.

Areas within Sydney’s Global Economic Corridor [1], stretching from the CBD to Macquarie Park, contributed almost a quarter of Australia’s GDP growth in 2015-16. Inner Melbourne contributed 11.4 per cent of GDP growth and the rapidly growing south eastern (3.4 percent) and western (2.4 per cent) suburbs of Melbourne were also in the top ten. The inner city of Brisbane contributed 2.1 per cent of national GDP growth - a lower contribution than the previous three years. Canberra’s contribution bounced back after two years of lower growth.

Mineral production in Regional Western Australia contributed 6.5 per cent to GDP growth in 2015-16. This contribution is well down on previous years when the construction of new mines added greatly to economic activity. The coal producing Bowen Basin region near Mackay also added 2.0 per cent to national growth.

However, many regional areas experienced an economic contraction during 2015-16. Regional Victoria’s growth was hampered by a poor year for farm production and the ongoing decline in Manufacturing. While the larger regional centres of Ballarat, Bendigo and Geelong did experience some economic growth in 2015-16, this did not keep pace with population growth.

During 2014-15, Cairns, Darling Downs, Gold Coast, Sunshine Coast, Toowoomba, Wide Bay and Townsville were all in an economic recession. While many of these areas did recover during 2015-16, they still experienced very low levels of growth. Regional Queensland’s GDP grew by 2.8 per cent, compared with a -1.4 per cent contraction in 2014-15.

More than half of the 2015-16 economic growth in Regional Queensland was from increased mining production. While mining production might be up, it is no longer providing the same stimulus to the local economies that was seen in the past. During the mining boom, mining facilities were being built across Regional Queensland. With these projects now at an end, many construction workers are unemployed, have left the region, or have reduced wages and are spending less in local communities.

Western Australia is also feeling the impact of the mining bust. Perth’s growth rate of 1.6 per cent was the third lowest on record (only 2000-01 at 0.5 per cent and 1990-91 at minus 3 per cent are lower). The 2.3 per cent GDP growth in Regional Western Australia was driven by increased mining production. Almost all other industries fell during 2015-16. Construction (-0.6 percentage points), Accommodation & Food services (-0.3 percentage points) and Administrative support (-0.3 percentage points) had the largest impact.

The stark contrast between growth rates across the country is greater now than at any period during the mining boom. The Reserve Bank of Australia has to manage strong economic growth in Sydney and Melbourne while the rest of the country is struggling to grow.

Table 1: Top ten Statistical Area 4 contribution to GDP growth 2015-16

The spatial disparity of economic growth is not the only issue; there are segments of the population who are being left behind.

A single person on the Newstart Allowance has seen their weekly benefit go from $150 per week in 1994, to $267 in 2017. An increase which has not kept pace with the cost of living.

Women living in regional areas and the outer suburbs of our major capital cities are struggling to find employment that matches their education. For example, more than 30 per cent of tertiary educated women working full time in the Cities of Casey and Dandenong in Melbourne’s outer South East are employed in positions that do not require a tertiary education.

Young people living in regional areas and in the far flung suburbs of our major cities have real challenges in accessing higher education services. These barriers to accessing higher education are reinforcing the spatial divide of disadvantage in our cities and regions.

Workers in Accommodation and Food Services, Retail trade, Health care & Social Assistance and Manufacturing are all experiencing below average wage growth.

These economic and social outcomes, combined with feelings of disenfranchisement within communities and dissatisfaction with major political parties, is changing the political landscape in many of these regions.

[1] Consists of the following SA4s: Sydney City and Inner South, Sydney North Sydney and Hornsby and Sydney Ryde.

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