Regions grow from the bottom up
14 September 2018
By Nyunggai Warren Mundine AO
With the change of Prime Minister it seems more likely Australia will have a genuine public discussion about immigration policy.
To date the discussion among Australia’s political class has been muted with the major parties holding the line that current record immigration levels are both desirable and sustainable.
Regular Australians don’t see it the same way.
It’s not bigoted to debate whether Australia’s immigration levels should be reduced. It’s a debate about how many immigrants Australia should take each year and about what population our cities and towns can realistically sustain.
One of the paradoxes about Australia is that we’re both a very large and a very small country. By land mass, Australia is one of the largest countries in the world. But we also have one of the most concentrated populations.
Nearly half of all Australians live in three cities — Sydney, Melbourne and Brisbane. Include Perth and you have 55 per cent of the population.
Compare this with the US where the four largest metropolitan areas — New York, Los Angeles, Chicago and Dallas — are home to just 15 per cent of its population. Two-thirds of Australians live in just eight places. In the US two-thirds of the population are spread across 100 US cities and towns.
If you look at a satellite image of Australia at night you’d be forgiven for thinking we’re a tiny country with a sliver of land in the southeast and an island in the southwest. The rest is dark. Australia lives on the doorstep of Asia, the fastest growing, most highly populated region in the world. And we’re huddled on the side of the continent furthest away from it.
Population concentration impacts Australia’s economic strength. It’s a key reason housing is so expensive and rental affordability is so low in major cities. Job creation in Australia is also concentrated, with half of all jobs growth within a 2km radius of Melbourne and Sydney’s CBDs.
Add to this that 90 per cent of new arrivals to Australia settle in Sydney or Melbourne. It’s no wonder both cities are bursting at the seams.
I believe Australia’s economy will benefit if we build out our regions. It’s important to our engagement with Asia and to building an economically strong nation where home ownership and job opportunities are readily accessible and people have real choices where to live, study and work.
Over the years, Australian governments have talked about regional development a lot; some even making plans to build cities in the bush. But cities don’t grow from the top down. They grow from the bottom up. Every Australian city was once a remote community with “no jobs”, growing organically, not from central planning.
I travel through regional Australia every month and there are two things I notice. One is there’s a lot of unmet demand for goods and services. People travel long distances for basic goods and services and often go without a local supply they’d like to have. This unmet demand is an opportunity for new sole traders and small businesses.
The second is labour shortages. The agricultural, tourism and hospitality sectors in regional Australia rely on working holiday visa holders to fill chronic labour shortages, many in unskilled jobs. The agriculture industry alone relies on 40,000 backpackers and foreign workers annually.
I’ve lost count of the times I’ve been in regional Australian towns with high unemployment and a backpacker has served me or an accommodation owner has told me they get labour from overseas and I despair local unemployed people aren’t filling those jobs.
I’ve focused on this because many of these areas have high Aboriginal populations who are heavily welfare dependent. But that’s just a subset of a broader problem.
I don’t blame employers or foreign workers. Most long-term welfare recipients in these areas aren’t job ready and our welfare system acquiesces while people languish on welfare for generations.
But as long as regional towns rely on outside labour to do basic jobs while locals experience high unemployment, these areas won’t grow. As long as there are people sitting outside the real economy, those area’s economies will be weighed down.
Recent reports say the federal government is considering imposing mandatory regional settlement laws where new immigrants will be required to settle for up to five years outside Sydney or Melbourne.
That may ease congestion and provide a boost to regional areas. But what I’d really like to see is governments tackling long-term welfare dependence and getting people into work, giving them every assistance they need to start and maintain a job.
Getting unemployed people into work to fill the existing jobs and creating new jobs to meet unmet demand increases economic participation. That, in turn, generates economic growth. It’s not rocket science. It’s how every economy in the world has developed in history.
This article was first published in the Daily Telegraph on 7 September 2018