5.1
Regional businesses provide local jobs and deliver the goods and services that are crucial for building strong communities in which people can live, work and raise families.
5.2
The business landscape in regional Australia is diverse. It comprises a range of major employing industries include agriculture, forestry and fishing; manufacturing; health care and social assistance; and retail. Small business plays an important role in regional economies. It often provides goods and services which are not sold by larger retailers due to issues with economies of scale. This means that small businesses are more likely to be found in regional areas.
5.3
Accordingly, businesses in regional areas offer a wide range of employment opportunities:
It’s not just farm work that’s available. A variety of occupations are in demand, from low skilled and entry level roles through to health and personal care, trades and professional occupations.
5.4
Mayor of Barcoo, Ms Sally O’Neil, said it simply:
If you want work, you can get a job in the bush without a doubt.
5.5
Regional business benefits from the presence of large government agencies. The Department of Defence has a significant regional presence which has resulted in the development of extensive partnerships with communities, business and government:
Defence’s contribution to regional economies includes housing, capital works and employment outcomes, and also in more unique circumstances, military exercises in rural and regional Australia. Defence’s contributions to social, economic development, environmental protection, waste management and sustainability activities are also evidenced in relation to the delivery of military training in regional Australia, including pre-recruitment programs for Indigenous Australians. Community engagement and capacity building also occur in regional locations.
5.6
Because regional business is essential both to local economies, and also to the wider national one, it is important that it receive appropriate support to enable it to sustain. It faces a number of challenges associated with its lack of proximity to major metropolitan areas including greater transport costs, poorer digital connectivity and difficulty in gaining access to skilled personnel.
The importance of regional business
5.7
Regional Capitals Australia (RCA) noted the broader significance of regional business:
Collectively, Australia’s regions account for around 40% of total national economic output and most importantly, have a stabilising effect on Australia’s economy.
5.8
The stabilising role played by regional business makes it necessary for it to receive specific attention in a number of areas. The Country Women’s Association of Australia noted the connections between population, business and economic sustainability in regions:
…when more people live in a town it builds on the economic base of that community. The more people who are in that community—the more people who require another teacher at the school, another coffee each day, another support service in town and another business in town—the better equipped that community is to increase their economic base and to increase their self-reliance.
5.9
The contribution of regional business extends from the direct value of primary production such as mining, agriculture, forestry and fisheries to the consequent spill over effects to the wider economy. It is clear that regional economic activity is a vital component of our national economic wellbeing.
Challenges for regional business
5.10
Inquiry participants raised a number of regulatory and structural barriers which affect the ongoing viability of regional business. In order for them to prosper, these barriers need to be addressed. Furthermore, the diversity of Australia’s regions means that what is successful in one place will not necessarily be the same for another. Therefore, it is crucial that the needs of individual regions are heard and policies tailored accordingly.
5.11
As discussed in Chapter 2, the need for place-based policies was reiterated by the Regional Australia Institute (RAI):
One of the things that's constraining that at the moment—and it's a regulatory and policy design issue—is that we tend to offer the same sorts of support, programs and assistance across the country. … So we've got a uniform approach to most of our industry and education development, but we need … things that allow some of these policies and programs to vary according to different places.
Red tape
5.12
While it is essential that there be responsible administrative oversight of public funds, the theme of excessive red tape was raised several times in the inquiry as a barrier to investment. Mr Tim Watson of the Dorset Council stated that if the enterprise had come up against a referral under the Environment Protection and Biodiversity Conservation Act 1999, they might have still been waiting to develop the Derby mountain bike trails. These trails have been a successful enterprise due to the forested environment and due to the supportive and efficient management of Forestry Tasmania (now Sustainable Timber Tasmania).
5.13
The City of Kalgoorlie-Boulder suggested that investors could be attracted to regional Australia by ‘cutting red tape and providing them ongoing support from all levels of Government’.
5.14
Differing interests in regional Australia can mean that the livelihood of one business can affect that of another. These competing interests may require careful negotiation to achieve mutually beneficial outcomes. Mr Ross Hampton of the Australian Forest Products Association argued for a place-based approach to different industries and urged governments to consider ‘what is the right shape or fit for a particular part of Australia’. Mr Hampton also said:
One of the problems we’ve had in Australia is that, because the areas available to us keep reducing, because we’ve had a binary approach, we’ve had to say, ‘We have a multiuse forest for forestry or we have the rest of the forest,’ and then all the attention is on the multiuse forest and that gets smaller and smaller, so the operations get ‘harsher and harsher’….If we could have a broader approach to forestry in Australia- native forestry, not plantation forestry – then I think the impacts on communities would be far more tolerated.
5.15
The primary concern of regional businesses in many cases is investor confidence, as articulated by Mr Ian Telfer of Forestry Industry Federation WA:
Regarding confidence for investment, particularly when we’re dealing with what we might call sovereign risk – concern about government policies, putting aside the forestry ones – investors are concerned, whether it’s around power or security or fibre security. The risk of government policy changes undermining investment – and we’re talking about significant investment – is a major impediment for growth in our sector.
5.16
Regional Development Australia (RDA) Kimberley stated that ‘… private investment is critical to the development and sustainability of regional Australia’, but also noted impediments to private investment which included a shortage of freehold tenure, excessive state and federal regulations, and the need for greater government investment in critical infrastructure.
5.17
Gill Parssey of the Wukalina Walk in Tasmania expressed frustration surrounding the multitude of rules surrounding grant and funding programs, stating that the selection criteria could be simplified:
Do you think this is going to be successful? … Is it going to meet an unmet demand from clients or our target markets …, and if that’s the case, do we really need to have all these restrictions around it?
5.18
The Blue Derby mountain biking trails have had a transformative effect on a town that was described as ‘dead and buried’ to a thriving ‘resort town’, which unusually employs around 70 to 80 per cent locals. As a result of Derby’s success, other towns in the region are developing their own mountain bike trails and growing Tasmania as a mountain biking holiday destination. A key element noted by the Dorset Council was:
It's handy having a decent town planner who actually knows the law, so that, when you are having these difficult conversations with the agencies, they can quote the law to them.
5.19
Business NSW submitted that reforming a variety of state and federal tax changes could benefit regional businesses. It noted the importance of inter-governmental collaboration in delivering the most effective reforms:
It is a disservice to the Australian community for the states and territories to be expected to reform in isolation. The most fruitful reform opportunities would necessitate close collaboration between all tiers of government in Australia.
5.20
Robert Pennicott of Pennicott Wilderness Journeys regarded the imposition of payroll tax by the Tasmanian Government as a disincentive to employ people.
5.21
In a similar vein, research undertaken by Business SA in 2018 found that award rates and conditions was the top issue facing regional businesses in terms of specific labour cost challenges. Other red tape issues of concern were payroll tax and work health and safety compliance.
5.22
These sentiments were also supported by research undertaken by CommBank which found that more than a quarter of regional businesses surveyed cited government regulations and taxes as a challenge.
5.23
The Australian Government has a range of incentives for supporting regional business. These incentives acknowledge the key role played by regional business and also some of the unique challenges that it faces. For example, in 2015-16, it cut the business tax rate for smaller businesses. While the measure was welcome, RCA recommended that further incentives including additional tax breaks to be made specifically for regional operators who establish or re-establish regional businesses.
5.24
RCA also recommended that the Australian Government prioritise regional capital cities for its Industry, Innovation and Competitiveness Agenda and for the investment of the $188.5 million allocated for Industry Growth Centres.
Access to skilled labour
5.25
While much of the narrative around regional Australia is focused upon creating employment opportunities, the City of Kalgoorlie-Boulder finds itself in a different position—needing labour:
Everyone talks about jobs and that we need to create more jobs. In a silly sort of way, we don't want any more jobs. Yet we are creating them, and they're coming down the pipeline.
5.26
The issue of labour shortages cannot be fixed quickly; it is dependent upon a number of interrelated factors including population policy, access to training, spousal employment, and access to health services and educational opportunities for children.
5.27
The City of Wagga Wagga acknowledged these interrelationships:
There is a great need for workers to fill many vacant positions, involving many skills in demand. Meeting these needs would be a driver to stimulate significant economic activity. Further, it would provide a population base to keep schools and services viable throughout the Riverina. RDA Riverina are supportive and have programs involving promotion of investment opportunities, growing existing Riverina businesses, internal migration or relocation through Country Change, secondary refugee resettlement and skilled migration.
5.28
Ms Julie Broad, a small business advisor in regional WA, spoke about her experience in assisting business growth and development in the tourism sector in Collie:
My findings…were interesting in that, on the whole, businesses in Collie were not aware of what job service providers can offer to them as potential employers. Equally, the job service providers did not realise that they needed to promote themselves to the businesses and promote what they can actually do for business owners in the way of staffing. There seemed to be a disparity….Some of what I’m hearing from business owners is the lack of readiness that some jobseekers exhibit. On the few occasions business owners have accessed job service providers, they’ve been disappointed….
5.29
The problem of relatively limited opportunities for spousal employment was raised by Mr McKenna from Business SA reinforced this point stating:
One of the biggest issues, and a lot of the feedback we get, is that it’s very hard to attract families to the region. There might be jobs for either the husband or the wife but not both because the cities aren’t big enough to have that diversity of opportunities.
5.30
The Hunter Business Chamber referred to research finding skilled labour to be an area of ongoing concern for business:
The issue of a reliable supply of skilled and experienced labour is high on the minds of businesses across Australia currently, as demonstrated in successive business sentiment surveys conducted by the NSW Business Chamber. This is an area that would benefit from positive intervention by government.
5.31
While the need for new skills poses a challenge for regional Australia, the CSIRO also suggested that the shift towards generating value through knowledge and innovation could ‘… energise new forms of regional development’ including new energy sources, advanced manufacturing and ICT services.
5.32
Skilled labour is also dependent upon access to training. The Regional Universities Network attributed regional skills shortages in part to restrictions in the number of Commonwealth Supported Places:
The current funding freeze on Commonwealth Supported Places means that regional universities have found it difficult to grow bachelor places to meet areas of regional skills need e.g. in health (including nursing and allied health), agriculture and environmental science, teaching, social work and engineering. Sub-bachelors and enabling places, that act as pathways to higher qualifications, are capped, further restricting access to universities in RRR [Regional, Rural and Remote] areas.
5.33
Furthermore, Business NSW expects that there will be an increase in global competition for talent following the migration restrictions associated with COVID-19. These shortages are expected to exacerbate the pre-existing skill shortages in regional areas.
5.34
The Australian Local Government Association noted its role as employers and the skill shortages being faced by many of its members:
Local governments are a key driver of employment in regional and remote Australia. Over 40 percent of local governments across Australia surveyed in 2017 indicated they did not have enough apprentices/trainees to meet their future skill needs.
5.35
The Australian Government offers an Apprentices and Trainees wage subsidy which will subsidise 50 per cent of the wages of an eligible trainee or apprentice. These additional apprentices and trainees should eventually contribute to increasing the aggregate pool of skilled labour.
5.36
Similarly, the recently introduced Jobs and Skills WA Employer Incentive is an initiative by the Western Australian Government to assist businesses with the cost of employing apprentices and new trainees. The incentive comprises a base rate with an additional loading payable to those in regional areas.
5.37
One of the principal sources of regional skills shortages is the lack of Vocational Education and Training providers in regional areas. Business NSW recommended that greater subsidies be provided to public and private training providers who deliver courses in regional areas.
5.38
Tourism Accommodation Australia (TAA) has made a number of recommendations regarding the development of the workforce for the tourism industry:
Consider incentives and initiatives to attract more Australians into the industry such as:
Work with industry to identify pre-apprenticeship programs;
Continue to provide incentives for employers who hire adult apprentices; and
Revise wording of the Adult Apprenticeship incentive to be in line with the modern award, rather than the National Minimum Wage.
5.39
Regional Universities Network (RUN) has also argued that some regional development funding be directed towards regional universities:
Given the importance of regionally-headquartered universities to their regions, it is appropriate that at least some of the funding required, including for places in areas of regional skills need, research and infrastructure, is sourced from regional development funds.
5.40
TAA noted the following factors contributing to sectoral workforce shortages and their need to employ migrant workers:
Limited applicants with sufficient skills, education and experience;
Competition from other sectors;
Seasonality of demand in regional areas; and
A lack of interest in careers in hospitality and tourism.
Natural disasters and COVID-19
5.41
Regional Australia is currently contending with the effects of several immediate and severe forces which have arrived in quick succession. The triple effects of drought, bushfires and COVID-19 have combined to exert unusual stresses and exacerbate pre-existing challenges on regional economies.
5.42
The Department of Infrastructure, Transport, Cities and Regional Development (Department of Infrastructure) noted drought as one of the megatrends with which regional Australia will have to contend. The shift from a focus on immediate relief to long-term preparedness was also noted in work undertaken jointly between the Department and the CSIRO.
5.43
In November 2019, the Australian Government announced over $1 billion in funding for communities affected by drought.
5.44
Compounding the effects of drought were the bushfires which ravaged regional Australia:
…the scale of the 2019-2020 bushfires was truly unprecedented, and, whilst the impacts were felt far and wide across the nation, it was principally Australia's regional communities and businesses that felt the full brunt of the fires' direct effects and continue to face the ongoing challenges today.
5.45
The effects of the fires were widespread with over 600,000 businesses operating within their perimeter and an estimated economic damage cost of $3.6 billion.
5.46
The third strike to regional economies has been the devastating effects of restrictions associated with COVID-19.
5.47
A March 2020 Survey of Business Expectations in South Australia found that 63 per cent were doubtful of surviving six months of these restrictions. A subsequent survey published in September 2020, however, found that business confidence had soared to record levels indicating an economic recovery for the state.
5.48
South Australia is illustrative of the fact that the differential effects of COVID-19, even within the same state, necessitate the need for place-based regional policy. In the southern part of South Australia, businesses in the hospitality sector have been particularly affected by COVID-19 restrictions. These effects have been exacerbated by confusions surrounding travel restrictions given that some businesses have staff residing in Victoria.
5.49
The impact of restrictions, however, has been quite different in the Yorke Peninsula whose economy is dominated by agriculture. In Kadina, the main town, most retail stores have remained open albeit with some having reduced hours.
5.50
Similarly, a survey undertaken by Business NSW found that:
Business conditions deteriorated rapidly, with respondents reporting a doubling of COVID-19-related revenue losses during the first and second weeks of the survey period. Business expectations for the next quarter also indicated that business confidence had fallen at unprecedented rate.
5.51
While COVID-19 restrictions have had an adverse effect on regional business, Business NSW also sees the potential for Australia to gain a reputation as a safe trading partner should the number of cases remain low.
Structural change, diversification and sustainability
5.52
Throughout Australia’s history, the structure of the economy has changed as activity in different industries has risen and fallen. These fluctuations have also been reflected in regional economic growth.
5.53
Most industry sectors have undergone a process of gradual structural change. There are, however, regions that have experienced more abrupt changes or shocks. Because regions are not identical, this means that there has been great variation in the way in which they have experienced this change. For example, over the past few decades, the employment share of non-mining regions has shifted significantly towards service provision, while for mining regions, this shift has been less pronounced.
5.54
The differential exposure of regions to changes in industry structure also influences their ability to adapt to changes in economic conditions. Factors include the skills and qualifications of the labour force, industry diversity, human capital and physical capital.
5.55
The Hunter Business Chamber acknowledged the imperative to identify new business opportunities given the region’s reliance upon coal, a finite resource. It stated that transition planning led by government will be necessary to diversify its economic base for the future.
5.56
RDA Barwon South West also noted the need to diversify its economy in order to secure future prosperity:
Susceptibility and impact are further exacerbated in our region due to the relatively narrow economic base concentrated on significant sectors such as agriculture and traditional manufacturing… RDA BSW [Barwon South West] is working closely with key stakeholders in the South West area of the region to prioritise a plan for economic diversification to make the region more resilient and better able to respond to potential economic shocks and structural adjustment.
5.57
Similarly, the Western Australian Government acknowledged the importance of focusing upon developing multiple industry sectors:
While recognising the importance and contribution of the resources sector, this agenda highlights the need for greater effort to grow priority economic sectors including science, technology, manufacturing, tourism, services, education services, agriculture and other industries. It also considers how these industries are supported alongside a resource sector driven economy.
5.58
The Department of Agriculture, Water and the Environment suggested diversification as a solution to boost Australian growth, resilience and reliance on specific markets. As a result of COVID-19, it is exploring options to further diversify export efforts to promote regional resilience.
5.59
Industry change in itself, however, is not necessarily negative. It can be an indicator of an economy shifting to a more profitable sector and deliver considerable benefits to the local and wider economies:
It is the larger and longer lasting changes in resource allocation made in response to changing economic conditions and is recognised as an essential concomitant of economic growth and rising living standards.
5.60
An example of a positive change is the shift to the mining sector in Western Australia and Queensland which led to higher economic growth in those states when compared to the non-mining states.
Innovation
5.61
Innovation is an integral component of the ability of regional businesses to transition to new sources of growth. RUN noted the following:
The jobs and industries of the future will need highly skilled university graduates who can connect regional Australia with the global, innovative economy. We need to generate new jobs and industries through innovation to make regional economies more resilient. Through university study and research, students become more highly skilled, and are better prepared to be creative, entrepreneurial and flexible to meet future job challenges.
5.62
The Defence Innovation Hub, introduced in 2016, is expected to provide opportunities for regional Australia:
With the introduction of a Defence Innovation Hub in 2016, work is underway to remove barriers to innovation, including creating new contracting and intellectual property policies that may open up further opportunities for regional and rural participation. Close collaboration between Defence and industry is critical to meet future challenges in delivering the Government’s program of works.
5.63
The Regional Jobs and Investment Package (RJIP), delivered by the Department of Infrastructure, is funding 10 pilot regions for projects to drive innovation and local infrastructure investment and support skills development and training.
5.64
An example of a project funded under the RJIP Business Innovation stream is the provision of $5 million towards the construction of the first commercial Carbon Fibre manufacturing facility to produce commercial quantities of next generation Carbon Fibre. The project is expected to reinvigorate applications for the material that had previously been discounted due to cost and exponentially increase the uptake of composite products.
5.65
The Organisation for Economic Co-operation and Development (OECD) notes the role of collaboration in fostering regional innovation:
…growing regions are more open to inter-regional technological collaborations, are better connected within a highly connected cluster of nodes and are more central in the global inter-regional innovation network.
5.66
Similarly, the Centre for Social Impact at Swinburne University argued that entrepreneurship and innovation are key to regional development. It quoted research from the Victorian Government’s Department of Economic Development, Jobs, Transport, and Resources indicating that Victorian social enterprises based in regional locations had contributed 43 per cent of $5.2 billion in gross output to the Victorian economy, resulting in the creation of thousands of jobs. The Centre recommended that consideration be given to the potential of non-traditional enterprise forms and the social economy ‘to enhance the economic, social and cultural life of regional communities, and to actively encourage the development of inclusive enterprise ecosystems in regional areas, including the provision of infrastructure that enables active participation in the digital economy’.
5.67
Professor Sue Kilpatrick also noted the prominence of the social enterprise sector in regional Australia and the potential for innovation:
We're even finding in our regional collaboration framework that those organisations think slightly differently and can foster innovation just because they think a bit differently to for-profit or government.
Positive risk culture
5.68
A number of businesses in Tasmania spoke of the importance having backing for original ideas. Mr Pennicott, the Managing Director of Pennicott Wilderness Journeys stated:
But you've also got to take a risk on people you've got a gut feel about. If you can get a 70 per cent success rate with grants and low-interest loans—I've been successful three times and I reckon the payback to the federal government through all the taxes you pay and people you employ et cetera would take under two years for those grants.
5.69
This appetite for risk needs to be supported by government policy. Such support could take the form of more flexible criteria for funding programs.
5.70
Mr Mark Wilsdon Co-CEO of Museum of Old and New Art (MONA) emphasised the criticality of ‘… backing good ideas in regional areas …’ and enabling local events to establish and grow.
5.71
An example of such an enterprise is the wukalina Walk in Tasmania. The business has had difficulty in obtaining funding as Indigenous Business Australia expects a return on its investment in three years. While the wukalina Walk expects to be profitable in the long-term, in the immediate term it has been receiving positive feedback and has employed five previously long-term unemployed people for two and a half years.
5.72
Another resounding success in Tasmania has been the Derby mountain bike trails. When the trails first opened in 2014, Derby was a welfare-dependent town with one remaining business. The trails provide considerable local employment with visitation of approximately over 30,000 tourists per year.
5.73
Because visitors stay for an average of five nights, they estimate flow-on effects of approximately $30 million to the Tasmanian economy including sourcing 70 to 80 per cent of its 120 employees locally. Mr Tim Watson, General Manager, Dorset Council regards the high quality of the product as insurance against risk.
Promoting the competitive advantages of regional location for business
5.74
In order for regional business to succeed, investors need to be aware of the relative advantages of establishing a business in non-metropolitan areas. The benefits are numerous and include lower operating costs and lifestyle advantages.
5.75
RDA Logan & Redlands noted the responsibility of various stakeholders in marketing the unique advantages of particular areas:
It is incumbent on local councils and key groups such as the RDA to ensure potential investors have the knowledge, opportunity and means to investigate a region in terms of viability of business establishment into a specific area. The RDA has been approached by businesses to provide overviews of the region and has introduced them to the relevant economic development practitioners at local council and provincial levels.
5.76
The Country Women’s Association of Australia raised the role of technology in attracting business to regional areas and realising its attendant benefits:
Also, being able to provide access to technological improvements in relation to agricultural and other businesses that are located rurally or who want to relocate rurally, would be a big advantage in actually attracting more people to smaller communities, which should … broaden their economic base.
5.77
Ms Liz Ritchie, CEO, RAI, noted its campaign to market the advantages of regional Australia:
Whether we're talking about regional job opportunities or the propensity of people to move to the regions, we know that regional Australia has a very bright future.
5.78
RDA Logan & Redlands noted the importance of good data in marketing the competitive advantage of regions to business:
While key drivers vary from business to business, the important consideration is to ensure that regions have the data and the expertise to make information available to potential re-locators. … Such an analysis should include a wide range of considerations such as access to labour and skilled workers, reduced travel time which would provide better work/life balance, reduction in congestion which is choking cities.
5.79
RDA Riverina has a Country Change platform and program to promote the competitive advantage of the region’s towns. Employers are able to advertise jobs at no cost and potential employees are able to search for jobs and post their résumés.
5.80
RDA Tasmania also acknowledged the importance of information for potential investments. It recommended that a template be developed jointly with Infrastructure Australia that could be used to list investment priorities to inform both government and the private sector.
5.81
In Tasmania, the Office of the Co-ordinator General is the state’s key entity for attracting and supporting new major investment. Since 2014, it has facilitated over $1.4 billion in investment. Because the smaller scale of Tasmanian enterprises often makes them unattractive to private investors, RDA Tasmania focuses on projects that are integral to value chains which are likely to deliver flow-on benefits to Tasmanian businesses.
5.82
A partnership between the public and private sectors aims to develop Tasmania’s visitor economy. The strategy aims to attract 1.5 million visitors and $2.7 billion in visitor spending annually.
5.83
In Western Australia, the City of Kalgoorlie-Boulder is a major contributor to the regional and national economy through the mining industry. It recommended that it be provided with funding to promote it as a region in which to live, work and invest.
Collaborative investment
5.84
In regional Australia, private investment does not typically occur in a vacuum. Partnership with the public sector can act as a means of overcoming issues of scale and extending the value of public investment. Investment partnerships also spread the financial risk across multiple parties. The Committee heard of several examples of successes in this area.
5.85
RDA Yorke and Mid North stated that while the development of tools such as a regional investment prospectus can be useful, regional business ‘… could also be supported through targeted investment attraction strategies supported by all tiers of government’.
5.86
Similarly, the WA Government has invested in Bunbury’s waterfront to create marina facilities with the aim of attracting private investment and generating long-term employment.
5.87
The East Gippsland Shire Council noted the need for private investment in addition to Federal and state government support to aid the region’s transition to a tourism economy which exploits the region’s natural assets.
5.88
The use of government investment to encourage private investment was also successful in the case of the Urannah Water Scheme. Federal Government support worth $13 million for the completion of business cases helped to attract an additional $2 million in private investment.
Box 5.1: Private investment in emerging industries
Regional Development Australia (RDA) Limestone Coast is the lead organisation managing and delivering South Australia’s Bioenergy Roadmap Program for the ‘hotspot’ of the Limestone Coast. The Roadmap ‘provides a foundation of research, industry discussions and funding for the development of bioenergy projects in South Australia’.
The program funds prefeasibility and feasibility studies for private businesses to identify bioenergy projects. Businesses then fund any identified bioenergy projects privately. Two businesses have moved into construction phase
Blue Lake Milling oat processing facility (Bordertown) is constructing an anaerobic digestions system for oat husks; and
Whitehead Timber Sales sawmill (Mount Gambier) is constructing a biomass fuelled boiler using waste sawdust to power its three drying kilns.
These two projects ‘represent a total private sector investment of around $12 million, and a return of about $80 for every $1 invested by the Bioenergy Roadmap Program.’
5.89
RDA Yorke Mid North also noted the benefits of collaboration:
A closer working relationship between investment attraction agencies and practitioners in region would also assist.
5.90
RDA Kimberley also agreed that collaboration can deliver many benefits for business:
To promote regional locations advantages for business requires closer collaboration and engagement with key stakeholders such as Chamber of Commerce and Industries and Small Business Centers to provide ongoing training opportunity for businesses, avoid duplication and enable a joined-up approach that support business.
5.91
An example of successful collaboration is Regional Cities Victoria who cited access to skills, university graduates and linkages with Federation University as key to attracting IBM as the first major international investor in the Ballarat Technology Park.
Access to Markets
5.92
The Department of Infrastructure noted that ‘… regionally located industries, such as resources and agriculture provide a significant proportion of our exports’. These sectors contribute almost two-thirds of the value of Australia’s merchandise exports. The mining and energy sectors were responsible for three-quarters of Australia’s goods exports, and 59 per cent of goods and services exports.
5.93
The 13 trade agreements Australia has with 20 partners ‘… facilitate the involvement of Australian businesses in regional value chains and more seamless trade and investment between businesses in the parties’.
5.94
The Department of Agriculture emphasised the importance of exports to the agriculture, forestry and fisheries sectors and the role played by the Australian Government in gaining access to these export opportunities. It also noted Australian Government activities such as support for the key export sectors including free trade agreements and technical market access negotiations:
Exports are vital to the viability and sustainability of Australia's agricultural industries and regional economies, and drive productivity, innovation and competitiveness in Australian agriculture.
5.95
While globalisation has expanded the markets available to businesses, it also makes them more vulnerable to foreign competition.
5.96
The Export Market Development Grant (EMDG) scheme provides support for export promotion for goods and services produced in Australia. Business NSW has advocated for an increase in the EMDG in addition to targeted support for small and regional businesses.
5.97
Another impediment faced by regional businesses is the cost of freight:
It costs us more to freight from Tarpeena to Port Melbourne that it does to … send it to parts of Asia.
5.98
More cost effective access to markets is being facilitated by the Australian Government which is investing $100 billion in transport infrastructure, including $4.5 billion to upgrade key freight route through the Roads of Strategic Importance Initiative.
Promoting industry within regions
5.99
Regional pride plays a role in how the public engages with local industries. One inquiry participant suggested that their community holds contradictory views regarding employment. Some parents do not want their children to grow up and work in manufacturing (the primary industry in their town), however these parents also do not want their children to leave for larger towns. This contradictory position was further articulated by RDA South West:
Australians do have a general affinity to the bush but few understand it. They like to see sheep in a paddock or a treed landscape, they like roast lamb and polished wooden floors but no one likes what needs to happen in the middle. We do have abattoirs and we must cut down trees.
5.100
One avenue recommended by a number of submitters is to pursue advanced, high value manufacturing which is ‘… less sensitive to changes in labour prices (cost competitiveness), as it competes on quality, uniqueness, reliability and prestige’.
We've got the mindset that we can't manufacture, yet you can make cars in a high-cost country like Germany. We've got some fantastic capability in manufacturing, but it's a question of attracting people. It's about building the skill base.
5.101
Demographer Bernard Salt recommended that business activity be aligned with existing local infrastructure and skills:
I want to actually create a business activity in that community that value ads (sic), that employs people and that fits into the infrastructure of that town. They are the examples that I want.
5.102
This view is supported by RAI:
Advanced manufacturing often builds on existing primary industries and its fortunes are tied to these industries, such as agriculture and mining, who purchase machinery.
5.103
Mrs Lynette Martin, Mayor, City of Mount Gambier, noted that Mondelez, an international company that manufactures cream cheese for the Australian market is situated locally.
5.104
The East Gippsland Shire Council also advocated for the desirability of co-locating industry with raw materials:
For some industry sectors there are also advantages that come from proximity to suppliers. In the case of East Gippsland, this applies to food manufacturing, which equates to a $1.452 billion industry for the local economy.
5.105
The Queensland Government is investing $30 million into building Manufacturing Hubs in Cairns, Townsville and Rockhampton to assist in adopting ‘… world-leading technologies, processes and practices.’
5.106
The Townsville City Council stressed the relationship between manufacturing, distribution and geography, presenting the benefits of its ‘outstanding supply chains’ which serve as a ‘… distribution base for goods flowing throughout the rest of Australia and out to the Asia-pacific’. The Council recommended the Australian Government ‘… fund greater research manufacturing development and technological adaptation in Townsville’.
5.107
Similarly, the Tasmanian Government is investing in ‘… high-value advanced manufacturing contributing to the broader performance of the sector.’ It stated that programs under its Advanced Manufacturing Plan have provided assistance to over 70 individual commercial projects.
5.108
In Bendigo, the Regional Engineering and Advanced Manufacturing Skills Road Map has the support of both industry and TAFE to identify:
… short and long-term initiatives to support future advanced manufacturing workforce needs, articulation of pathways and initiatives for school leavers and a mature age workforce, and the identification of industry/business and influencers.
Box 5.2: Bell Bay Advanced Manufacturing Zone
The Bell Bay Advanced Manufacturing Zone (BBAMZ) is Tasmania’s largest industrial precinct, and the product of collaboration between industry, government, RDA Tasmania, and the community. BBAMZ was established in 2015:
…from a desire by businesses in the region for better collaboration, and to grow the region’s capabilities by supporting existing businesses, encouraging investment and promoting the benefits of the region as a place to live and work.
BBAMZ has taken steps to rebrand and unite the region’s manufacturing businesses under the one brand by developing a website on the zone. As a result of having created this united industrial community, BBAMZ was approached by Rio Tinto seeking approximately eight full-time equivalent staff as short-term skilled labour on an ad hoc basis, and could develop a tailored solution:
So those five engineering companies out at Bell Bay actually formed a new company called the Key Employment and Education Network. That is a group-training organisation as well as a labour hire company. It has been in operation now for just under 12 months and it has 30 employees, eight apprentices and two trainees. It has worked extremely well, and will continue to expand into other areas now such as construction and civil.
Despite George Town’s strengths in its manufacturing sector, the industry remains fragile in the face of a ‘boom and bust’ cycle that follows the global manufacturing and commodity industry. As a response to this situation, which has produced 35 per cent youth unemployment, the Mayor of George Town advocated for ‘a plan B, or second string’ industry (in this case tourism) to diversify and strengthen regional economies.
Supporting regional tourism
5.109
The arts and arts tourism sector is crucial to Australia’s regions, creating sustainable growth and contributing to thriving communities. Support required by the tourism industry is different to that of many other industries. It requires more flexible consideration to avoid expectations of rapid financial returns within a three-year timeframe:
Tourism products don't provide those kinds of returns in that short a period of time in any case, let alone if you introduce the aspects that are common to Aboriginal tourism businesses. We're working in a paradigm that is from a disadvantaged perspective.
5.110
Country Arts SA advocated for the Australian Government to commit to:
Providing stable multi-year funding agreements for all large and small to medium arts organisations that will enable greater stability and certainty in planning and delivery of sustainable arts programs and enhancing these organisations efforts in seeking corporate and philanthropic participation and support.
5.111
Furthermore, the impact of the ‘extensive bushfire season’ and COVID-19 on the tourism industry has been widely felt across the tourism industry, with bushfire recovery efforts ‘stalled’ due to COVID-19. This has had both positive and negative effects. On one hand, there has been an increased reliance on domestic tourism. The industry, however, is also concerned about workforce stability given the significant loss of ‘working holiday-makers’ and the accompanying tourism revenue they bring through ‘visiting friends and relatives’. In light of these challenges, TAA suggested that a renewal of incentives which have previously been in place, as a potential avenue to both attract employees to the industry and encourage employers to take on adult apprentices.
5.112
Recfish SA has suggested that lakes in South Australia be reassessed for their potential recreational uses, both for fishing and also their effect on the tourism industry more broadly.
5.113
Specifically, it recommended the establishment of a South East Lakes’ body to better coordinate with all levels of government and function as a ‘one-stop shop’ to maximise the opportunities and economic contribution from recreational activities, including primarily recreational fishing.
5.114
The opportunities afforded by the events of 2020 may allow a rediscovery of regional destinations, allowing a new wave of innovative and attractive events and accommodation options.
5.115
TAA stated that its remit, which had previously been focused on international travellers, has now shifted entirely onto domestic travellers. TAA noted the impact of these major disruptions on the tourism sector, and particularly highlighted the importance of re-opening regional Australian destinations. TAA considered that encouraging domestic travellers into regional travel as it becomes possible and safe will allow regional tourism to outperform metropolitan tourism.
Regional arts employment
5.116
RAI has analysed the employment of people within both the tourism sector and the creative industries, finding that the share of these industries as a proportion of local employment varies in different regions.
5.117
It found that ‘… some very small and remote regions show as places which are fairly reliant on tourism and creative industries for employment’. One such community is Anangu Pitjantjatjara Yankunytjatjara (APY), an Indigenous community in remote North-West South Australia. APY is home to 35 visual arts and crafts professionals. While this is a small absolute number, it is significant for the community’s population size and the limited alternative employment opportunities available.
5.118
Both the creative industries and tourism are ‘… mainly driven by the private sector and are highly susceptible to market forces’, with both playing an essential role in the employment of regional Australians.
Committee comment
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Regional business makes a significant and essential contribution to the national economy.
5.120
In order for regional businesses to prosper, a number of structural and regulatory barriers will need to be addressed. They include access to skilled labour, reducing red tape and promoting the competitive advantages of regions.
5.121
Private investment is essential for the economic health of regions. It is not only is the absolute value of investment from the private sector that is significant, these funds can also have a multiplier effect on government funding. This investment can take various forms including cash and in-kind support.
5.122
COVID-19 restrictions have disrupted the flow of migrant labour upon which Australia has long depended and exacerbated existing labour shortages.
5.123
The Committee recommends that the Australian Government investigate means of reducing the red tape burden upon regional business.
5.124
The Committee recommends that the Australian Government develop a program funding stream which is more tolerant of risk and encourages innovation funding be provided for smaller regional businesses.
5.125
The Committee recommends that the Australian Government implement a program for promoting the advantages of locating businesses in regional areas, doing business in regional areas and look at ways to incentivise business into regional areas.