Recent research in regional development
Issues surrounding the theory and practice of regional development, including insights into best practice from Australian and international perspectives are well documented in research literature.
The research indicates that no consensus exists on how regions can or should be developed, or on how this ‘development’ can or should be measured. Indeed, there exists no consensus on how ‘region’/’regional’ is defined for development purposes. There is also no consensus on the relationship between ‘regional cities,’ ‘regional areas,’ ‘rural areas,’ and ‘remote areas’, or whether all of these can, or should, be subsumed under the term of ‘regional development’.
Despite this, there are several consistent themes on best practice approaches to regional development which are relevant to the Committee’s inquiry.
In 2015, the Regional Australia Institute (RAI) released a discussion paper, The Future of Regional Australia: Change on Our Terms, which summarises the main issues facing regional Australia and provides guidance on policy direction into the future. The key finding was that ‘government has diminishing control over the factors that shape Australia’s regions’. These factors include the global economy, technological change, the environment and population. They do, however, ‘continue to have a role in providing the right political and policy settings for fostering regional growth’.
The RAI suggests that more integrated and collaborative government approaches, at all tiers of government, could produce better outcomes for regional Australia.
The RAI further highlights that Australia’s regions are increasingly exposed to global market volatility, which engenders both risks and opportunities. The challenge for regional Australia is to ‘identify their emerging comparative and competitive advantage in a global setting and develop strategies that engage with these external demands’.
Similarly, the Productivity Commission recently released an initial report on Transitioning Regional Economies. The report highlights that successful adaptive and development strategies for Australia’s regions need to be:
led by local communities;
aligned with regional strengths;
supported by targeted investment; and
guided by clear objectives and measurable performance indicators.
The importance of ‘place-based’ approaches suggested by the RAI and the Productivity Commission is a broad theme identified in the recent literature. It is an approach recommended by the OECD and presents an essential element in ‘best practice’ to regional development. This approach has also been referred to as ‘regionalism’ and ‘localism’ within the literature.
In 2010, John Tomaney, under commission by the Australian Business Foundation, examined international trends in ‘placed-based’ approaches and their implications for Australia. Tomaney concludes that successful ‘place-based’ approaches require:
strengthened local and regional institutions that are able to assess and develop local economic assets in ways that amount to more than “tailoring national policies”;
the active role of stakeholder; and
the development of human capital and the promotion of innovation.
Tomaney also suggests that successful regional development is a long-term process and that, in the Australian context, ‘fiscal federalism potentially provides a supportive framework for the emergence of place-based approaches’.
The ‘place-based’ approach is important because it recognises that regions are different, that one-size-fits-all approaches are often inappropriate, and that local communities must be central to development efforts.
Implicit in this understanding is that regional development is most effective when it is a ‘bottom-up’ process—‘regions are best placed to understand and secure their own interests’. This contrasts to more traditional forms of development which have tended to be ‘top-down’ and centre-directed.
‘Top-down’ models have focussed on ‘attracting industry and capital to a region from elsewhere,’ whereas ‘bottom-down,’ ‘place-based’ models promote ‘community empowerment and the development of local industries, based on local resources and closely tied to the local community.’ Speaking to this point at the Committee’s public hearing on
7 August 2017, Andrew Beer noted that:
Good practice in regional economic development is accepted as focusing upon endogenous growth—that is, growth that takes place because of the assets, abilities and talents of the region and the people within it.
Central to the long-term viability of regional development is, of course, a sustainable population. Several studies have considered the issue of regional demographic change and the possible policy options open to government and communities.
In 2013, Graeme Hugo et al. traced these recent trends. While this study highlights a general decrease in regional population numbers, it notes that the decrease is not universal and there exists a significant coastal/internal divide. Whereas all regional areas have experienced a net decrease in young adults, coastal areas have seen net gains due to immigration of young families and retirees.
Hugo et al. suggest that any attempts to increase immigration to regional areas must be predicated on the economic potential of these areas to absorb any increase in population. They also suggest that return migration programmes and national immigration policy may be viable mechanisms to encourage population growth and address skills and labour shortages in regional areas.
Migration was raised as an issue in evidence to the Committee by Jack Archer, Chief Executive Officer, RAI. In particular, it was noted that little is done to facilitate migration to regional and rural areas across Australia:
…we could have more focused programs complementing what we're doing with migration policy and visas to actually find those opportunities in communities. Our work has also shown that there are a lot of rural communities that are actually workforce constrained. There are businesses that don't take on extra people, simply because there isn't a community of people to tap into locally or a clear pathway for that.
… our migration system doesn't do a very good job of getting people to regional Australia, and the idea that that's because there isn't any opportunity for them there is I think, frankly, nonsense.
The Department of Immigration and Border Protection recently reviewed the academic literature on migration and regional development. The Department found that ‘one of the key challenges in utilising the migration program to assist in regional development outcomes has been in ensuring that migrants who do settle in regional areas stay there over the long-term’. It is therefore necessary to understand ‘the factors that contribute to regional retention’.
In 2017, the RAI provided a Blueprint for Investing in City Deals, an initiative of the Turnbull Government which provides funding to promote regional development. The Blueprint provides a guide to best practice for stakeholders in determining whether a particular regional city is ready for a ‘City Deal’. In determining this, two considerations were identified as crucial:
understanding the city’s economic growth engine and determining the city’s growth path; and
identifying the required leadership, clarifying the structures for implementation, and understanding capacity.
Best practice guides and frameworks
Regional Development Australia (RDA) and the European Union (EU) have both produced best/better practice guides which explore optimal ways to approach regional development. A Canadian study has also identified if not best practice, then a set of observations which can be regarded as ‘good practices’.
Consistent themes across the three guides include:
consultation and engagement with and ‘buy-in’ by the regional authorities and communities is essential;
Analysis is, of course, necessary but the EU report noted that one of the pitfalls was excessive analysis rather than a focus on the key features of importance for preparing a strategy;
prioritising, effective communication and effective mechanisms for delivering on the strategy;
regions should be focused on their core existing advantages and distinctive competencies, and select niches for developing and diversifying their economic bases;
regional strategies appear more effective when they have clearly defined policies, action plans and measurable benchmarks. The EU report noted an over-reliance on simple, quantitative indicators and qualitative indicators are usually underdeveloped; and
funding support from the central authorities (in this case the federal government or EU Commission) remains as important as ever.
Examples of successful regional development
Identifying examples of successful and unsuccessful regional development is problematic. This is because there are few independent and objective reviews of these initiatives. In the absence of ‘controlled studies’, it is difficult to determine what outcomes would have occurred in an area had the program not been put in place. Further, what successful regional development looks like in one location may be very different to others. That is, it is subjective.
The Committee acknowledges there is a difference between a regional development strategy and a regional development project. Through its inquiry, the Committee hopes to identify examples of successful regional development strategies. In particular, those that have resulted in sustained benefits to communities. Appendix D lists some examples of regional development projects identified by the Committee to date. The Committee would like to learn more about the strategies behind these projects.